25 Comments

Another fast and fantastic post. I appreciate how you're able to get to the meat of things plainly and quickly. Of course, I also love your longer, more detailed posts. But a post is a post: any little or long bit of a read from you is better than none!

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Oct 2, 2023Liked by Nancy Whiteman

Nancy, your points are well made and pertinent: Start early, plan ahead, and get competent assistance. I did our Portuguese tax return myself this year - a multi-week project that nearly wore out my translation app! The shocker for me was that at the end, I had no idea how much tax I owed. Since all of our income is "foreign sourced" (from the US), the online tax submission system could not calculate it. We had to wait until we got a bill in early August. I had some sticker shock at that point, but also had AFM audit my return to ensure I'd done it correctly. They said I did, so I paid the bill and promised myself I'd let them do the whole thing for me next year!

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Oct 2, 2023Liked by Nancy Whiteman

I wish I could think and articulate as clearly and concise as you! Everything made perfect sense! Thank you, NHR is on my spreadsheet under “research” so great timing.

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Oct 2, 2023Liked by Nancy Whiteman

Thanks Nancy. Great post. As a tax accountant, I can say you are so right - plan early and often! Tax laws change all the time. I fear our taxation in the US is never going to let citizens go, no matter where you live. And of course I KNEW you’d have a spreadsheet! 😃

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Oct 3, 2023Liked by Nancy Whiteman

You are so well prepared, I am amazed and thankful. We just returned from a vacation in Spain having decided to weather the politics in the US for the time being. We are no longer looking at other countries to live in. We had looked at Costa Rica, thought about Portugal but my Spanish is excellent and trying to learn Portuguese seems difficult at 70. I realize that we would have many hurdles to jump if we relocate and reading your blog elucidates them so well. Thank you for the wake up call. ~jan marks

It’s funny (wonderful) how familiar you seem because of your writing.

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Thank you thank you thank you.

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Oct 2, 2023Liked by Nancy Whiteman

good advice. we are just beginning our adventure, but will certainly keep these blogs for reference.

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Ahhh, got it. Thank you, Nancy. Can you explain everything in life to me this clearly and concisely? 🤗😂

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Terrific post! We have had 3 consults withPT tax professionals and I did not understand what you made clear, the the highest tax rate is not on the total income. Like you, we have an RMD “problem” in 8-9 years, however. It was refreshing to know we would pay, ostensibly about 38%, not 48% on the total.

Regarding the Roth IRAs, my understanding is that the jury is still out on the interpretation of those. PT tax attorney perspective on this here: https://www.fresh-portugal.com/blog/understanding-the-taxation-of-roth-ira-in-portugal

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Hi Nancy. The Portuguese tax rates are sobering. I don't understand how many of the people in Portugal can get by. They are underpaid, and taxed at higher rates. Do you know if there are any tax deductions in Portugal, or is a person taxed on the gross income?

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Oct 4, 2023·edited Oct 4, 2023

Hi Nancy, after reading this post, and then seeing the news this week "End of the NHR in 2024". I have to be honest, I was disheartened. As a U.S. citizen, still living and working in the U.S., part of our retirement planning for 2024-25, included the D7 visa, followed by the NHR at the appropriate time. Plus of course reduce health care costs compared to the U.S.

I understand what the Portuguese government is trying to do here; eliminate the Golden Visa program, reduce or eliminate the AL (Alojamento Local) short term rental licenses program, and now the NHR program to make things better for the Portuguese people (100% get it). Putting all of this aside except the NHR, here is my fast math (assuming no NHR):

Example only with these assumptions: Married, and filing jointly on U.S. federal income taxes. And also considered a tax resident in Portugal.

Income: $42,000 (€39,924)

U.S. $42,000 less the $27,700 standard deduction (assuming no other tax deductions) allowed in 2023 by the IRS = a taxable income of $14,300, taxes owed 10% or $1,430. Net income $40,570 a year or $3,381 a month.

Same income as above, how would Portugal tax this?

€39,924 (assuming no tax deductions) would be taxed at approximately 36% or €14,372 = net €25,552 a year or €2,129 a month.

This is of course a large difference in net income per year and month. I believe that ending the NHR would greatly reduce the amount of people wanting to enter Portugal at least on the D7 visa in the future. The only other options off the top of my head are; 1) come in on the digital nomad visa and pay a flat 20% tax (assuming it doesn't go away since it just started in 2023, or 2) don't be a tax resident in Portugal and split your time in other countries. Again, all off the top of my head.....which is now jello.

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I mean to poke a few experts on the subject of IRAs and Roth accounts. I don't follow why a Schwab investment account, a Schwab IRA, and a Schwab Roth would be treated differently under PT tax law. I can withdraw funds from any of them at any time; it's just that if I don't meet certain time and amount requirements I could be subject to significant US tax penalties. Why is an elective withdrawal from a Roth a pension, and from a normal investment account not?

It seems as inexplicable as annuities.

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Thank you, Nancy for another helpful and informative post. I have so many tax questions! But this is a helpful start. So, if I’m understanding, you get a bit of a pass for the first 10 years. But after that, am I correct that you pay taxes in Portugal only on income generated in Portugal (so you aren’t taxed twice)? Or do I have that all wrong? Probably!

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Great post! And rather timely for us. Thanks, as always. Do you know if AMF has a presence in Madeira - and would you recommend them?

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