resident

steve · Post by **steve** » Tue Oct 27, 2009 8:47 pm

As far as I understand the position if you are not tax resident in the UK you should not have to pay UK tax but NI is payable on a salary issued in the UK. I should ring the HMRC helpline if I were you. On proof of tax residency here and declaration of the income to the IRS they should approve salary payment without tax deduction at source.

shanagarry · Post by **shanagarry** » Tue Oct 27, 2009 9:18 pm

Steve - thank you.

The purpose of the question is to get a feel for where it more tax beneficial/efficient to be a tax resident - Portugal or the UK?

steve · Post by **steve** » Tue Oct 27, 2009 11:45 pm

I guess that you know well enough what tax you would pay as a UK tax resident and you can input the figures for the same taxable income into a model to see what tax would be payable in Portugal as a Portuguese tax resident. I used JURINFOR IRScalc 2008 last year to see what my liability was likely to be as for me there were special circumstances which had not applied in earlier years. The model gave a good clue but it did not handle DTR on UK Govt pensions in the same convoluted way that the actual IRS calculation does.

DTR is something that the IRS has only really got to grips with in recent years. Foreign dividends still seem to be open to some interpretation as to how they are taxed. Interest from Portuguese banks is not taxed at other than the basic rate of the 20% deducted at source but interest earned outside of Portugal seems to be taxed at marginal rates in the same way as interest is taxed in the UK.

These are merely my own observations based on my experience of paying tax here and I do not claim that they are gospel. At the end of the day you really need to talk to a good accountant here to properly assess tax based on residence in Portugal. It will clearly vary according to an individual's circumstances.

shanagarry · Post by **shanagarry** » Tue Oct 27, 2009 11:52 pm

In broad strokes - what are your own findings - taking everything you mentioned into consideration?

I realise we all have differing circumstances and I will be taking professional advice given my on-going working arrangements.

shanagarry · Post by **shanagarry** » Tue Oct 27, 2009 11:54 pm

I meant to ask earlier - what is the position regarding our wills?

If we have made UK wills - are they compliant with the Portuguese process or will we have to make new wills in Portugal?

MaisieK · Post by **MaisieK** » Wed Oct 28, 2009 10:20 am

It is very important that you make wills in Portugal it will make things a lot easier for
the person handling your estate.

Maisie

steve · Post by **steve** » Wed Oct 28, 2009 10:45 am

Earning from husband and wife are aggregated and taxed jointly in Portugal which can make a difference. It also depends whether you are a higher tax rate payer in the UK. It is impossible for me to give a general rule but in my own circumstances I think it is probably much about the same or perhaps slightly beneficial to be taxed here but I have a Government pension which has to be taxed at source in the UK and then relieved here under the DTR treaty. Clearly advantageous though for a higher rate tax payer with saving in a Portuguese bank rather than a UK institution. The position will naturally vary from person to person and you need to go into the position in some detail to see where you stand. Be warned though that the knowledge levels of some accountants here about the DTR effects of UK sourced investments is not always that high.

shanagarry · Post by **shanagarry** » Wed Oct 28, 2009 11:04 am

Maisie - Does that mean you need to make two wills - one in the UK the other in Portugal?

shanagarry · Post by **shanagarry** » Wed Oct 28, 2009 11:06 am

Steve - thank you for that insight - it's very helpful.

steve · Post by **steve** » Wed Oct 28, 2009 11:14 am

I took legal advice in the UK about wills and was told correctly that a UK will is perfectly legal for use in Portugal by a British national and will be processed based on the nationality of the writer of the will. Unfortunately it appears that the grant of probate under these arrangements is complicated and it may be difficult for the heirs to get assets released to them. I am about to have my will translated and registered here. Yes two wills seems to be the answer but obviously make sure that they do not conflict.

shanagarry · Post by **shanagarry** » Wed Oct 28, 2009 11:29 am

Steve - thanks again. Is there anything in this life that is straightforward?

I suppose it keeps all those 'jobsworth' civil servants occupied

steve · Post by **steve** » Wed Oct 28, 2009 1:52 pm

Probably not. I was a member of the British Senior Civil Service when I retired in 2000!

shanagarry · Post by **shanagarry** » Wed Oct 28, 2009 1:59 pm

Ah well! - you can't get it right all of the time.

Thanks for your very useful feedback.

MaisieK · Post by **MaisieK** » Wed Oct 28, 2009 9:50 pm

Yes Shanagarry Steve is right if you don`t both make a will in Portugal it will be very difficult
to get probate, we bought at Rocha Brava 20 years ago and were advised to both make a will
straight away, which we did, our Solicitor in Norwich where we live has a copy of it.

Maisie

shanagarry · Post by **shanagarry** » Wed Oct 28, 2009 11:58 pm

Maisie

Does that mean you have one in the UK and one in Portugal? Presumably, they are both the same (if you have two)?

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