Thanks for a lovely blog. I enjoyed reading about your experiences. I miss one thing only from South Africa - thunderstorms with sonic booms. Nothing else - nada.
Thanks for another informative and well written post. I always enjoy them and will continue reading, even though my own hopes of moving to Portugal will not be realized. I can live vicariously through you ladies 😉
I'm surprised that Denice's military pension is considered taxable in PT. I had understood that government pensions (US gov't, at the federal, state, county...) are not taxed by PT. As you say, Social Security (US) distributions are subject to the 10% rate during NHR years, but I have heard in every seminar I've joined over the last two years that gov't pensions would not be taxed by PT. Taxes for US citizens are rather fuzzy in PT. There is no clearly established code. Tax advisers and tax lawyers, the 'experts' have different interpretations and do their best to extrapolate a defendable strategy. The main takeaway I hear, however, is to pick one strategy and stay consistent with it while you document everything That and to enjoy a fresh-baked pastel de nata every morning with your meia de leite escura. Tchau!
I attended another webinar on Portuguese Taxes last week. Frankly, I didn't have any questions...just wanted another opinion before writing this post. They confirmed that all pensions are taxable after March 2020 NHR status. Like you, I had thought her military pension would not.
Hi Nanc. If that was the FreshTax presentation by Zeev et al, I heard that US government pensions became taxable AFTER becoming full Portuguese citizens. Apparently, even after the NHR expires, unless and until you go for full citizenship, it would not be taxed by PT.
Thank you again for your post about taxes. This subject has been keeping me up nights. Firstly, understanding WHAT is taxed is boggling and second, if you are taxed in the US first, then Portugal, if your PT taxes would only be 10 or 20%, it seems as if you will never owe taxes in Portugal until after the 10 year NHR period. Is that correct? Here's what twists my brain..we had a consult with a tax attorney. He recommended that we direct our financial advisors to convert money made to dividends and interest from white-listed (not black listed) companies only. These monies will not be taxed under NHR. At All. However, if we are being taxed by the US first, isn't it "a wash"? This is where my level of tax understanding ends. I did listen to a webinar given by Fresh, Zeev Fischer's firm, and I learned that the only pensions that are not taxed are government pensions, for those that were government employees. Social Security, IRA's and all other non government employee pensions are taxed at 10%. The other thing that keeps me up at nights is the issue no one seems to want to talk about. What happens after NHR? We are then taxed at the progressive PT tax rate, which, if you are making more than 70,000 eu, rates over 48%. I know we all don't plan to up and move in 10 years. Yikes, that's when US mandatory IRA distributions kick in. My husband tells me not to think about taxes so much. I'm trying!
I understand your concerns but don’t male it keep you up at night. I listened to the same webinar your did, and found some of their advice confusing…but here is my attempt to assist. If you do not have PT income, then your tax rate during NHR is 10%. Your likely pay more than 10% in the US…so you won’t pay anything to PT. 10 years later, yes many of us will be at the highest (48%) rate… but as you suggest will be receiving RMD and more, so we can probably afford it. But if you have concerns consult a competent PT tax advisor.
I appreciate your writing about the top areas of interest requested by your readers. I, too, enjoy your posts about construction projects, healthcare and info for Americans on taxes.
You mentioned you are not a food blogger and a number of readers are interested in whether they can be a vegan in Portugal. I've written a few posts about restaurants we've visited and enjoyed that have vegan options. I'm linking to one here about the 26 Vegan Food Project restaurant in Lisbon for folks who may be interested. I have written about other restaurants with vegan options including a post on Three Little Birds in Sagres and an upcoming post on Lagos. https://open.substack.com/pub/juliearing/p/lisbon-food-memories?r=3gg1j&utm_campaign=post&utm_medium=web
Always interesting and informative! We have been wondering how the taxes worked here so this gives us a good start. I might have to get your PT tax contact. Thanks again, Nancy for keeping us informed and entertained!
I don’t believe all your tax info is correct. My understanding is…
-Pensions are not taxed but social security is.
-You pay your taxes first to your country of residency, which is then deducted from your US tax burden. (I paid €1200 to Portugal and then owned nothing to the US) I have a small teachers pension, social security and a bit of income from my Portuguese Airbnb.
-The FBAR takes about 5 minutes to fill our and is free, but you have to know what your highest foreign bank account balance is for that year. So check your statements before starting the process.
Linda Weygant is a US tax preparer living in Coimbra and might be a good resource for you.
I have checked my information with two different firms, and watched a webinar with a third firm just last week ... it is correct. Before 2020 pensions were NOT taxed. But we arrived after the change, making Denise's US military pension taxable. As US citizens we are required to file first in the US then PT. Please note we do NOT have any Portuguese income. You are required to file that here as well, so that may be why you are filing in PT first.
Thanks for a lovely blog. I enjoyed reading about your experiences. I miss one thing only from South Africa - thunderstorms with sonic booms. Nothing else - nada.
Appreciate your clear straight forward writing style and sharing your experience with me.
Thanks for another informative and well written post. I always enjoy them and will continue reading, even though my own hopes of moving to Portugal will not be realized. I can live vicariously through you ladies 😉
Hi Nanc,
I'm surprised that Denice's military pension is considered taxable in PT. I had understood that government pensions (US gov't, at the federal, state, county...) are not taxed by PT. As you say, Social Security (US) distributions are subject to the 10% rate during NHR years, but I have heard in every seminar I've joined over the last two years that gov't pensions would not be taxed by PT. Taxes for US citizens are rather fuzzy in PT. There is no clearly established code. Tax advisers and tax lawyers, the 'experts' have different interpretations and do their best to extrapolate a defendable strategy. The main takeaway I hear, however, is to pick one strategy and stay consistent with it while you document everything That and to enjoy a fresh-baked pastel de nata every morning with your meia de leite escura. Tchau!
I attended another webinar on Portuguese Taxes last week. Frankly, I didn't have any questions...just wanted another opinion before writing this post. They confirmed that all pensions are taxable after March 2020 NHR status. Like you, I had thought her military pension would not.
Hi Nanc. If that was the FreshTax presentation by Zeev et al, I heard that US government pensions became taxable AFTER becoming full Portuguese citizens. Apparently, even after the NHR expires, unless and until you go for full citizenship, it would not be taxed by PT.
I consulted again with our tax preparer and you are correct. Denise's military pension is not taxed.
Thank you again for your post about taxes. This subject has been keeping me up nights. Firstly, understanding WHAT is taxed is boggling and second, if you are taxed in the US first, then Portugal, if your PT taxes would only be 10 or 20%, it seems as if you will never owe taxes in Portugal until after the 10 year NHR period. Is that correct? Here's what twists my brain..we had a consult with a tax attorney. He recommended that we direct our financial advisors to convert money made to dividends and interest from white-listed (not black listed) companies only. These monies will not be taxed under NHR. At All. However, if we are being taxed by the US first, isn't it "a wash"? This is where my level of tax understanding ends. I did listen to a webinar given by Fresh, Zeev Fischer's firm, and I learned that the only pensions that are not taxed are government pensions, for those that were government employees. Social Security, IRA's and all other non government employee pensions are taxed at 10%. The other thing that keeps me up at nights is the issue no one seems to want to talk about. What happens after NHR? We are then taxed at the progressive PT tax rate, which, if you are making more than 70,000 eu, rates over 48%. I know we all don't plan to up and move in 10 years. Yikes, that's when US mandatory IRA distributions kick in. My husband tells me not to think about taxes so much. I'm trying!
I understand your concerns but don’t male it keep you up at night. I listened to the same webinar your did, and found some of their advice confusing…but here is my attempt to assist. If you do not have PT income, then your tax rate during NHR is 10%. Your likely pay more than 10% in the US…so you won’t pay anything to PT. 10 years later, yes many of us will be at the highest (48%) rate… but as you suggest will be receiving RMD and more, so we can probably afford it. But if you have concerns consult a competent PT tax advisor.
I appreciate your writing about the top areas of interest requested by your readers. I, too, enjoy your posts about construction projects, healthcare and info for Americans on taxes.
You mentioned you are not a food blogger and a number of readers are interested in whether they can be a vegan in Portugal. I've written a few posts about restaurants we've visited and enjoyed that have vegan options. I'm linking to one here about the 26 Vegan Food Project restaurant in Lisbon for folks who may be interested. I have written about other restaurants with vegan options including a post on Three Little Birds in Sagres and an upcoming post on Lagos. https://open.substack.com/pub/juliearing/p/lisbon-food-memories?r=3gg1j&utm_campaign=post&utm_medium=web
Thanks !
Always interesting and informative! We have been wondering how the taxes worked here so this gives us a good start. I might have to get your PT tax contact. Thanks again, Nancy for keeping us informed and entertained!
We use AllFinanceMatters in Tavira. https://allfinancematters.com Everything is done by email and phone, so really doesn't matter where the office is.
Hi Nancy,
I don’t believe all your tax info is correct. My understanding is…
-Pensions are not taxed but social security is.
-You pay your taxes first to your country of residency, which is then deducted from your US tax burden. (I paid €1200 to Portugal and then owned nothing to the US) I have a small teachers pension, social security and a bit of income from my Portuguese Airbnb.
-The FBAR takes about 5 minutes to fill our and is free, but you have to know what your highest foreign bank account balance is for that year. So check your statements before starting the process.
Linda Weygant is a US tax preparer living in Coimbra and might be a good resource for you.
I have checked my information with two different firms, and watched a webinar with a third firm just last week ... it is correct. Before 2020 pensions were NOT taxed. But we arrived after the change, making Denise's US military pension taxable. As US citizens we are required to file first in the US then PT. Please note we do NOT have any Portuguese income. You are required to file that here as well, so that may be why you are filing in PT first.