Portugal NHR 2.0 Tax Program is Not Appealing

[@joricmclean]

Do not confuse the old NHR program with the new one!

[@lucchese20]

Thanks Joric for your clarification. I typically don’t hold my breath for any “breakthroughs” but I appreciate your opinion. 👍🏻

[@joricmclean]

Great to hear from you. I hope you two are doing well!

[@christobar]

Joric, so I'm a software engineer with my own consulting company and I do data integration work. We have a house on Madeira island and are thinking about becoming residents later this year. ITS may work for us, but Madeira itself has tax benefits for technology startups so it could be that I create a company on Madeira and put all expenses through that company and it will result in a significant savings. I have yet to talk in detail with a tax accountant, but I need to do that soon.

[@joricmclean]

That sounds very favorable to you and it will be interesting what you find out when you consult a tax accountant.

[@stevefromthegarden1135]

If I relocate there, I will be in both IT and the stock market. The IT job will be with a US employer, not a local one. I'm guessing that means I wouldn't qualify.

[@christobar]

You'll have to talk to an expert, but I don't know if having a US based employer makes a difference on qualifying for ITS. I'm working for my own consulting company, which at the moment is based in the US. I'll be talking to a tax lawyer soon to figure out how things would work out if we become tax residents (of Madeira Island specifically) and if it makes a difference to choose ITS vs other tax schemes. Some areas have tax benefits for starting up a technology business and you can harvest tax benefits.

[@stevefromthegarden1135]

@@christobar Thanks Chris. I will need to reach out to a Portugal tax person who can provide guidence. I'm thinking I should setup an LLC for the stock market stuff this year.

[@christobar]

Is it clarified that they're looking for people who are getting jobs IN Portugal, to qualify for ITS? Or just someone who is doing that work from Portugal?

[@joricmclean]

I'm not sure that has been clarified.

[@treza007]

Sorry, not related but will you be sharing if your place in Lisbon sold? Hope it did!

[@joricmclean]

Thank you for asking. It took 6 months, but it did!

[@treza007]

Aleluia 🎉 ​@@joricmclean

[@TS-py2fe]

Would you advise someone with aprox $50K in pensions, social security and defered comp to retire in Portugal now? Thoughts on how big of a tax hit?

[@joricmclean]

I would not want to speculate on the tax hit as a tax professional would be the person to give you expert advice. Portugal, outside of Lisbon (due to how expensive Lisbon is) should be within budget. You may be surprised how far your dollar goes in Portugal, even with the old NHR system gone. I would look up the US Portugal Tax Treaty too, and lastly, the taxes you pay in Portugal do get credited on your US return.

[@Solrac-Siul]

As someone that moved in 2009, I will second Joric's words. Outside of Lisbon ,for portuguese standards 50K is quite a decent amount , in truth it is less than what I and my family (we are 4) spend in a normal year. And forgive me I will sound blunt, but unless you plan to be drinking bottles of good quality whiskey and having daily lunches and dinners in michelin grade restaurants, you will find yourself well within budget

[@TS-py2fe]

@@Solrac-Siul Thank you! I know that $50K is more than I'll need. What I'm worried about is how much I'll net after taxes with the new tax structure for D7s.

[@joricmclean]

@@Solrac-SiulVery True!