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DSG – in the pipeline

Tag Archives: british

Residency Rules and the Withdrawal Agreement – Frequently Asked Questions

19 Tuesday Jan 2021

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brexit, british, portugal, residency, rules, uk

The Withdrawal Agreement provides for citizens rights upon the UK’s withdrawal from the EU. The following are some FAQ’s based on policy set by SEF (Serviço de Estrangeiros e Fronteiras).

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Residency Registration for British Nationals

14 Monday Dec 2020

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brexit, british, citizens, portugal, uk

Even in the year of the pandemic, many British nationals continue to seek out Portugal as a popular destination. The UK government has multiplied notices to UK citizens who reside in Portugal to have their documentation in order by 31 December. Currently, there are more than 50,000 British nationals residing in Portugal, ranking Portugal in sixth place behind Spain, Ireland, France, Germany and Italy. Official data in 2019 from the Portuguese Immigration and Borders Service (SEF) indicated there were 34,358 UK citizens officially residents in Portugal. SEF officials explain that from January to October 2020, a further 6,469 new Residency Permits were issued to UK nationals for a total of 40,827 current residents. Since 2016, the year of the Brexit referendum, 19,384 Britons registered in Portugal. Up until last October, the increase reached 111%.

The British embassy in Lisbon recognises that there are, in fact, many more Britons living in Portugal than the official figures would indicate. By the end of the year, many more are expected to register officially with SEF. What is certain is that now all will have to deal with the new bureaucracy necessary to remain in the country in January 2021 and beyond. At this point, the embassy also does not have definitive record of the number of British nationals who have already completed all the necessary steps.

Portuguese bureaucracy

At the top of the concerns of the British in Portugal are upcoming changes. One of the reasons for the aggressive advertising campaign to ask British citizens to take care of all necessary documentation is also due to Portuguese bureaucracy. There may be delays in scheduling services as well as problems in accessing services due to the pandemic. The embassy clarifies that Portugal does not oblige UK nationals to apply for a new residency status according to the current agreement. However, as there are many who are still unregistered, it is important that everyone needs to become compliant to protect their rights after the transition period at the end of December. In October, the embassy, in partnership with SEF, launched a joint campaign asking the British living in Portugal to register where they reside by the end of the year.

Driving licences 

You can drive in Portugal with a UK driving licence until it expires. You must register your address in Portugal with IMT services within 60 days of settling in Portugal. The IMT online (Instituto da Mobilidade e dos Transportes – IMT) allows for the exchange of a UK licence for a Portuguese one. Even if you are unable to affect the exchange immediately, British citizens have 90 days after 1 January, so no road test should be necessary.

Healthcare

Another concern is access to the Portuguese National Health System. Coverage may be dependent on your residency status. If British nationals are registered as residents in Portugal, they should have full access to the  Portuguese National Health Service (Serviço Nacional de Saúde, SNS).

Passports

British embassies are no longer involved if a passport expires. Renewal is now carried out online. The embassy warns that British citizens living in Portugal that they must have a valid passport after 1 January 2021.

Implementation

The British Government has posted a dedicated website called “Living in Portugal” (gov.uk/livinginportugal or sef.pt/en). The embassy indicates that the Portuguese Government is responsible for implementing the Exit Agreement. British citizens are accountable for ensuring that they have their documentation in order before the end of the transition period.

Brexit to cut 100,000 British Holidaymakers to Portugal

16 Monday Dec 2019

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2020, brexit, british, cut, portugal, tourists

In all, Brexit is set to cancel eight million tourists travelling in 2021. In Spain alone, there should be 1.3 million fewer UK nationals travelling according to projections of the European Travel Commission. Without a Brexit agreement, British travel should fall by 7% by 2020 and 8% the following year.

Americans compensate for the loss of British tourists

20 Wednesday Feb 2019

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american, british, loss, portugal, tourists

Last year, fewer British holidaymakers chose Portugal as a tourist destination, less 111,667 than in 2017. Despite the drop, the overall number of foreign tourists grew by 0.4% last year, enough to reach a new record high at 12.76 million. This increase was mostly due to a 20% jump in American tourism, accounting for an additional 135,000 US visitors in 2018.

Tourists spending more money

26 Wednesday Sep 2018

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british, french, german, money, portugal, spending, tourist

In the first six months of 2018, holidaymakers in Portugal spent almost 7 billion euros, corresponding to 38 million euros per day. The figures represent an increase of 14% as compared to the same period last year. In the first half of 2018, Portugal received 9.6 million visitors. British, German and French continue to be the primary national groups to visit the country.

Working for a UK company in Portugal

23 Thursday Aug 2018

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brexit, british, employee, freelance, portugal, resident, social security, uk, work

A common situation arises where a UK employee wishes to continue to receive a salary from a British-based company but would prefer to provide the services virtually via the internet while residing in Portugal.

Unfortunately, there are significant obstacles to this type of arrangement:

  1. As an employee of a UK-based company, you cannot enrol nor make contributions to Social Security (National Insurance) in Portugal.
  2. If you continue to declare as a UK resident but, in fact, are living and working in Portugal, you will fail to meet the criteria of the UK Statutory Residency test requirements.
  3. To be employed by your UK company in Portugal, the Company would need to set up a subsidiary or branch office in Portugal. While this is possible, the process involves both initial start-up costs as well as ongoing overhead to the Company. This solution is unlikely to be cost effective for just one employee.
  4. Once a branch office is in place, Portuguese personal income tax (“IRS”) on a modest salary (€35,000) would be ±25%. In contrast, as a freelancer in Portugal, taxation on a similar amount would be just ±5% in year one, ±7.5% in year 2 and ±10% after that.
  5. Post Brexit (March 2019?), requirements could become more complicated. While not even insider political negotiators know how Brexit will turn out, there is no reason to expect anything less than a more complex state of affairs for UK individuals wishing to work abroad.

Working as a PT freelance contractor to the UK Company

The best solution to the dilemma is to be a Portuguese-based freelancer, contracting with the UK Company, rather than continuing to work as a UK salaried employee. By being registered as providing “other support services” from Portugal, you will be assessed on just 35% of your gross invoicing to the Company under the Portuguese “Simplified Regime”. Social Security deductions will be made on a similar reduced basis. As already mentioned above, the final tax due should be substantially lower.

The Company should also find this arrangement to be advantageous by eliminating UK National Insurance obligations, thereby lowering overhead. Payment of freelancer invoices can continue to be made to the sole trader’s local UK bank account if so desired.

The Company hires on a project-by-project basis; the freelancer earns more; the Company lowers risk. Shifting to an independent worker status based in Portugal can create a win-win situation for all concerned.

Brexit leads to decline in British holidaymakers

24 Thursday Aug 2017

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algarve, brexit, british, decline, holidaymakers

The 15% drop in the Pound after the UK decided to leave the European Union is contributing to a significant reduction in British visitors to the Algarve. In July alone, hotels registered 56,000 fewer English guests than a year earlier. Concern about the impact of Brexit would be even greater were it not for the crisis in Eastern Mediterranean which enhances Portugal’s appeal to other nationalities.

Brexit not stopping British from property purchases in the Algarve

24 Thursday Aug 2017

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alagrve, brexit, british, property, purchase

UK nationals continued to invest heavily in residential real estate in Portugal in 2016. Brits made up the largest group of foreign investors with a 31% share of transactions carried out by non-residents. France (19%) and the Benelux and the Scandinavian countries (17%) were the other two most significant buyers in the Algarve.

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