BREXIT : LAST CALL FOR INDIVIDUALS - Destination Portugal By Antonio Varela
After all the confusion, delays, and sudden changes that Brexit has brought upon us all, it seems that the “Last call” date for UK citizens looking to move to the EU is now truly at hand.
Although the UK left the EU on the 31st of January 2020, the full effects of Brexit have not yet been felt, mainly due to the fact that currently, and until the 31st of December 2020, a transition period is in effect.
For British citizens, there is not much time left to enjoy EU freedom of movement rights, such as the right to freely visit, move, work and study across the EU.
Therefore, in these last few months, many UK citizens may be considering moving to an EU country in order to establish residence before the cut-off date (31st December 2020). If you are considering moving to Portugal, let us give you some tax and legal tips that might be useful for you. Portugal offers tax benefits for foreigners who decide to reside in the county. Do not forget to take good advantage of them. Look at the Non-Habitual Resident tax regime(NHRTR), under which certain professions, designated ”high added value activities”1
1 Director-General and executive manager of companies and other categories of directors, specialists in physical sciences, mathematics, engineering and related techniques, doctors, university and higher education professors, specialists in information and communication technologies, authors, journalists and linguists, creative and performing artists, Intermediate level science and engineering technicians and professions, Information and communication technology technicians,market oriented farmers and skilled agriculturaland production workers andother trained professionals
are taxed at a mere 20% flat rate, regardless of the amounts earned. Also note that under the NHRTR, important forms of income sourced outside Portugal, such as income from self-employment in high added value activities, royalties, interests or dividends, may be exempt from taxation in Portugal, if they may be taxed overseas (which, in general, they may be, according to the Double Taxation Treaty between Portugal and the UK).
And the same happens with employment income sourced outside Portugal : it may also be exempt from taxation in Portugal if it is taxed in the other country (which is generally the case as regards the UK). If, on the other hand, you are retired, the NHRTR may still be a good option, as pensions (except pensions of public employees) are taxed at a flat 10% rate.
Finally, note that there is no wealth tax and no tax on donations and inheritances to descendants or spouses (unless it includes Real Estate in which case there is a 0,8% Stamp Tax). Furthermore, Portugal has a fairly easy path from residency to citizenship, as well as permitting dual citizenship. In fact, after 5 years of being a resident in Portugal, a UK citizen can apply for Portuguese nationality whilst keeping their British nationality.
For these reasons, Portugal has seen a notable increase in the influx of foreign citizens, including British citizens looking to relocate.
So, what practical steps will you need to take to relocate to Portugal?
In order to move to Portugal, there are a number of steps you will have to take, however, essentially, you will need to:
•Obtain a Portuguese Fiscal Number from the Portuguese Tax Authorities
•Get Portuguese tax residency. The most practical option is through leasing or owning real estate property, in order to establish a permanent dwelling.
•Proceed to the local Town Hall (“CâmaraMunicipal”) in the place of your residence in order to register as a resident.
•Apply for the NHRTR, if you so wish. You must initiate the necessary proceedings before the Tax Authorities and submit all the relevant paperwork.
•At this point you may wish to register for the Portuguese NHS (“SNS”) and, depending upon your particular situation, register with the Social Security Services.
•Exchange your driving licence for a Portuguese driving licence, before the 31st of December 2020
•If you are bringing over your vehicle, you will need to alter the number plate in order to drive legally in Portugal (note that there is a 12 month deadline after moving to Portugalto initiate this proceeding so that you can benefit from the exemption of the Importation Tax (ISV)).
•Subsequently, a new document will be issued for UK citizens residing in Portugal, which will need to be requested from the Foreigner and Border Services (“SEF”).
Should you have close family members that you live with in the UK but that are not EU citizens, they may also move with you to Portugal, however their residency must be dealt with before the Foreigner and Border Services (“SEF”), and they may require additional documentation.
Although your official residency is in Portugal, you may freely travel and reside outside the country for up to six months within a year, or more in specific cases foreseen in the law.* *
*For further information, please contact our
UKDESK through the email