Schengen visit / tax residency

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rb91134

New member
My wife and I are currently both perpetual travellers. However, my wife (but not me) is somewhat tired of the constant travelling and wants to settle down (at least partially) in Portugal.

Here's a tentative plan we are thinking of:

Next year, my wife plans to become a resident of Portugal and rent a house under her name (and only her name) in Portugal. She is an EU citizen (but not Portuguese - from a different EU country) and so can easily get residency in Portugal.

She will stay in Portugal for around 7 months a year, and travel around the world for the remaining 5 months with me. She will file her income tax returns under the NHR regime of Portugal. However, she doesn't have any significant income or assets in her name, so we aren't that worried about her returns.

I am a citizen of the country of Dominica. I rent a house in the UAE in my name (with an ejari and utility bills) and have a bank account in the UAE.

I will not get permanent residence in Portugal (even though I can under EU family reuinification rules). Instead, I am planning on visiting her in Portugal under the Schengen 90-day rule and stay in the house that she is renting for around 85 - 90 days at a time in every 180 day period. This means a total stay of around 170 - 180 days for me in Portugal every year, broken down into 2 visits of 85 - 90 days each, separated by at least 90 days in between.

I know that I can establish tax residency in Portugal under the NHR regime as well, but am thinking of not doing it because NHR doesn't exempt capital gains and I expect to have a lot of them in the future (not crypto but in stocks, options, etc.) and avoiding capital gains tax may require having to set up trusts etc. which I don't really want to right now.

My question:

Is there a significant risk that Portugal will consider me to be a tax resident of Portugal? Under Portuguese law, an individual becomes a tax resident if they stay for > 183 days in Portugal (which I won't), OR "has a home under circumstances which imply his intention to keep and occupy such abode as his permanent residence". As mentioned, the house that I will be staying in will be rented by my wife (not me) and my 170 - 180 day stay every year in Portugal will not be under a permanent residence permit - it will be a normal Schengen tourist visit. And I will continue to rent a place under my name in the UAE. So is there still a significant risk that Portugal may claim that the house my wife is renting in Portugal is also "a home under circumstances which imply MY intention to keep and occupy such abode as MY permanent residence"?

Just to add to my original post, other than the fact that my wife is living in Portugal for 7 months and I am visiting her for around 170 - 180 days every year, I will have no other ties to Portugal. My wife may have a bank account, may get medical insurance, may join local clubs and social groups etc. in Portugal, but I won't.

My reading of Portuguese tax law is that unlike many other European countries, they don't use a "center of your social life" test. The 2 relevant tests they use are "length of stay in country" and "place of habitual abode". I will clearly not fall under the "length of stay in country" test, so my question is whether the home my wife is renting and where I will be staying for 170 - 180 days per year as a Schengen tourist will be considered my "place of habitual abode".
 
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Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
Such a long post.

My wife and I are currently both perpetual travellers. However, my wife (but not me) is somewhat tired of the constant travelling and wants to settle down (at least partially) in Portugal.

So your wife wants to settle down? She may be giving you a strong hint she wants to start a family? You can't really define what you posted as settling down if a family is on the horizon as you may have children to think about etc. Have you really discussed your long term plans with her? She is probably just being kind to your needs and your searching for middle ground.

It's great you are thinking of solutions that satisfy your tax needs. But look at the bigger picture and work out what is more important - your tax needs or your wifes happiness and need to settle down.

You could have the best of both words if you could maybe just move to Malta and settle there as non-doms. Malta does not tax offshore income and offshore capital gains of non-doms. Even if offshore capital gains is remitted to Malta.


Wish you luck however.
 

zzzzzz

Active Member
In EU countries is usually one more rule, if your family resides there (wife, children) you're automatically tax resident there as you have strong ties.
 

rb91134

New member
@martin - I can confirm that neither of us want kids :) We have both discussed the plan that I laid down in my post and agreed that it is a viable option (since it requires us to stay apart for no more than 1 - 1.5 months a year) and satisfies her needs for feeling a sense of permanence while still getting to travel. So the only question now is the tax question.

Unfortunately, Malta is not an option for quality of life reasons. We've been to Malta and didn't like it.

@zzzzzz - Portugal is not one of those EU countries based on my reading of Portuguese tax law. Portugal applies only 2 criteria: the length of stay test, and the place of habitual abode test. It does not have a center of life test. So my situation boils down to whether the place that my wife is renting solely in her name and treating as her permanent residence would also be considered a place that I intend to treat as my permanent residence.
 

Sols

Staff member
Mentor Group Gold
Is there a significant risk that Portugal will consider me to be a tax resident of Portugal?
The risk isn't zero but it's low.

So is there still a significant risk that Portugal may claim that the house my wife is renting in Portugal is also "a home under circumstances which imply MY intention to keep and occupy such abode as MY permanent residence"?
The tax enforcement culture in Portugal has to change drastically for something like this to happen. That, or you do something to stand out and draw attention from the tax man.
 

rb91134

New member
@Sols - thanks for your response. Yes, I am increasingly coming to the same conclusion based on the research I've done so far - non-zero but fairly low risk.
 

CyprusLawyer101

Mentor Group Gold
There appears to be some risk but you appear to have a solid case in an event of a challenge. Although I have no exposure with the Portuguese Authorities, I would highly doubt that they would come after you unless your ultra wealthy, a PEP or a famous person in which case they have other reasons to come after you.
 
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