Case studies
The effectiveness of the programme can be illustrated through a number of case studies that are based on actual clients who have successfully obtained the NHR status.
Charles, a UK tax resident approaching the age of 55, will soon be able to draw down on a private pension from the investment bank based in the UK in which he previously worked. He also has the option of rolling over part of this pension into an annuity and wishes to set up a company in Portugal to conduct his further professional activity.
Charles applies for the NHR programme and receives a reply within two months. Given the terms of the double-taxation agreement between Portugal and the UK, and the definition of ‘pension’ for the purposes of Portuguese law, he will receive both his pension income and his annuity payments tax-free.
If he were to appoint nominee director(s) to the company, he could receive any salary payments at a flat rate of 20%, provided he is considered as ‘upper management’.
Desmond is resident outside the UK and approaching retirement age. He wishes to draw down on 100% of his UK occupational pension and transfer it to a Qrops.
He is, however, concerned about the tax implications. He applies for NHR and is successful in 2014 so that, when he draws down on his occupational pension, he is registered as NHR. When he delivers his tax return in May 2015, he declares the full amount of drawdown as ‘pension’ within the separate NHR section.
In August, he receives a notification from the Portuguese tax department showing all of his pension income is exempt and there is no tax to pay.
Martin is tax resident and working in the Middle East and exempt from any tax. He wishes to return to Europe and to live off his investments until he retires in 2020. His investments consist of interest from bank account deposits, dividends and some royalties in jurisdictions that are not considered as tax havens by Portugal. His pension is based in Jersey, which is still considered a tax haven in Portugal.
In Martin’s case he will not be taxed in Portugal on his income from interest, dividends and royalties, although there may be withholding tax in the source jurisdictions. Neither will he be taxed in Portugal when he starts to receive his pension in 2020.
