MEREDITH
[ 00:00:05 ] Welcome back, Portugal junkies! Hello, we are so excited to have Hui Borges back today with us. How good is that? I did that name so perfect this time but did she, but did I, did anyway? We're so happy to have Hui back with us um, you guys have heard his voice before or if you've seen him on our YouTube channel. He joined us a couple of months ago; he is our tax advisor here in Portugal who we have trusted since we met him and we are just partnered up now and he keeps joining us on the podcast um to give advice, share his expertise... I say advice quote unquote but it's really today we're going to talk about NHR which I think is probably one of the most Popular tax we find people are interested in because it's a big piece, it was a big draw for a long time of people who were moving to Portugal. There's been a lot of changes, so we thought we would have Hui back on with us. So, welcome Hui. We are so glad that you're here.
RUI
[ 00:01:16 ] Hello, thank you, thank you. Um, it's great to be back here to this space and to share our experience with NRH and with other tax topics. Yes, we are excited to be back here and we are excited to be back here and we are excited to to participate again. We love it, love it!
MEREDITH
[ 00:01:35 ] Well, this is like the second of many, as I promised before, so yeah, I'll just keep having you back on. So, let's start. Off with the baseline question so, this could be for listeners who are familiar with the process and they're just learning the process or they're just very beginner stage of the process of maybe thinking about moving to Portugal. What is NHR?
RUI
[ 00:01:58 ] Well, the NHR is a space for special tax incentives for people who move to Portugal, and there is an initial criteria to be eligible that you should not be tax resident in the past five years so this is a mandatory rule. And this program was launched in 2009 and the main goal was to attract um high-skilled professionals, the idea at that time was to to to bring Portugal to a kind of hub technology. Hub um for for new and attract these new residents, and at the very end it also attracts people who want to retire in Portugal. And in the very beginning, the NHR was so attractive that even patients were not taxed in Portugal, and they were not taxed in Portugal, and they were not at all as they were fun in our patients, they were not taxed at all. And after 2020, uh, tax authorities realized that there were many um taking advantage of this and they introduced a flat rate of 10% uh for these patients for private pensions um but in general what people should know is um NHR gives you some benefits uh on top of the patents being in Portugal. And in Portugal as well, so there are a lot of, of the ones that you can have as a tax resident in Portugal. You can keep deducting some healthcare expenses, education expenses, and additional on top of that, you can have these special tax rates or exemptions.
MEREDITH
[ 00:03:50 ] Awesome, thank you for that. It's like, I wanted to make sure we started off kind of with the baseline of the topic today. So when you think about NHR as it exists today, so we were just talking about it before we hit record basically, about there's been a lot of changes, lots of changes over the years that you just outlined from 2009. And the most recent changes came with the change in government and the budget and all of that jazz, which you can speak to much more eloquently than I can. But what does it look like right now for someone who's thinking about coming over? Can they still qualify? What does it look like in terms of the actual tax benefit and break now as it exists today? Not even when we showed up a year ago. So, what does it look like right now?
RUI
[ 00:04:45 ] Well, right now the point is the new government released an intention of establishing a new NHR that we can talk a bit later, but for those who were already in the process, for those who initiate the process still in 2023, requesting a visa, renting a space here in Portugal, or registering the kids in the school in Portugal. So all these are ways that you can prove that you initiate the process still in 2023, 23. For these people, you can still apply in the old NHR and take advantage of the old NHR. For the new ones, for those who are just moving now in 2024 and they initiate the process this year, for the moment, there is nothing to offer in terms of NHR. There are a lot of misinformation in the internet about this, because in fact, there was released, it was released some new information about the new NHR. In fact, the new NHR, it will not be called as NHR. It will be called as a fiscal incentive for scientific research and innovation. So this will be the new name of the NHR. And, but, yeah. Hard, the first easy um, but the the the main idea is that for those who who are on this I'm a process unstoppable, I'm a process for those who are on this if they can grant the appointment this year, 2024, or if they can grant the the residence permit and and if they can't prove that they initiate the process still in 2023, they can apply for the NHR and be on this program. And the NHR does not give you full exemption of taxes in Portugal, just to be clear about this, that's probably the main misunderstanding, right?
MEREDITH
[ 00:07:16 ] Yeah.
RUI
[ 00:07:16 ] So the the base idea is for professional activities then from Portugal under special conditions meaning, if you perform an high value activity and high value activities if you are a web designer or if you are a design general designer if you are a I. t developer if you are a doctor if you are an engineering all these activities are classified as high value activities and as a high value activity will have a special tax rate but accountant accountant is not an high value activity uh yes to us yeah you're very highly valued yeah but well but a consultant in general a consultant is not considered has an high value activity so this means that this person even coming under this nhr program will not take advantage of the nhr and what common common error also is if you think that a foreigner income will be always exempt this is not correct so it will be exempt as long as the double tax treaty between the two countries uh allowed the source of the the income to tax you for u . s citizens this is much more complex because there is a final protocol clause saying that as long as you are a u . s citizen u . s can always tax you so yeah we're so lucky we're so so lucky so lucky yeah yeah and lucky read not lucky green egg for this right here i was taking a sip i was but this is the idea so as long as the double tax treaty uh allows the the source of income to to to tax you you may take advantage of this and do not be taxed in portugal uh typical cases like a the uh with the with the pc and pknown car keyboard is one that is not included under the this uh printing protocol and so that you only have to pay paid income if you are them that if you are gonna get the rent but you three people and they're clothed together uh meaning that your income will not be taxed anyway and so um so and um so it's kindabilir Each case is one case. We always recommend studying the double tax treaty in order to avoid this general information that sometimes applies to you. But if you are not a citizen of U. S., a U. S. citizen, you may not be taxed at all. So this is something that we need to analyze case by case.
MEREDITH
[ 00:10:17 ] Well, and this is how it was in the U. S. as well for us. And I'm sure many, if you're sitting in the U. S. right now listening to us, you probably can agree that it's always been so confusing. It always feels like the biggest stressful time of the year when you have to file your taxes. And most people, if they have any kind of complication, I'll say, or, you know, you get married, you start to have assets, you have a business, all the above. It becomes even more confusing. And so when we talked about this on our last podcast together, here's the same thing, meaning you need someone to help you because your situation is going to be different than the next person and the next person and the next person. There is no cookie cutter.
MARK
[ 00:11:11 ] When it's time, you know, tax needs me.
MEREDITH
[ 00:11:14 ] I feel like everybody is very individualized, which is why we were so thankful to, you know, get in touch with you, because you've been helping us with our decisions as well. And so I think that's a really good thing to keep in mind for people is that I would be hard pressed to find someone to move to a different country and then just try to wing their own taxes there. So, and again, it's so important as immigrants that we make sure that we are respecting the laws of the land. Right. And you're doing it by the book and you're working with people that are helping you to do that, but also helping you to take advantage of the things that you're legally able to. So I just wanted to say that because I know that we talked about it in our last podcast together, but I think it's such an important point that most people are going to need a tax resource here, an advisor here, if you're going to move here, especially from the United States.
RUI
[ 00:12:16 ] No, but just to add some points on your comment. And we receive clients who are used to do their own taxes with TurboTax. I don't know TurboTax, the color of the screen, but I hear a lot about this TurboTax. And they come here thinking they can do the same in Portugal. Just use a tool and that's it. And in this point, Portugal is not really so friendly because we don't have this kind of tool. On the other side, as I think I mentioned in the last podcast, tax authorities in Portugal are much, much, much more friendly than the U. S. ones, at least from what I see. So, in case that you miss a deadline, you may pay a penalty, of course, but the penalties are: we receive a penalty for someone who files out of the time one month and they pay 25 euros. Okay. It's acceptable. So it's, and we are filing people who forget to file in 2020 and the penalties are really low. So it's not a big deal. Of course, you need to be in compliance. You need to do everything correctly. Otherwise, you will pay the penalties and you will pay the interests from the missing taxes. But it's not really the nightmare that you, that many clients from U. S. mention us.
MEREDITH
[ 00:13:58 ] Yeah, they're not going to come banging down our door.
MARK
[ 00:14:02 ] And so I'll ask a quick question just for clarity. If somebody is sitting in the States now and wants to move, they have started the VFS process of submitting all the paperwork, but do not yet have any visa. And if they do, what's the status of the person who's going to be in the passport or anything like that? What's the status in terms of NHR for that person, whether they were a proper retiree on social security or early retirement or digital nomad, for instance? What does it look like for somebody in that scenario where there was never an intention of, or you can't, you can't see that anything happened in 2023. Everything is 24. And do not have a visa yet. What does it look like?
RUI
[ 00:14:53 ] Well, in terms of NHR, the primary step to initiate the process is to become tax resident. So the NHR is a tax resident with special benefits. And to become a tax resident, you should have, you should spend here in Portugal more than 183 days. Or you must prove that you have a permanent house. In Portugal, and additionally to this, you need to have a residence permit. And this is the most critical point right now, because we have the Heima, the immigration entity in Portugal who is taking a really long time to to to issue this this residence permits. And so, for someone who is on this stage that you mentioned, there is nothing that can be done. And to be on this NHR program, because the first step is to become tax resident. And in order to become tax resident, you need to have a residence permit and a rental agreement or or a deed of acquisition.
MARK
[ 00:16:04 ] I just wanted to try and qualify that because I'm sure there are a lot of people, given what's happening in the States at the minute, and for any other reason, you know, I think I want to get out. And I love the idea of the NHR. But I haven't quite read or quite understood, have listened to a whole load of misinformation. You know, people are marching towards something that's potentially never going to happen for them. For NHR. So I think it's just worth putting that out.
Yeah, yeah.
RUI
[ 00:16:34 ] The idea is for these people who contact us in consulting sessions, our advice or our recommendation is to wait. some more time, a couple of months because we know that there will be released this new NHR because you cannot take any advantage if you move in 2024. You can, you will not take any advantage so if you move in 2025 that we may have additional information about this new NHR what we know so far it will be more oriented to no matter to professional high-value activities, professional activities. So, pensions is something that I we read that it will not be covered by this new regime. So, in case you receive a private pension from us, you may be paying taxes here in Portugal as well and a foreigner source income, income in general it will depend on the double tax treaty again. But for private, for professional activities, this may be an advantage and we, you will keep this flat rate of 20 that is already in place for in the former NHR. And but again there is no advantage to, to initiate the process in 2024 because this new regime will be in 2025. So, it's kind of like 2024 is like this gap year well for 2024 typically the people who are taking it is still uh taking advantage of the 2020 or of the former NHR and because the ones that are now receiving residence permits almost all of them almost yeah initiate the process still in 2020.
MARK
[ 00:18:45 ] Yes, that's because you visit the new ACATH is going to we will be on the fly it's a smooth release widespread the new thought process we will be in 2021 yeah we'll be in the next year or more to provide a live session and meet up with conversation we just finished today and I really want you to make sure you see it on the website and hopefully then on the next Zoom call.
RUI
[ 00:19:15 ] We can share with you, of course.
MEREDITH
[ 00:19:17 ] We'll do that. We'll definitely link to Goal Seek, yeah.
RUI
[ 00:19:20 ] We have to definitely anyway.
MEREDITH
[ 00:19:21 ] So I'm sure that some people are might be on here and they're like, 'Oh, well, I was i was really just gonna try to move over in 20, you know, at the end of this year if they're hearing you say let's wait it out or they've started the process and they're trying to decide when to come all this stuff. Right? What's the bigger picture here because we talked about it on our last podcast together too where it's like this is not the end-all-be-all of whether or not you should move to Portugal, that's what I want to say out loud to people and I don't want it to sound like a completely privileged position but I don't think you should be moving anywhere just because there's some sort of tax break involved, right? Right, so I think a lot of people who might have looked at Portugal as a place to move and maybe even started the process-maybe that was why you started, maybe that was what got your attention. But what do you say to people who might feel a little disappointed or dejected that they're not going to be able to take advantage of what what it used to be, right? That 10% look for a few years, in terms of taxes. What do you what's your response to that?
RUI
[ 00:20:41 ] Um, well I will divide my answer in two parts-the the first one for these people they can start they can move still in 2024 because the process will take so long and typically it might take one year the full process that when they become tax residents it will this will happen already in 2025 and we will have uh the new rules so this should not be the excuse to do not initiate the movement for regarding regarding nhr what i would say is um that when someone reads something about taxes in portugal they read that about 70 000 euros and you will pay 48 percent of in income tax and this is not really because this is not true because we have a progressive tax system this means that each slice of your income will will have each bracket will apply to a different tax rate so the the tax is not so high the final tax amount is not so high and also something that we already mentioned in our previous podcast is the cost of living it's much much lower here because of of these foreigners coming to portugal the the the the houses really increase a lot and we read that lisbon apartment costs the same as in dubai we read things like this but uh but the general cost of living it's much much lower the the groceries the the insurance you can have any health care insurance for 1000 1500 euros per year i mean per year and so into i think all of these should be taken in account to to make the movement and also there there are some non-financial elements like safety like health care system we we don't have a perfect healthcare of course not but it's much much better than many other countries and comparing with us i'm not really able to to make this comparison however uh what i can say it's it's cheaper and it grants that you you have a proper treatment um especially for for important disease we have really oncologic for instance oncologic we we have really good professionals uh we we had a a client uh she mentioned that she was uh treating the the cancer in u . She and she has she, she was doing the the ongoing these ongoing consulting uh with the medical doctors there and these medical consultations were only 15 minutes with each, yeah. And here, and here, the doctor, yeah, and and here, she said, 'Well, I spent one hour and a half with the doctor; he showed me products for my hair; for she, she made she, she did therapy on me also, because giving giving me confidence in order to overcome this showing other successful cases. So all of these, of course, it's not it's a non-material um elements that you should consider finally to to make the movements, I mean, I definitely would agree with that; the times that I've
MARK
[ 00:24:50 ] been to the to the hospital to the doctor you know it's you're not on a clock you're not timed and you're you're actually treated like a human being you know somebody walks in and you're like having a chat and yeah you know it's not come in sit down what's the problem here's the diagnosis off your trot you know it's yeah it's a really good experience it's a really good dealing thank you for that i just wanted to put it in perspective for people because you know i think it can feel like you've missed out on something if you have been in like if you've been researching and you've been following or this has been like a dream that
MEREDITH
[ 00:25:27 ] You haven't really realized yet, sitting in the U. S and thinking about moving, and if you've been clued in to the changes with NHR over the past five years, even it can feel like you missed out or something, and in some ways I guess it is a little bit true right because it's not going to be what it was, it doesn't exist anymore the way it was, and just like in 2009, it didn't, you know what I mean. So I guess I just wanted to put that in perspective because there appear to be some things on the horizon for 2025, but I do think that overall the big picture is, you know, looking at all in, yeah. If you're looking at it from a financial perspective, especially right this is not counting all those lovely things you just described which we're 100 because we've experienced them, but like if you're even just looking at it from a financial perspective it needs to be all in that you're looking at your cost of living where you're going to be, your health insurance costs, all of those things that are so different than in the US. In some cases, so, but let's talk about now. What's the most important thing that you're looking at when you're looking at it from a financial perspective? What can you share with us that's on the horizon for 2025? Is there anything I heard you say a couple times that it's specialized for kind of like high-value, high-tech um talent which I find very very interesting. How for years it was about targeting retirees to come to Portugal right and now it seems like the focus is let's benefit those folks that can bring talents and business and work into the country and incent those people so what else can you share that you know about what it might look like in 2025?
RUI
[ 00:27:20 ] Well, the information that was released, it's not much but uh um the the idea is that there will be a flat rate as in this former NHR of 20. This will apply for for professional activities, not all of your all professional activities. Will be covered by a flat rate. Only 20, only only high-value activities will will have this um this special um tax rate and what we expect is as I said, pensions may be not included anymore on these benefits and the the in general, these are the only elements that we have so far, nothing else, okay, yeah, do we know and this might be a silly question, do we know or is there some sort of pattern of like when we hear updates or is it just, it happens when it happens, it happens, like in terms of like, when you heard this information or when the publish this information um regarding potential for 2025, is it like quarterly, we can expect updates. Or is it not that regular well, but basically the political situation is not stable in Portugal, in terms that we had a social party that was in with the power and then, right now, we have a social democratic uh party; and this means that, right now, we are in the phase of approving the new budget for 2025. Once this budget is approved, and there is no specific point about NHR on this budget so far, once this is approved, we expect that the rules may be released, the new rules for this former NHR, because this was presented in July, this was presented by our economic department, from the government, as one of the ways to increase the competitiveness of Portugal in the economy. So we expect to have the end of this year, beginning of next year, to have new information, but for the moment there is no date to share.
MEREDITH
[ 00:30:12 ] So I will say this, as we wrap up. We love Huy because he has been such a partner to us personally, in terms of our taxes and advising. He owns a company called Goal Seek. And so we're going to link it on the podcast. But before I let you go, can you share with the listeners, what are your top services that you offer people like them at Goal Seek, and how they can find you?
RUI
[ 00:30:48 ] We offer two main services. One are consulting sessions for the ones that are still in the US, and they are looking for more information. And they don't want to relapse. They want to be caught in some wrong forums or Facebook groups. So the first, our primary service is consulting sessions. Then we provide tax filing. So tax return filing. So in case, once the client comes to Portugal, we file the taxes. This gives us both perspectives. From one side, we explain what the client should expect, finally, in taxes in Portugal. And as we are filing as well, the tax returns, we grant that what we said in the very beginning is what he will get it, finally. So basically, these are the two main services that we provide. For those who are already in Portugal and want to take some, to initiate some professional activity, we also support them with advising and also with registration as a freelancer. The typical Schedule C or freelancer activities in Portugal, as long as the activity is performed from Portugal, they should register in Portugal. And they should invoice from Portugal. And we support in the full process with tutorials, how to issue invoices. We file VAT, social security. We also support with social security issues. So all of these topics, we can help the people who is moving to Portugal. The idea is to make it as smooth as possible without surprises.
MEREDITH
[ 00:32:59 ] Right, that's the last thing people need when they're moving to another country.
RUI
[ 00:33:03 ] Yeah, you want to land happy. One more surprise? Oh, something came? Right, not good. And the best way to reach us is the website. The website is perfect place. We share content. It's www. goalseek. pt.
MEREDITH
[ 00:33:23 ] We will link it here for everyone.
RUI
[ 00:33:25 ] Yeah.
MEREDITH
[ 00:33:26 ] We encourage you guys to, if you are interested in having a consultation or you've been wondering about tax questions with this whole situation of potentially moving to Portugal, we highly recommend Joao. We have experienced his professionalism for months now. And so we are happy to put you in touch with him, but there's information on our website as well at PortugalJunkies. com. And of course, GoalSeek. pt, which is where you can find us. This is what Hui just described, but we're just so thankful that you're willing to spend some time with us. And again, I feel like this is probably going to be a common podcast that we have because things change so much, right? And I think it's important that you're kind of our point person on the tax side of things to keep us in the know. If you haven't listened to the prior podcast with Hui, I encourage you to go do that. We talked about a lot there too. At the time, it was very, very helpful to understand more about NHR than I did even then. So if you haven't listened to that, go listen to that one too.
MARK
[ 00:34:37 ] I think if you think you know what you're looking for and you're solely relying on Facebook groups and what you can find on your own on Google, it's not going to serve you well because you're still going to walk away with it thinking, but that doesn't line up with the other. And again, just find some professional advice; finding yourself a professional advisor has been a real sort of saving grace.
MEREDITH
[ 00:35:09 ] It is. So thank you, Hui. We appreciate you coming on today. Thank you, as always. And I'm sure we'll see you soon.
MARK
[ 00:35:16 ] Absolutely. Thank you very much for the opportunity again. No, no problem. Thank you very much. Look forward to seeing you soon.
MEREDITH
[ 00:35:22 ] See you next time.
MARK
[ 00:35:24 ] See you later.
MEREDITH
[ 00:35:25 ] Bye. Listen up future expats for more content about our move, the visa process, Portuguese culture and destinations and tons of support resources for your own decisions and potential move abroad. Follow us on Instagram and TikTok at Portugal Junkies.
MARK
[ 00:35:43 ] Stay in touch and help us reach more people by subscribing here and following us there.
MEREDITH
[ 00:35:49 ] Cheers y'all.