How NOT to be a Portuguese tax resident

[oznomad]

I am based in Australia and looking at second citizenship options in EU. Don't have any spare cash to buy the GV in Portugal so looking at D7 so the clock starts ticking and then switch to GV or something before the D7 comes up for renewal in 2 years from approval.

For various reasons, I'll remain an Australian tax resident for the foreseeable future so really looking for ways to make sure that I won't accidentally end up being a Portuguese tax resident (have some stock options that will trigger tax on Exercise in Portugal but I have some tax structuring in place in Australia)
1. Will be spending less than 183 days in Portugal. I do realize that D7 has minimum stay requirements but willing to risk that
2. With the exception of getting the D7 (which requires a rental agreement and will cancel it as soon the D7 is granted), I will make sure I only ever stay in airbnb style accommodation with contract terms of less than a month

Until recently, I've understood that having a place with the intention to make it a permanent abode will make one deemed to be a tax resident. An accountant I've met recently has said that it's an optional way to get tax residency but won't automatically make me one. Unfortunately I haven't seen much information that backs up that statement. What are the implications of that rule? Does that also mean anyone that gets a GV will automatically become a tax resident and have to apply for NHR?

 

[JamesDonkey]

It's quite simple - just go to Portugal and stay there. The longer - the better. And you'll become a Portuguese tax resident.

 

[Battura]

It sounds like by renting property for the D7 Portugal may consider you tax resident even if you are there for less than 183 days. However this might not matter if you can claim NHR status in Portugal and be subject to 0% tax on foreign capital gains if you're from a non-blacklisted country. You should get advice on whether this applies to your situation.

It may be better to cut ties with Australia first and pay the Aussie exit taxes at the time you leave if your options are likely to increase in value while you live in Portugal. Or delay the move until after you can exercise your options.

 

[oznomad]

Thanks Battura, I believe NHR still taxes capital gains from equity or so the Accountant has said. Really trying to avoid DTA pathway as Australia doesn't have one with Portugal and have to rely on general OECD rules

I am curious though, if owning/renting a property is all that is required to be deemed a tax resident then that implies all GV holders are also tax residents?

 

[Battura]

I'm going off the PWC guidance here which seems pretty clear:

According to the Portuguese tax law in force since January 2015, an individual is deemed to be resident in Portugal for tax purposes if one meets either of the following conditions:

• Spends more than 183 days, consecutive or not, in Portugal in any 12-month period starting or ending in the fiscal year concerned.
• Regardless of spending less than 183 days in Portugal, maintains a residence (i.e. a habitual residence) in Portugal during any day of the period referred above.

The PIT Reform introduced a partial residence concept, so that there is a direct connection between the period of physical presence in Portuguese territory and the status of tax resident.
Thus, as a rule, the taxpayer will become resident in Portugal as of the first day of stay in the Portuguese territory and non-tax resident as of the last day of stay in Portugal, with a few exceptions.

It sounds like you want a habitual residence for the D7 but not for the tax residency. In the letter of the law this doesn't seem possible.

Another guide suggests NHR does not have capital gains tax with non-treaty non-blacklisted countries (like Australia), but I'm neither a lawyer nor a Portuguese accountant.

As an aside - maybe you've looked into this already - many Australians have dual citizenship with EU countries that they are not even aware of. If you have any kind of European ancestry it could be worth looking into. In particular Italy, Greece and Malta have citizenship by descent for several generations.