Question Capital Gains Tax for NHRs in Portugal, holding companies, CFCs,

[JacekBiskup]

I will be moving to Portugal and becoming an NHR.

I have both listed shares and shares in private companies that I established decades ago which unless I do something will become subject to Portuguese capital gains tax at 28% if I ever sell them.

I was wondering what I can do before leaving the country I am current tax resident in, (Poland) and settling down in Portugal.
For the shares in listed companies it seems as if they are dividend stocks in countries that don't tax dividends at source like Singapore UK, and Croatia, then I won't pay tax on the dividends. ButI will be hit by 28% CGT if I need to raise money and sell them.

I wonder if I should sell the shares on the day I get NHR status in Portugal (so before I make any additional Capital Gain post arrival), and then buy them again, so as to "rebase" the point from which Portuguese CGT is levied?

For the shares in private companies which are mostly in Poland, I'll pay withholding tax on dividends in Poland, and pay no extra tax under NHR rules n Portugal.

but if I sell the private companies in Poland I'll be hit by 28% tax which would suck as I will have already paid tax on Polish capital gains due to the exit tax.

I was wondering if it is possible to somehow move the shares into a holding company before I arrive in Portugal where I would be CGT taxed if I sold them - but not very much. Are there any countries where CGT is at source under DTT with Portugal.
Normally - under most double taxation agreements - I would pay the CGT in Portugal apparently.
Or is there any way I could postpone the moment I pay the CGT until I actually receive the money by transferring my shares into a holding company. Either in a low tax country, or even in Poland. I'm no expert in controlled foreign companies, but it looks like if I owned the holding company or was its ultimate beneficial owner then I would be taxed in Portugal exactly the same as if I owned them directly.

I'm new to this forum so I am not sure how it work. If anyone here has experience of helping entrepreneurs who have businesses and capital prepare for their move to Portugal as an NHR to address capital gains tax after arrival I am interested, might become a client.

Thanks

 

[CyprusLawyer101]

It may be possible that you set up a Cyprus company for example, which has no tax on capital gains from the disposal of shares and transfer the shares probably at no tax ( subject to Polish tax laws, DTT and the EU Directives - all these should be assessed) to the Cyprus company. Your tax position in Portugal should be looked at for the application of any CFC rules or other provision that may create tax risks.

 

[Martin Everson]

I wonder if I should sell the shares on the day I get NHR status in Portugal (so before I make any additional Capital Gain post arrival), and then buy them again, so as to "rebase" the point from which Portuguese CGT is levied?

First of all, would the capital gains you could receive in future be worth all the effort in trying to minimize or avoid it? Also your either resident in Portugal or Poland when the sale occurs so CGT will be due on one side. Capital gains usually happens at point of disposal so disposing or moving it into an entity will trigger a capital gains event.

In any case you will have to contend with strong CFC and catch all GAAR rules that Portugal has. NHR is is pointless in such a case as you know. You may just be better of paying the 28% CGT on shares in future. Otherwise seek professional tax advice about seeing if you can move the investments somehow into a Unit Linked Life Assurance policy to get some partial tax exemption. However you may still trigger a capital gains event by moving the asset out of your control .