People are amazing. They want the many benefits of living in a EU country with peace, security,
food and drug safety, and many social programs, but they don’t want to pay the taxes. You get what you pay for. I had neighbors who spent hundreds of dollars on Halloween decorations, but complained constantly about income taxes and “the welfare state”. If you value peace and security, invest in it.
Thank you for sharing. Learning the real facts are so important. Good luck with your trash. Your description on scrubbing your house reminded me of stories of my grandmother. She lived the last 3rd of her life in a white frame house down the street from a Paper Mill in the mountains of NC. The black smoke pouring out dirtied her home and she would clean it daily. I think the exercise of cleaning kept her healthy since she lived to be 100.
I am not an expat and have no plans to be one, anywhere, but just spent two months on Madeira Island with my brother-in-law and his husband. I love reading your factual and interesting writings! What a life you've grabbed hold of!
My goodness, tax is such a bother. I have enough bother with accessing my CGD bank account as they have added some new complexity which I don't quite understand.
Thanks for the trash collection bins update. We're rooting for you! As to taxes, about 5% of Americans are saying they're moving away (to other European countries or home) as their 10-year NHR protection ended and another 5-7% have decided not to move to Portugal due to the changes to NHR. Most think 'I pay 15% in the US and 37% in Portugal...that's too much'. As you note, it is so much more nuanced than that, yet it is an important factor in making any overseas move.
Yes, we have some American friends who are exploring other options after NHR. And I am certain many have been put off by European tax rates. However, we are here for good! We are willing to pay higher taxes to enjoy the many other benefits of this country.
Thanks for your post, Nancy. For clarification, I believe that an FBAR must only be filed if the aggregate value of any foreign accounts exceeds $10,000 at any time during the calendar year reported. - CW
I am under NHR and because I automatically have taxes taken out of my Social Security each month, my PT accountant said I don't owe taxes in PT BUT my 401K taxable retirement withdrawals do get taxed in PT even though I automatically withdraw taxes whenever I take money out. I use Bruno Alfonso. I use the taxes paid in PT as a tax credit for my USA taxes. My USA accountant works with Bruno so that helps.
Very helpful in many ways, this was. I'm other ways, I'm still puzzled. I'm not a wealthy American, but a retired nurse who gets a social security pension of $33,000 per year. I thought that I'd done my research prior to moving to Portugal, noting that there wasn't dual taxation. However, last year, I paid €2,068 in taxes on Portugal (via a tax attorney) and still paid taxes in the USA. I also paid taxes on my last IRA withdrawal of $1,600 in 2024. The puzzling part for me is that not only was I dial taxed, but in Portugal, I did not receive any credit/tax deduction for the €3,660 I paid in health premiums n I r any of the €1,700 I paid in co-insurance. Taxes are so puzzling in Portugal and there's no real way to understand why you're being taxed. At this point, I feel like I'm being taxed just on my presence in the country as none of the VAT that I paid for groceries and goods is taken into account, either. Okay, I'm simply venting more than anything here, wishing I understood the tax laws and rationale.
I suggest you find a PT tax advisor that is willing to walk you through the PT taxes and how to reduce them For example, while deductions are not euro for euro in PT (and you can't apply US tax practices to PT) if you provide your NIF whenever you make a purchase there are deductions that apply. And your US taxes should be reduced by any amount paid in PT.
Under NHR Roth and IRA withdrawals are not taxed. After NHR both are subject to 28% tax…an important consideration for Americans that typically are coached to take Roth withdrawals last.
The 20% is on Portuguese income. Foreign income is different. See the following: The "NHR tax regime offers significant tax advantages, including a flat income tax rate of 20 percent on certain types of Portuguese-sourced income for eligible professions. This includes NHR Portugal freelance workers in high-value-added fields." https://getnifportugal.com/nhr-for-digital-nomads/
People are amazing. They want the many benefits of living in a EU country with peace, security,
food and drug safety, and many social programs, but they don’t want to pay the taxes. You get what you pay for. I had neighbors who spent hundreds of dollars on Halloween decorations, but complained constantly about income taxes and “the welfare state”. If you value peace and security, invest in it.
Agree!
Wow! There are a lot of tax confused folks in this thread...
Well said!
Thank you for sharing. Learning the real facts are so important. Good luck with your trash. Your description on scrubbing your house reminded me of stories of my grandmother. She lived the last 3rd of her life in a white frame house down the street from a Paper Mill in the mountains of NC. The black smoke pouring out dirtied her home and she would clean it daily. I think the exercise of cleaning kept her healthy since she lived to be 100.
I am not an expat and have no plans to be one, anywhere, but just spent two months on Madeira Island with my brother-in-law and his husband. I love reading your factual and interesting writings! What a life you've grabbed hold of!
Thanks so much for that recommendation, Nancy. It's sounding as if I need to seek an alternate tax advisor.
My goodness, tax is such a bother. I have enough bother with accessing my CGD bank account as they have added some new complexity which I don't quite understand.
Avoid CGD like the plague!
Depressing - it's sadly the most convenient bank near me.
Thanks for the trash collection bins update. We're rooting for you! As to taxes, about 5% of Americans are saying they're moving away (to other European countries or home) as their 10-year NHR protection ended and another 5-7% have decided not to move to Portugal due to the changes to NHR. Most think 'I pay 15% in the US and 37% in Portugal...that's too much'. As you note, it is so much more nuanced than that, yet it is an important factor in making any overseas move.
Yes, we have some American friends who are exploring other options after NHR. And I am certain many have been put off by European tax rates. However, we are here for good! We are willing to pay higher taxes to enjoy the many other benefits of this country.
Thanks for your post, Nancy. For clarification, I believe that an FBAR must only be filed if the aggregate value of any foreign accounts exceeds $10,000 at any time during the calendar year reported. - CW
Yes, you are correct. As a side note ..., I wish we had moved even more money to PT before the recent devaluation of the $.
I am under NHR and because I automatically have taxes taken out of my Social Security each month, my PT accountant said I don't owe taxes in PT BUT my 401K taxable retirement withdrawals do get taxed in PT even though I automatically withdraw taxes whenever I take money out. I use Bruno Alfonso. I use the taxes paid in PT as a tax credit for my USA taxes. My USA accountant works with Bruno so that helps.
I have found if you ask the same question to two different PT tax preparers you may get a very different answer.
Very helpful in many ways, this was. I'm other ways, I'm still puzzled. I'm not a wealthy American, but a retired nurse who gets a social security pension of $33,000 per year. I thought that I'd done my research prior to moving to Portugal, noting that there wasn't dual taxation. However, last year, I paid €2,068 in taxes on Portugal (via a tax attorney) and still paid taxes in the USA. I also paid taxes on my last IRA withdrawal of $1,600 in 2024. The puzzling part for me is that not only was I dial taxed, but in Portugal, I did not receive any credit/tax deduction for the €3,660 I paid in health premiums n I r any of the €1,700 I paid in co-insurance. Taxes are so puzzling in Portugal and there's no real way to understand why you're being taxed. At this point, I feel like I'm being taxed just on my presence in the country as none of the VAT that I paid for groceries and goods is taken into account, either. Okay, I'm simply venting more than anything here, wishing I understood the tax laws and rationale.
I suggest you find a PT tax advisor that is willing to walk you through the PT taxes and how to reduce them For example, while deductions are not euro for euro in PT (and you can't apply US tax practices to PT) if you provide your NIF whenever you make a purchase there are deductions that apply. And your US taxes should be reduced by any amount paid in PT.
Are you saying 401K/IRA's are not taxed? If that's not the case, what about ROTH 401K's, how would that work if you happen to know? Thanks!
Under NHR Roth and IRA withdrawals are not taxed. After NHR both are subject to 28% tax…an important consideration for Americans that typically are coached to take Roth withdrawals last.
Great write-up, Nancy. One more add, I'm not sure when it changed, but NHR is now 20%, which is what I pay. I arrived Feb 1st 2023.
The 20% is on Portuguese income. Foreign income is different. See the following: The "NHR tax regime offers significant tax advantages, including a flat income tax rate of 20 percent on certain types of Portuguese-sourced income for eligible professions. This includes NHR Portugal freelance workers in high-value-added fields." https://getnifportugal.com/nhr-for-digital-nomads/