Non-Habitual Resident Status and Taxes

In my last post I mentioned that I would be consulting with an accountant about filing taxes in Portugal. The news was all good. However, I did become aware of another step that I need to take in order to not pay income tax in Portugal.

I have until March 31 of the year following the year in which I obtained my Temporary Resident status to file as a non-habitual resident. It is a simple online process to apply, followed up by submitting proof electronically or by mail that I am currently paying taxes in the country of which I am a citizen. So what does that mean for my tax obligations here in Portugal?

Once my status is granted I will need to file a report online showing that I am still residing in Portugal and that I am still paying taxes in the country from which my income originates.

Certain types of income are allowed to be exempt and others are capped at a 20% tax rate. Here is the abbreviated version of how tax obligation is applied if have non-habitual resident status.

  • For a period of 10 years, taxation related to IRS (personal income tax) on labour income in Portugal is at a fixed rate of 20%
  • No double taxation for pension incomes or for employment and self-employment income obtained abroad for a period of 10 years

I will still need to file a tax return each year in Portugal, with no payment due, and I will also need to update my non-habitual resident status annually for 10 years. Then, a new set of rules regarding citizenship and taxes will apply. I am not going to worry about that yet!

For more information

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The Dream Continues

 

Portuguese Resident Permit

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SEF Office in Portimao

On November 29th I arrived at the SEF Office in Portimao anxious, yet confident that I had everything that I needed to complete my application for a Portuguese Resident Permit.

I arrived earlier than my appointed time and received a number for the order in which I would be seen. The process was easier and less stressful than I had anticipated. I first met with a person who reviewed my file and handed many papers back to me that I did not need (I had decided to bring anything that they might ask for!).

He then took digital fingerprints of both index fingers and took a digital photo, similar to a passport photo. Next I placed a digital signature under my photo. He asked me to correct one item on my cover sheet and then to wait to be seen by the person who would finalize my permit. I spent about 10 minutes at this first desk.

After a 15 minute wait I was seated in front of a woman. She first scanned my paperwork. All of the paperwork that you bring in is returned to you. After clarifying a few items I was asked for the fee (as of this writing 159,70 Euros). The woman who was assisting me printed out a receipt and a one page temporary permit before telling me my Resident Permit card would arrive in the mail in about a week.

The entire process in SEF once my number was called took about one hour.

I walked out, smile on my face, and had a celebratory lunch while waiting for my bus to Praia da Luz.

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Ham and Cheese Omelette, Fries and a Salad – 5 Euros!

A bus ride home and I was gazing at the cloudless sky and deep blue ocean in Praia da Luz.

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View from Promenade – Praia da Luz

 

Coming soon – content list of packet for Resident Permit Application for retirees. The requirements vary some depending on the type of Resident status for which you are applying. I will also be posting information on various health insurance options. Having health insurance that covers you in Portugal is one of the requirements for any kind of Resident Permit.

Continuing to live the dream in Portugal….

Kathy

Real Life Issues of Living Your Dream

Living your dream in another country does not eliminate the day to day business that we all deal with in every day life. Some of that business is unique to whatever county you have chosen to call home. Some is universal.

One of the first things that needs to be addressed for someone who is not a citizen of any of the EU countries is the limitation of days that you can stay in any EU country under the Schengen Agreement. Schengen Information

A short summary of the impact of the Schengen Agreement is that even if you are a citizen of a country that does not require a visa to enter an EU country, you are limited to a 90 day stay in any 180 day period. For more details on how this plays out when traveling, see the link above for Schengen Information.

So, one of the first questions you need to ask is does the country you are interested in moving to have a process to apply for residency status allowing you to stay for more than 90s days,

In Portugal the answer is yes. There are a variety of different options for extending the 90 days. This online Portugal Immigration Guide does a good job of outlining the options.

If your plan is to live here for most of each year you need to start with a Portuguese resident visa which must be applied for at the nearest Portuguese Consulate to your permanent address in your home county. The link I have provided is for Consulates in the United States.

You must have the Portuguese resident visa before you can apply for a Portuguese resident permit (non-EU). The resident permit will be applied for in Portugal once you arrive. The residence visa gives you 120 days to complete the resident permit application at the nearest SEF office.  The English translation for what SEF stands for is Immigration and Borders Service.

Link for information on applying for Portuguese Residence Permit

I found the best way to work through the process was to gather everything on the list that was obvious and then to email the Consulate with specific questions about anything of which I was unsure. Then I waited until 90 days before my planned departure for Portugal (the window allowed) and mailed off my application.

My application was approved and then came the scary part. Mailing my passport to the Consulate for them to attach my Resident Visa just ten days before I was to board my flight to Portugal. My passport arrived back to me with my much anticipated visa just a week before I flew off to start living my dream.

Next up for me in this residency process – my appointment with SEF the end of this month to obtain my Portuguese residency permit. I will share more about that process after it is completed.

Any questions? Ask me in the comments section. Any readers with experience to share on obtaining a resident visa for Portugal or elsewhere?