Portugal and Pensions

[Deleted User]

nigelbb wrote: »

The rule that Government pension are taxable in the country of origin seems to be standard in all dual taxation treaties. It only covers those who were directly employed by central or local government so for example the overwhelming majority of those on an NHS pension are NOT classed as Government pensioners. It's only those who were in jobs that moved from the NHS to a local authority who had the option of joining the LGPS but preferred to stay in the NHS pension scheme who are classed as Government pensioners.

The only government pension DTA that I know that isn’t is Cyprus

Johnnyboy11

nigelbb wrote: »

The rule that Government pension are taxable in the country of origin seems to be standard in all dual taxation treaties. It only covers those who were directly employed by central or local government so for example the overwhelming majority of those on an NHS pension are NOT classed as Government pensioners. It's only those who were in jobs that moved from the NHS to a local authority who had the option of joining the LGPS but preferred to stay in the NHS pension scheme who are classed as Government pensioners.

Good point re. NHS pensions. I guess one could always transfer* a LGPS pension fund to a SIPP then retire in Portugal and enjoy it tax-free
* Assuming you can get an IFA to advise in your favour.

bostonerimus

Johnnyboy11 wrote: »

Good point re. NHS pensions. I guess one could always transfer* a LGPS pension fund to a SIPP then retire in Portugal and enjoy it tax-free
* Assuming you can get an IFA to advise in your favour.

I'm not sure that would work as the source of the funds would still be from the UK government. It's dangerous to DIY when it comes to international tax matters and you should take professional advice before doing anything. Even then there could be contradictory opinions.

DairyQueen

Nick_C wrote: »

According to my Portuguese husband, Lisbon is being overrun by French and Chinese ex pats attracted by the tax breaks. Property prices have gone up significantly. As have prices in bars and restaurants. Local people are being priced out of their own country.

Replace 'French' with 'Russian' and this sounds like London. I suspect that the respective Golden Visa schemes may have a part to play in both circumstances.

Nick_C wrote: »

This policy is not popular with ordinary people. The long term consequences have not been thought through. The scheme might last for ten more years. Or it might not.

I'm not surprised that it isn't popular with locals. Tax breaks for foreigners that aren't available to local people is likely to make the heckles rise.

However, and unlike China (no idea about France), the UK is a popular destination for Portuguese workers. This is unlikely to change until Portugal is able to offer the same economic opportunities to workers as the UK, or unless Brexit disrupts the demographic flow of workers to the UK, and of well-heeled retirees (for example) in the other direction.

Let's not forget that the oldies retiring to Portugal are generally well-off. Their spending power benefits the Portuguese economy. Likewise, the tax-take and productivity of Portuguese workers benefits the UK economy. Both countries stand to lose if the status quo is disrupted by Brexit. For Portugal, and for the UK, this reciprocity is not common to all other nations, whether EU or non-EU.

Having said that, the impact of the financial crisis is no longer so acute in Portugal. I wouldn't be a bit surprised if the NHR scheme is ended, or terms changed, in the not-so-distant future.

bostonerimus

Whatever the popularity of the UK with Portuguese workers in the past the falling value of the pound and changing attitudes to foreign workers are going to change things. And there are the political uncertainties surrounding visas and rights to healthcare and pensions to be resolved. These issues of cross border living are going to be similar for UK retirees moving to Portugal. So it will be a while after Brexit when people can seriously answer whether retiring to Portugal is a good idea for a UK OAP.

Johnnyboy11

bostonerimus wrote: »

Whatever the popularity of the UK with Portuguese workers in the past the falling value of the pound and changing attitudes to foreign workers are going to change things. And there are the political uncertainties surrounding visas and rights to healthcare and pensions to be resolved. These issues of cross border living are going to be similar for UK retirees moving to Portugal. So it will be a while after Brexit when people can seriously answer whether retiring to Portugal is a good idea for a UK OAP.

But the Portugal deal isn't just for UK OAPs. For example, a UK couple in their early fifties could reloate to Portugal and take up the Habitual Residency offer, start drawing their UK Pensons tax-free from age 55, and both continue working either in Portugal or elsewhere, as long as they meet the criteria for being resident in Portugal and non-resident in the UK for tax purposes.

bostonerimus

Johnnyboy11 wrote: »

But the Portugal deal isn't just for UK OAPs. For example, a UK couple in their early fifties could reloate to Portugal and take up the Habitual Residency offer, start drawing their UK Pensons tax-free from age 55, and both continue working either in Portugal or elsewhere, as long as they meet the criteria for being resident in Portugal and non-resident in the UK for tax purposes.

The mechanisms for UK citizens moving to EU countries are going to be uncertain for a while. Freedom of movement seems to be in play politically on the UK side and so the EU could counter and UK citizens would have to apply for a residency visa. Yes it might be possible for a UK citizen to retire to Portugal and take advantage of the 10 year NHR tax breaks in Portugal, but the tax rules could easily change and the ease and hurdles for getting the visa are uncertain. If the UK signs up to freedom of movement post Brexit then things could be quite simple.

Nick_C

DairyQueen wrote: »

Let's not forget that the oldies retiring to Portugal are generally well-off. Their spending power benefits the Portuguese economy. Likewise, the tax-take and productivity of Portuguese workers benefits the UK economy. Both countries stand to lose if the status quo is disrupted by Brexit.

Rich foreigners paying no taxes are not helping the Portuguese economy. They are just adding to the increasing cost of living and making a Portugal unaffordable for the Portuguese people.

The National Minimum Wage in Portugal is €3.94 an hour.

It is not only Brits who feel the EU is failing them.

cfw1994

Of course, change may have nothing to do with Brexit etc....I hadn’t clocked that the UK & Portugal share the kudos of having the oldest treaty in the world!
https://en.m.wikipedia.org/wiki/Anglo-Portuguese_Alliance

No wonder we love each other!

chiny

I'm a UK tax resident and have long had a Spanish property, used for a carefully calculated number of days per year to avoid becoming tax resident in Spain. Of course, there are taxes for non-residents in Spain, property taxes and inevitably costs for maintaining the non tax status. But... and I've seen many fail... as well as £/€ investment, you need to emotionally invest in where you live or life will be uncomfortable and more expensive. I rate speaking Spanish and having Spanish friends very highly.

Against this background, I've been thinking of buying on the other side of Iberia for some years, probably in one of the cities north of Lisbon and have spent many happy weeks stomping about. Only once, to an estate agent, did I accidentally mention the 10 year no-tax break and it went down like a lead balloon. Oops. I have to say the Portuguese are wonderful people and I'd be happy to live there.

Several Portuguese nationals have suggested to me that their NHS equivalent is not that good and private is better, although these were more wealthy than the average but not rich. However, if you suddenly keel over in the street, you will be treated properly, without equivocation and certainly without anyone rummaging through your wallet for plastic.

There is a risk of being trapped in one Schengen country, that is, having legal residence in one Schengen country and as a UK national post-Brexit being unable to visit another Schengen country. I'm still mulling that one.