Portugal Tax Myths - Why Portugal is bad for Freelancers and Digital Nomads?
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- Опубликовано: 7 ноя 2024
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Many believe that Portugal is a tax haven, especially if you're a crypto investor.
Indeed, you can do some structuring and use their famous NHR regime to pay very little or no tax, but there are certainly limits to this.
Even though Portugal can be great for some people, it is certainly not for everyone!
If you're a digital nomad/freelancer you may be hit with very high taxes and socials in Portugal!
Are there ways to avoid this? Or is there a certain group of people that should just stay away from Portugal?
Let's see!
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We are Offshore Citizen team. We help people become global: get a second passport, set up a second residency, pay less taxes, do banking abroad, etc.
We have lots of interesting articles on different topics, we have relevant information up to date.
Author: Michael Rosmer
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Hi Michael I have been following you on RUclips since your early days. I'm very proud to see how you have grown and how versatile, how deep your contents have become. I would say you are better than nomad capitalist even though he's pioneer on this field. I'm a big fan of yours now didn't miss your single video. I will definitely reach out to you for help. Big hugs lots of love for you cheers 🥂
Thanks for the continuous support, Salem. Appreciate it!
Looking forward to connecting with you. All best
Stay away from the other one - Wealthy Expat. He is very loose with the truth
Really appreciate the very straight-to-the-point and transparent info! There's so much misleading information out there making things seem overly rosy.
Thank you! That's the goal :)
What do you think of Portugal?
Another great video. Keep doing what you're doing Michael, your point of difference in this niche is your informative approach with no heavy sales pressure. Its great to see the community growing and you covering different areas (Crypto, Visas, Residencies, Citizenship etc). You have previously done a video on "Taxation for Traders", are you planning on creating content on the best countries, residencies, structures etc for traders (Stock options, Crypto, Day traders etc). I would love to see it. Thanks again mate. Loving the content.
That's a good suggestion, thank you! And thanks for all the compliments, always happy to provide valuable content.
What makes you interested in trading content?
@@OffshoreCitizen Fantastic thanks. I have a modest portfolio that I trade options on each fortnight/month. This has enabled me to "retire" in Panama. But I would love to learn more about other countries that are friendly to traders/crypto investors with residency programs that eventually lead to citizenship. Thanks again.
Welcome back! Hope you've been well
Thanks, Alex!
How did you like today's video?
You mentioned that crypto interest /staking rewards are taxable in Portugal. I have to disagree with that, if you are using an overseas based exchange or CEFI platform in combination with NHR, then this should not be taxable as it is overseas passive income. If on the other hand, we are taking about defi protocols or mining, then yes that would be taxable. At least this is what I have been told by my Portuguese accountant.
Kind of a moot point since, if you are STILL (after all that has happened) leaving your coins on an exchange, taxes should be the least of your worries.
That being said, how different countries will tax defi activities is an interesting and important subject.
Overseas passive income is mostly taxable under NHR except real estate sales and dividends. My understanding is since there is no legislation (yet) you won’t be able to claim staking to be a dividend.
He doesn’t know ANYTHING about crypto taxation in Portugal. I’m a crypto lawyer in Portugal and I can assure you that
Thanks a lot for the information, Michael! You mention the high social security contribution in Portugal in case of a local income. Would these contributions have to be paid by someone (self-employed) who's sole income comes from a foreign company? This could make a big difference in the decision of keeping the business in the source country or moving it to Portugal as domestic income at 20%.
Thanks!
Yes, you still need to pay social security when the income is from abroad
Good advice Michael, thank you for sharing.
Bri
Always a pleasure! Thank you for keeping up, Bri.
How do you like Portugal?
Nice video. They recently introduced also the solidarity tax for hifg incomes! It is getting worse and worse. And as a sole trader seems that also local accountants do not understand what taxable income coefficient applies to my case.
Thank-you for referring to withholding tax. Every time I watch a certain Andrew I feel like he is misleading people by ignoring withholding taxes completely.
Happy to be of service :D
What do you think of Portugal?
Living on investment income, not in Portugal, paying 19% in Europe on investment income. Romania and Bulgaria are more attractive next alternatives for investment income. Georgia is good but no tax treaty on dividends. I’m sure there are some better strategies, when it’s time for me, maybe we’ll talk.
What do you think about the autonomous regions for tax purposes, also in spain the canary islands as a base for digital nomads?
Great and helpful video. Sounds like Portugal is bad if you're a digital nomad, even if income is from outside Portugal. Plus the country is getting more expensive these days.
For taxes it's not great there might be lifestyle reasons to go with it
well, its also getting expensive because of the digital nomads
I read somewhere that although capital gains tax in Portugal is 28%, but it is calculated on only 50% of the gains, which doesn't seem all that bad compared to the US cg rates
Why would matter though? You’ll still be liable for the rest in the US even if you pay less Cap Gains tax somewhere else and would be able to apply tax credit.
The 50% thing is for real estate
please respond to my polite query: do international students in Portugal pay income taxes on their worldwide income or income from back home?
So for “Self Employed” digital
Nomad what tax rate Im looking at? Lets say from 2K gross salary how much I will be left with every month? Thx
Definitely a good move for us.
A question: After 10 years of the Non-Habitual Resident (NHR) regime, you will have to pay taxes in Portugal. AFTER this period, if I have already obtained citizenship, how should I declare myself "non-tax resident", if I want to move out of portugal, but maintain citizenship? It's a hard process (For exemple: I know that in South Africa you need to prove that you have ties as Tax Resident in anywhere else to get rid of being a tax resident in South Africa regime)?
You need to severe your ties to Portugal, stop spending much time there and establish a home somewhere else, typically not a tax haven initially
Hi Michael, We enjoy your videos and the knowledge you share.
We are Are planning to move to Portugal. Our son lives between Paris and Germany. I fell in love with portugal when I visited in may. We are semi retired and have an LLC. My husband will be earning commissions in the security industry. The NHR sounded so good but his profession does not qualify neither does mine as a teacher training other teachers. It looks like we would pay a very big tax on those commissions unless he forms a Portugese company.
Do you think that’s the best course of action and do you help with that?
Hi Janis, it's probably best to send a message through our website offshorecitizen.net/
Thank you for the great info !! Could you please clarify more on NHR Portugal that if you are exempted from all types of taxes for 10 yrs ? Or there are only spécific taxes that are exempted under NHR ?
Only specific that's the point, many types of income are still fully taxed or partially taxed. We have another video on it from quite a while back
@@OffshoreCitizen aha, so in that case, Malta is much better where if the money is not brought into the country is tax free or Andorra, or even Cyprus. I would appreciate if you can make a video comparing these 3 countries in 1. Thank you Michael !!
Great Video Michael, have you discussed the crypto farming with a Portuguese accountant? Both I have asked says it is not taxable. Seems to be a bit of a grey area. Also do you know weather they class NFT’s as any other crypto or would a sale of one also have tax liabilities? Thanks
There's of course no explicit rules around mining but it should be categorized as income meaning the gains on the tokens you receive shouldn't be taxable but the earnings themselves should be. As mentioned the currency you're paid in doesn't change your tax consequences
Hi! Could you elaborate a bit more your opinion about the portuguese banking system? Thank you!
Hi Michael, great content as always. My wife and I are US citizens and are looking to live in Portugal (my wife is originally from there). We both work virtually under 2 separate LLC's (for liability reasons), one as a health coach and one as a business consultant (product growth strategies). Based on your video I assume we would be taxable under Portugal tax code and not the US as we would perform our work there (virtually). What is not clear is whether we would qualify as High Value-Added Professional under NHR regime. Thoughts on this? is this best approach or can you suggest a better structure to minimize tax. I am ok paying up to US tax rates but wanted to avoid anything higher.
I'd book a call, but it's a question of a hybrid mismatch most likely. You'll most likely still be liable for Self Employed Tax on the LLC level, If qualified under NHR, then 20% in PT as well as PT social contribution as a freelancer. Then totalization agreement comes in place. You may be able to work around some with PT social tax quarterly structuring & claiming being present in PT social system. I'd book a call.
Best to book a call but if you're a US citizen you're always also under the US system
Very good advice as usual. You have to be very careful about capital gains tax which is quite high. It's 28% from normal countries, I mean white label countries, and 35% from Black jurisdictions. Even Bond traders for example that received dividends or coupons get caught with 35% tax if they have bonds that are issued from the Cayman Islands etc. I don't think the tax her program that they have is really good for a lot of people.
I'm a bit confused by your comment on dividends. Aren't those taxed at normal rates in Portugal? If I decide to move from the US to Portugal and live there permanently on passive dividends from stocks, wouldn't that be taxed over there at higher rates than I'd pay back home in the US?
if I already have the NHR stats- can I open a sole US LLC a few months after receiving the NHR? (foreign income) for minimum taxes? or would that be considered planning?
Planning is allowed, evasion is not.
Foreign income isn't necessarily tax free, foreign dividends & royalties are.
A foreign registered company could be taxable locally depending on the operations and management.
Best to book a call if you'd like to go over details
What about tax friendly Panama, I love spending part of the year there and I have PR.
Panama is a completely different story, will consider posting a video about it in the future
If the digital nomad makes money exclusively from royalty income, Portugal can be beneficial, especially for a US citizen earning royalties from US sources thanks to the foreign earned income exclusion and the social security totalization agreement.
Source on this? Most of sources say royalties can’t be claimed under FEIE.
What are the tax implications for a U.S. citizen who owns their own business in the U.S. but can do their job via telehealth using a computer? Their clients will be 100% U.S. citizens paying via U.S. health nsurance companies or self pay clients. They would pay Income tax in their home state and to the IRS. What taxes would they have to pay in Portugal?
I'm wondering about the same. Usually the location of the client doesn't matter. But I think the location of the business entity does matter, like if it's a c-corp and you're an employee you will likely not be taxed in Portugal, so you can take advantage of FEIE, someone above said this works for US based royalty income
After watching the whole video, Michael does say with a foreign corporation it can work out for lower taxes. I will have to look if a non-US corp can be setup the right way. But if you need any corporation either way, Portugal will save money. If it's a pass-through, probably not.
As far as I know, you’ll need to worry about CFC and POEM rules first. Where is this company managed from? Do you have an office in the US? Also How do you distribute the profits? Contact a professional. Too many questions to ask.
Best to book a call to discuss the specifics of this
@@OffshoreCitizen thank you. Will do
Are Portugal residents taxed on foreign generated capital gains as well? (e.g. stocks in the US stock market).
Yes
How about for Golden Visa? No tax is don’t stay beyond 183 days / yr..
Not exactly... No tax if you don't trigger tax residency (you can do this without being there 183 days, see our video on the 183 days myth) and don't have source income.
I read that working remotely for a foreign company with no business in Portugal, you don’t get taxed as a nomad. Is this true?
No that's false
The cherry on the cake that Noone talks about is the list of tax haven jurisdictions that the Portugal has. And the associated exit tax if you are a citizen
Has been talked about on that channel for sure, in the video about Simplified Regime or the other one.
Yeah I've mentioned the black list, which is super thorough, numerous times in the past.
It's not just an exit tax if you're citizen there are issues depending on where you move. Though that assumes giving up tax residency, which assumes you had it to begin with, the objective ideally is get the citizenship without becoming tax resident
What about someone that is returning to Portugal with a portuguese passport ?
Can still apply if away for long enough
@@OffshoreCitizen What do you mean ? Apply for what ? If I was born in Portugal and have a Portuguese Passport, cant I just go back any time and just stay in Portugal ? I am a Portuguese Citizen.
Portugal can work when you pay yourself dividends from an overseas company, and invest rather than trade crypto. There are no socials to pay with this setup. Nature and climate are great. Costs of living are not that cheap overall but OK.
Yes that's great if the business isn't controlled from Portugal, isn't in a black list country and doesn't have Portuguese permanent establishments
You'll have to invest in the country? What would be a suggestion for investment that helps the country?
@@oGiygas for digital nomads really nothing. digital nomads just earn enough to price out portuguese people from even renting a home
Hi what do u mean by NHR?
Non-habitual residency
Well - I thought Michael had died - its been so long since he posted a video
Haha all good and well
How did you like today's video?
@@OffshoreCitizen Really good. Portugal is very high tax. I am having problems getting employment in Dubai due to lots of job applicants for each job (400+) but scared about the high taxes everywhere else. Singapore is the next best options. As a NZ citizen I would need work visa sponsorship which many companies do not want to do
I thought that some of his crypto (staking etc. to generate yield) had died in all the recent tumult and left him in a less than enviable situation. 😉
Certainly recently VERY hot here. We're receiving a massive amount of US/Canadian immigrants.
How are you dealing with the weather?
@@OffshoreCitizen It's been a bit hot but we're near the sea/wide river - so can be breezy. We DID have a large forest fire within a couple of miles from our apartment. Plenty of concrete between the fire and us but at the height... over 500 firefighters, 100 plus fire vehicles and seven planes were dropping water. A lot of tourists here but it's still very good, and we're happy we've made the move! About to publish some more books - gotta keep those royalties coming in!!
portugal's tax sucks my dad gains 70k a year ( a lot ) and with tax thats 20k ( not a lot )
hes a lawyer and im really mad
Why are your videos consistently way too quiet? Having to reset my volume levels just for this channel is super annoying. Then I have to find the proper volume again for everything else after you're finished. So that's double annoying!
Terrible situation.
....wait! and your name is "Peace on Earth"?
No idea I don't have that issue when we test the videos ourselves