Brexit and Portuguese Residency

By Advertiser, in Business · 16-10-2020 01:00:00 · 1 Comments
Brexit and Portuguese Residency

Are you a concerned British national with interests in Portugal? Are you thinking about moving to a country with low transmission rates for Covid-19, topping up your Vitamin D and a better lifestyle?

In this information article, we can tell you what the steps are so that you get it right before a potential no deal Brexit becomes a reality.

Prior to becoming a resident, if you intend to sign contracts in Portugal such as the opening of a bank account or purchase a property, you will need to obtain a Portuguese fiscal number (NIF) from the tax authorities (AT).

You may also use a resident entity (corporate or private) as your Fiscal Representative in Portugal (this is obligatory for non-EU residents). This entity would then obtain the number for you, receive and administer relevant Portuguese tax notices.

For those arriving from the UK (and other EU member states), the current legislation with regards to residency status stipulates that EU nationals are permitted to stay in the country for a three-month period, simply with just a photo ID, e.g. your passport. If you remain in Portugal beyond the first three months, then by the fourth month you must have obtained a residency permit - “Residência” - from the local council municipality - “Câmara Municipal (CM).

The documentation required varies from one council to another, but in general, this requires a photo identification, a copy of recent utility bill from home with your address, and a Portuguese fiscal number. Some councils also require proof of funds, health insurance and a respective declaration, where stipulated.

Once you have obtained your residency permit, you need to update your tax status at the tax office from non-resident to resident. Your Fiscal Representative can do this for you as well.

To execute your registration process to completion, you or your Fiscal Representative can request a password - “Senha” - to access your personal affairs with the tax authorities (AT) online portal. For security purposes, the password will be posted to your new Portuguese address. This postal procedure may take time and you must ensure you have a good address (the true street name and house number) so that it is delivered correctly. The “Senha” is essential to provide all personal and Portuguese tax-related transactions in Portugal, from income tax to social security.

NHR

A Non-Habitual Residency (NHR) application has to be submitted no later than the 31st March in the following year after you obtained your Portuguese residency, i.e. your residency permit (civil status) and tax residence (fiscal status) obtained in 2020 should be followed by an NHR application submitted before the 31st March 2021 deadline. A fiscal or legal advisor can check if the NHR status is ideally suited to your circumstances because some of the headline benefits may not work for you.

Once you are established as a resident here in Portugal and have your NHR status set up, the Portuguese tax authorities expect you to submit an annual Tax Return (IRS). This can be daunting at the best of times, especially as it is in another language, and will demand reporting of all overseas income and gains in full. A good fiscal and tax reporting firm will prepare the tax return and provide a simulation before delivering the declaration to the tax authorities (AT).

Carrying out the correct sequence of steps is paramount to a successful outcome which, if not adhered to, could result in complications and errors that no Brexit negotiations will ever fix.

This article is intended to provide a general review of certain topics and its purpose is to inform but NOT to recommend or support any specific course of action.

Raoul Ruiz Martinez is a resident and independent consultant for Finesco Financial Services Ltd., Glasgow and advises clients on private financial matters in both the UK and throughout Europe under the MiFID regulation. Finesco Financial Services Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Some of the services provided are not regulated by the FCA because they are not included within the Financial Services and Markets Act 2000.

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Comments:

As I understand, the UK officially left the European Union on 31 January 2020 and is no longer an EU country. During the transition period until 31 December 2020 the EU rules still apply.
If you are legally resident in Portugal by the end of the transition period on 31 December 2020, you will be able to stay for more than 3 months.

By Annie from Algarve on 16-10-2020 11:37
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