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PostPosted: Mon Oct 09, 2017 3:03 pm 
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Hi,

I am looking for the opinion of fellow expats regarding the Tax regime for non-regular residents for Foreign sourced Self-employed income.

I found this PDF from the Tax office: https://www.dropbox.com/s/1c3k2jbxku657a1/IRS_RNH_EN.pdf?dl=0

On page 8, it says
Quote:
Income in category B (Self Employment), [...], obtained abroad by non-regular residents, are exempt if alternatively:
a) They are taxed by the source State/nation, according to the convention to terminate double taxation entered into by Portugal and the source State; or
b) They can be taxed in another country, in cases where the convention to terminate double taxation has not been held into under the terms defined by the OECD Model Tax Convention on Income and Capital, as long as it is not a territory subject to privileged tax systems (defined by Ordinance n. 292/2011, November 8) and, as long as the corresponding income, cannot be considered to have been obtained on Portuguese territory, as per Art. 18., n. 1 of the CIRS of the Personal Income Tax (IRS) Code.


I am not sure if I understand the second part correctly ("b) They can be taxed in another country[...]"). I was hoping that, as Self-employed, if I invoice a customer outside Portugal, I will pay zero tax on it.

What is your understanding of it?


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PostPosted: Tue Oct 10, 2017 12:53 am 
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Location: Australia
expatportugal5926 wrote:
I was hoping that, as Self-employed, if I invoice a customer outside Portugal, I will pay zero tax on it.


Where are you resident for tax purposes? Are you registered for VAT anywhere? Also, what is the nature of the work? If it is services that are dispensed from Portugal to someone in another country then I'm pretty sure it will be deemed taxable in Portugal. If you are doing the work overseas and reside in another country for a period of the year there may be a choice as to where you are taxed. If you are registered under the non habitual residents program in Portugal you may be entitled to a reduced tax rate depending on the nature of the work (some high skilled professions qualify for a 20% rate). I don't think there's a scenario where you won't pay tax at all unless you find a way to 'hide' some of your income.

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PostPosted: Fri Oct 13, 2017 12:12 pm 
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Hi,

Thank you for your answer.

I am resident in Portugal. I am VAT registered in Portugal.

The work varies between consultancy and software development. Some are done remotely, and for some I travel onsite.

Also do you know if NHR need to pay the Extraordinary surtax and Additional solidarity rate mentionned on http://taxsummaries.pwc.com/ID/Portugal-Individual-Taxes-on-personal-income?


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PostPosted: Fri Oct 13, 2017 12:55 pm 
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Location: Belfast/Luz
expatportugal5926 wrote:
... I am resident in Portugal. I am VAT registered in Portugal. ...


If you're taxed in Portugal as a resident it may already be too late for you to take advantage of the NHR scheme.


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PostPosted: Fri Oct 13, 2017 12:58 pm 
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RichardHenshall wrote:
expatportugal5926 wrote:
... I am resident in Portugal. I am VAT registered in Portugal. ...


If you're taxed in Portugal as a resident it may already be too late for you to take advantage of the NHR scheme.


No, as I moved this year I have until March next year to apply.


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PostPosted: Fri Oct 13, 2017 11:44 pm 
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Location: Australia
Hi Expat,

My understanding of your situation is that you will be taxable on all your work related income in Portugal. Some professions are subject to a preferential tax rate of 20% under the NHR scheme and one of these is "I.T. technician". I don't know if what you do would qualify, so you will need to check that. My interpretation of the surcharges is that they will apply, once you are deemed to be a resident taxpayer. However, I am not an expert and I'd advise getting advice from a tax consultant.

Regarding the NHR scheme, I'm trying to find out any news from the 2018 budget which was released in draft form yesterday. It is expected that they will change the rules so that previously tax free overseas income will be taxed at 5-10% from January 2018, unless you are already registered for the scheme before then. So if you haven't already registered you should do it sooner rather than later. I'm considering travelling to Portugal from Australia for a few days just to register, if the budget does make that change.

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PostPosted: Sat Oct 14, 2017 12:29 am 
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Thank you for your answer.

You can register online on http://www.portaldasfinancas.gov.pt


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PostPosted: Sat Oct 14, 2017 10:47 pm 
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Location: Australia
News on the 2018 budget suggests that they will not now be changing the NHR scheme. They are also abolishing the solidarity tax.

http://www.kitco.com/news/2017-10-13/UP ... 2-pct.html

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