Portugal tax residence

[Alice]

Hello everyone!

Question on tax residence. Suppose the following scenario:

• I have been tax resident in UK and leave before end of tax year in March. (break all ties)
• Then i travel to other countries (April/May/June/July) and generate some income from remote work/selling assets.
• Finally i move to Portugal in August and stay there for 183 days

The guidelines on Portugal tax residence mentions the following requirement:

"Spends more than 183 days, consecutive or not, in Portugal in any 12-month period starting or ending in the fiscal year concerned"

My questions:

• If i stay from August to February in Portugal, i will be tax resident for the current year and the next year. Is that correct?
• Where would the income from the months between UK and Portugal tax residence be taxed?

Many thanks

 

[JustAnotherNomad]

You should talk to a PT tax advisor. If Portugal is your "main home", you are considered tax resident, even if you spend less than 183 days, like in most countries.

 

[Rzeznik]

My questions:

• If i stay from August to February in Portugal, i will be tax resident for the current year and the next year. Is that correct?
• Where would the income from the months between UK and Portugal tax residence be taxed?

In my understanding you should stay 183 days in Portugal in period from 1 jan 2020 to 30 dec 2020 to be tax resident there.
(he Portuguese tax year runs from 1 January to 31 December)
In 2021 you can pay some tax and claim tax certificate that will be needed later for UK.
From day of arrival and eg. renting there home you can start counting changing residency you need to get 183+ day of presence there to be resident in that year.
(I assume at most common laws in EU those are bit harmonized)

Once you have tax certificate then you can claim that later in UK that income arrasing during stay in Portugal is subject to Porugal in case of control and double treaty tests.

Months between UK/Portugal you will be taxed in UK I guess because till day of arrival into Portugal you have not established permanent residence elsewhere where tax treaty will defend you.
(as I explore that matter, later tax certificate will defend you from UK tax man and you changed your tax residency).
Even you move to Portugal you should be aware that in case both countries claim your tax residency you will end up with test those are universal becouse of MLI agreements:
1) Where is your permanent address/home is social life/economy. (was in both countries but was changed)
2) Place where you have spend more time if that was +183 days in Portugal (Portugal won), but be aware that in treaty there is no time involved.
3) Do you often coming back to UK during that tax year from Portugal or later during tax year ?
4) If above tests fails who citzen you are won.

So very important is for UK to show them ties to new place social / economic to lose ties to UK is more important for you that 183days in Portugal, because of substance test you can fail to change tax residency.

PS: My knowledge is based at some studies of tax treaties and common tax laws across EU it can be not perfect but can give you clue.

 

[JustAnotherNomad]

In my understanding you should stay 183 days in Portugal in period from 1 jan 2020 to 30 dec 2020 to be tax resident there.

There is no such requirement from the PT side. As soon as your "main home" is in PT, you are considered tax resident in PT. So if you are no longer a UK tax resident, the tax treaty is not relevant.
Only if you were also considered UK tax resident, it would be good to spend to spend 183+ days in PT, as this would make it clear where your tax residency is. But there are also tie breakers, so spending 183+ days in PT shouldn't even be required in that case.