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DSG – in the pipeline

Tag Archives: france

“NHR” under pressure in France and Portugal

20 Monday Jul 2020

Posted by Ursula in Articles

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france, nhr, portugal, pressure, tax

Beneficiaries of retirement pensions from French sources (excluding public sector retirees) who settled in Portugal before 01 April 2020 may benefit from the Non-Habitual Resident scheme, an attractive tax-free regime for a period of 10 years. This favourable assessment results from a combined application of the double tax treaty concluded between France and Portugal and the  “Non-Habitual Resident” tax regime (“NHR”), established by the Portuguese legislator in 2009.

  • The Franco-Portuguese tax convention provides that Portugal alone has the right to tax French retirement pensions (excluding public pensions) received by a Portuguese resident.
  • Under the “NHR” rules, Portugal grants a total exemption for ten years from taxation of pensions to taxpayers settling in Portugal.

Other Tax Authorities in the European Union are concerned by this situation which they consider to be the subject of aggressive tax competition on the part of Portugal. These criticisms have led to regime changes recently introduced by the 2020 State Budget.

In France, the Tax Authority has expressed its intention to monitor these taxpayers closely. In particular, it considers that a taxpayer who pays no tax in Portugal cannot be classified as a Portuguese fiscal resident within the context of the bilateral tax treaty and therefore cannot benefit from the protection of this agreement. The French Tax Authority intends to rule out the application of the tax treaty and regain its right to tax retirement pensions from French sources.

  • French pension beneficiaries who have declared tax residency in Portugal must indicate that they do not benefit from the protection of the tax treaty. These French nationals must declare their retirement pension in France in addition to other sources of income;
  • or by sending a rectification proposal leading to a tax adjustment in France.

French courts have not yet ruled on the treatment of such “NHR” taxpayers. There is little doubt that the outcome will be controversial between the position of the French tax administration and that of taxpayers. In all in cases, any letters received from the tax authorities should not be left unanswered. The response to be made and the arguments to be put forward (scope of the agreement tax, existence of taxable income provided that it is not fictitious, the effectiveness of the Portuguese residence) must be adapted to each particular situation.

The 2020 Portuguese State Budget entered into force as of 01 April 1 2020. It reformed the tax system of NHR beneficiaries, by introducing, instead of a total exemption, a flat rate assessment at the rate of 10% for a period of 10 years on pensions from foreign sources. More specifically, the 10% rate applies not only to pension income paid as a result of retirement but also to other types of pensions such as income allocated in the event of early retirement, as well as other benefits granted under compulsory social security pension schemes, including amounts paid by the employer on life insurance contracts as well as contributions to pension funds, retirement savings schemes or any complementary Social Security plan. If retirement is also taxable in the source country, Portugal will grant a tax credit which may be deducted from the tax due abroad.

With regard to other types of income (dividends, rental income, etc.), no amendment was introduced in the State Budget. In practice, these changes also concern taxpayers who already benefit from the scheme. “NHR” taxpayers who are resident in Portugal and who have already applied for but who have not yet received a response can choose the application of the new regime to their 2020 income tax return.

An Introduction to Forced (Protected) Heirship

26 Friday Jul 2019

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brussels, civil, common las, cyprus, denmark, eu, forced, france, heirship, ireland, portugal, succession, uk

What is Forced Heirship?

In many Common Law jurisdictions, testators enjoy full freedom to leave their assets to whomever they wish. However, in other countries, this is not the case. Succession laws define given rights for the heirs. Despite the provisions made in a testament, a will can easily be overturned by these protected heirs. This is called Forced Heirship. Continue reading →

Tax burden in Portugal up in 2017

07 Friday Dec 2018

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2017, europe, france, ireland, portugal, tax, taxation, up

Despite an increase of three tenths, Portuguese taxation remained below the European average last year. In Portugal, the weight of taxes reached 40.2% of GDP and in the Euro Zone, 41.4%. France had the heaviest load (48.4%) and Ireland the lightest (23.5%).

Non-Habitual Resident migrants nearly double

26 Wednesday Sep 2018

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foreigners, france, italy, migrant, nhr, non habitual, resident, uk

Non-Habitual Resident migrants nearly double

Improved conditions and generous tax breaks have attracted more foreigners to Portugal in the last year and a half. The increase in the number of Non-Habitual Residents was 83% over the period, currently totalling 23,767 with NHR status. The rise is mainly from France, Italy and the UK. Emigrated Portuguese nationals are also returning but only account for 6% of the total.

France prepares to attack NHR pension exemption

26 Wednesday Sep 2018

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dta, exemption, france, nhr, pension, portugal

Due to a pending change in the French government’s interpretation of domestic law, national migrating pensioners may soon be classified as still being resident for tax purposes in France if they join the Non-Habitual Resident (“NHR”) scheme in Portugal. Under the new reading, the 10-year exemption granted to retirement pensions under NHR creates a double tax waiver that contradicts the application of the Double Taxation Agreement (“DTA”), thereby negating any change in French residency status. To avoid on-going assessment in France, French migrants should establish their “centre of economic interests” in Portugal as well as have other sources of taxable income in Portugal.

 

 

La France se prépare à attaquer l’exonération des pensions de la RNH

Grâce à un changement imminent dans l’interprétation de la législation nationale par le Conseil d’État, les retraités nationaux émigrés au Portugal pourraient bientôt être classés comme étant toujours résidents fiscaux en France s’ils adhèrent au régime de Résident Non Habituel portugais. Selon la nouvelle lecture, l’exonération de dix ans accordée aux pensions de retraite dans le cadre de la RNH crée une dispense fiscale qui contredit l’application de l’accord de double imposition, annulant ainsi toute modification du statut de résident en France. Pour éviter que les évaluations fiscales continuent en France, les migrants français devraient établir leur «centre d’intérêts économiques» au Portugal et disposer d’autres sources de revenus imposables au Portugal.

France with largest tourist accommodation offerings in the EU

23 Thursday Aug 2018

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accommodation, france, ru, tourist, tourist beds

France is the EU country with the highest number of tourist beds available. According to 2016 data collected by the European Statistical Office, the French tourist industry registered 5.1 million beds or 16.4% of the EU total. Italy ranked a close second with 4.9 million beds (15.8%). Spain placed third with 3.5 million beds or 11.2%. Over the same period, Portugal recorded approximately 567,800 tourist accommodations, an increase of 16,100 beds (+3%) when compared to the previous year.

Local Lodging around the EU – a review of recent legislative changes

09 Thursday Nov 2017

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#, al, comparison, europe, france, germany, italy, netherlands, portugal, spain, uk

Holiday Letting has been popping up throughout Europe, especially in the more tourist-oriented countries. We look at what measures are being enacted to regulate this ever-growing phenomenon.

Continue reading →

Local Lodging around the EU – a review of recent legislative changes

24 Thursday Aug 2017

Posted by Ursula in Article

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eu, europe, france, germany, italy, legislation, local lodging, review, spain, uk

Holiday Letting has been popping up throughout Europe, especially in the more tourist-oriented countries. We look at what measures are being enacted to regulate this ever-growing phenomenon. Continue reading →

Portuguese Emigration ranks second in Europe

27 Monday Feb 2017

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emigration, europe, france, germany, portuguese, second, switzerland, uk

Currently, more than 2.3 million Portuguese live abroad or 22% of the population. After Malta, Portugal is the European country with most emigrants. In 2015, the latest year of available statistics, the main destination was the United Kingdom with 32,301 Portuguese entries, followed by France with 18,480, and Switzerland with 12,325.  Moves to Germany numbered 9195 and Angola 6715.

France and Portugal update Double Tax Treaty

31 Wednesday Aug 2016

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bilateral, common reporting standard, double taxation treaty, france, oecd, portugal

France and Portugal have agreed to alter the bilateral tax treaty between the two countries.  The changes reflect the OECD recommendations regarding the exchange of fiscal information under the Common Reporting Standard.

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