Portugal tax resident under NHR + US LLC

[disagree]

Because it's managed from Malta.

Yes form who/what? If you're resident in Portugal, who is managing the Singapore company from Malta? A Nominee?

 

[Marzio]

A Nominee?

Of course. Malta is full of directors eager to get your money for doing basically nothing

 

[disagree]

Of course. Malta is full of directors eager to get your money for doing basically nothing

Here my question is: ok but with Nominee service, usually you have a contract between you (real UBO) and the lawyer/accountant offering you the Nominee service, that states that is only for privacy and stuff, so it's not a real shareholder or involved with the company operations.

That's why also incorporating a UK LTD (with nominee) + NHR is not totally compliant. As if they check on you, nominee will just show the contract and step back, and you'll be exposed as the effective UBO.

How's the Singapore company resident in Malta solution different from this?

 

[Marzio]

How's the Singapore company resident in Malta solution different from this?

UK LTD with nominee will pay 25% CIT while the SG company resident non domiciled in Malta is tax free. How about that difference to begin with?

The point here is that if you do all the work from Portugal no setup will be compliant.

If they check on you you shoud show proof that you are paying somebody to do some of the work.

The more you pay, the more it will seem real.

You can also hire a nominee director + someone else remotely that will help you for real.

 

[phi303]

Re the US single-member LLC setup (and others)

What happens if the person (EU citizen) has Portugal tax residency and NHR, but travels all year and physically does the associated LLC-billed work outside of Portugal?

Or do you have any thoughts/recommendations in this scenario?

Also, re the Malta, Singapore, Cyprus setups— are any of these feasible / worthwhile if earning $60-$100K? For this lower earning bracket, its the social security in PT that is the kicker, rather than the 20% tax.

Thanks

 

[daniels27]

What happens if the person (EU citizen) has Portugal tax residency and NHR, but travels all year and physically does the associated LLC-billed work outside of Portugal?

Nothing happens until the place where you actually reside finds you. And then it depends on how many days you spent in which country as the rules differ from country to country.

 

[phi303]

Sorry - I should have clarified;

I mean if the person is a Portugal tax resident (with NHR & EU citizenship) but lives a digital nomad life and never spends more than the tax residency criteria durations in each country (mostly <180 days but some exceptions & variations eg UK).

eg a Portugal tax resident with EU citizenship spending 4 months in 3 different countries during 12 months and never doing any of the work whilst being physically present in Portugal.

Thanks

(Updating info via this reply because I could not edit previous reply)

 

[daniels27]

I mean if the person is a Portugal tax resident (with NHR & EU citizenship) but lives a digital nomad life and never spends more than the tax residency criteria durations in each country (mostly <180 days but some exceptions & variations eg UK).

30 days for Switzerland. Watch out.

In this case nothing happens. You can enjoy freedom and be happy.

 

[JackAlabama]

30 days for Switzerland. Watch out.

In this case nothing happens. You can enjoy freedom and be happy.

only if work is being performed there. Otherwise its 90.
https://taxsummaries.pwc.com/switzerland/individual/residence

It can be even 0 with intent to stay

 

[daniels27]

only if work is being performed there. Otherwise its 90.
https://taxsummaries.pwc.com/switzerland/individual/residence

It can be even 0 with intent to stay

Exactly. But in this case, it would be 30 as he plans to work.

 

[phi303]

Thank you @daniels27 — that's pretty tight for Switzerland! I'd def need to look into each individual country but plan would be to ensure stay outside whatever the period / criteria is.

So, essentially, by ensuring no work/management is done on Portuguese soil and bank, phone records as evidence, there is very little risk operating via a single-member (member managed) LLC?

 

[daniels27]

Thank you @daniels27 — that's pretty tight for Switzerland! I'd def need to look into each individual country but plan would be to ensure stay outside whatever the period / criteria is.

You still have the PE risk in any country you stay.

So, essentially, by ensuring no work/management is done on Portuguese soil and bank, phone records as evidence, there is very little risk operating via a single-member (member managed) LLC?

Essentially, we are back at the PT myth discussed elsewhere.

There are risks but in many cases acceptable ones. As @GPT suggests, it would be better using a director and you just being employed. But in general, I am not a fan of stand-alone US LLCs as there are to many inconveniences.

 

[disagree]

Thank you @daniels27 — that's pretty tight for Switzerland! I'd def need to look into each individual country but plan would be to ensure stay outside whatever the period / criteria is.

So, essentially, by ensuring no work/management is done on Portuguese soil and bank, phone records as evidence, there is very little risk operating via a single-member (member managed) LLC?

They give you NHR, yes, but to be considered tax reisdent in portugal you have to stay there for at least 6 months.
If you prove the opposite when they come after you, I don't think that saying the LLC is legit because you didn't work from Portugal because you stayed outside of it for more than 6 months is so smart... it sounds like then you are proving you're not tax resident.

 

[daniels27]

They give you NHR, yes, but to be considered tax reisdent in portugal you have to stay there for at least 6 months.
If you prove the opposite when they come after you, I don't think that saying the LLC is legit because you didn't work from Portugal because you stayed outside of it for more than 6 months is so smart... it sounds like then you are proving you're not tax resident.

Exactly, so you better stay in Portugal for the required time and pay taxes there. But then... in any case that's why @Sols called the PT a myth.

 

[disagree]

in any case that's why @Sols called the PT a myth.

Can you clarify please? What do you mean?

 

[daniels27]

Can you clarify please? What do you mean?

Yes, I can.

What happens if the person (EU citizen) has Portugal tax residency and NHR, but travels all year and physically does the associated LLC-billed work outside of Portugal?

They give you NHR, yes, but to be considered tax reisdent in portugal you have to stay there for at least 6 months.

In short, you can chose. Either you are in Portugal and pay tax there. If not, you better not get caught elsewhere as you cannot claim tax residency in Portygal.

 

[JustAnotherNomad]

Haven't read the whole thread. I know a guy who's in Portugal as an NHR. He runs a US LLC as a disregarded entity.
He told me there has been a court ruling that such income shall be treated as dividends in Portugal, so no tax under NHR.

PE etc. is not enforced by Portugal, at least for now. Honestly that seems unlikely to change, especially with the NHR program closed.

 

[phi303]

They give you NHR, yes, but to be considered tax reisdent in portugal you have to stay there for at least 6 months.
If you prove the opposite when they come after you, I don't think that saying the LLC is legit because you didn't work from Portugal because you stayed outside of it for more than 6 months is so smart... it sounds like then you are proving you're not tax resident.

In my situation as a EU citizen, need to stay for 6+ months or have a residence - own a home / long term rental. I think there are maybe different rules for visas.

The 20% tax is OK and sounds good, but it’s flat rate across everything (no 0% / progressive allowance) and the social security is high (but capped) so NHR has little advantage over many other locations unless you’re a high earner or have income from the various 0% sources.

Haven't read the whole thread. I know a guy who's in Portugal as an NHR. He runs a US LLC as a disregarded entity.
He told me there has been a court ruling that such income shall be treated as dividends in Portugal, so no tax under NHR.

PE etc. is not enforced by Portugal, at least for now. Honestly that seems unlikely to change, especially with the NHR program closed.

Sounds interesting. Is it quite clear cut? Was the ruling for a single-member LLC / disregarded entity?

Re PE
I’ve heard this a lot but would prefer to play safer if possible. With digital/remote work I can’t seem to find a clear cut answer about PE eg is it based on tax residency location or the physical location when work is being done.

Just looking into the (legal!) options for maximising NHR when a modest-ish earner.

 

[JustAnotherNomad]

In my situation as a EU citizen, need to stay for 6+ months or have a residence - own a home / long term rental. I think there are maybe different rules for visas.

Yes, you would usually rent a place there for the whole year.
But NHR is over now anyway.
I heard they are working on NHR 2.0, but who knows what that will look like...

The 20% tax is OK and sounds good, but it’s flat rate across everything (no 0% / progressive allowance) and the social security is high (but capped) so NHR has little advantage over many other locations unless you’re a high earner or have income from the various 0% sources.

The idea with NHR was that dividends were tax free in most cases.

Sounds interesting. Is it quite clear cut? Was the ruling for a single-member LLC / disregarded entity?

I heard it was a ruling for a SMLLC/disregarded entity, yes.

Re PE
I’ve heard this a lot but would prefer to play safer if possible. With digital/remote work I can’t seem to find a clear cut answer about PE eg is it based on tax residency location or the physical location when work is being done.

As far as I know:
It is about where the work is actually being done, but if you can't show a fixed place where the work is being done, then your tax residency country will claim the place where you live as the "business headquarters".

Just looking into the (legal!) options for maximising NHR when a modest-ish earner.

You can't get in. They don't accept new applications at the moment.

 

[phi303]

Thanks for all the replies @JustAnotherNomad
- I already have the NHR status; just trying to figure out best way to make use of it.

As far as I know:
It is about where the work is actually being done, but if you can't show a fixed place where the work is being done, then your tax residency country will claim the place where you live as the "business headquarters".

Yeah; this is the main piece of info I can't seem to get information or agreement on when it comes to an LLC ie. where there is an offshore business registration in US but the owner is working from several different countries and never the one in which they are an individual tax resident (in this case, Portugal).

I understand that if operating as an individual (not via LLC or company) then the country of tax residency would claim it as being the headquarters, even if no work was ever actually being done within that country.