Become Portugal tax resident ... pay no tax on US pension income for 10 years?

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dgdevil
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Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by dgdevil »

Is anyone familiar with Portugal's non-habitual resident (NHR) scheme, which gives big tax breaks to tax residents for 10 years? As far as I can tell, withdrawals from IRAs, 401(k)s, etc would be completely tax-free in both countries.

Under the longstanding tax agreement between USA and Portugal, private pension income is taxed only in the country where you are a tax resident (ie 183 days):

1. Subject to the provisions of Article 21 (Government Service):
(a) pensions and other similar remuneration derived and beneficially owned by a
resident of a Contracting State in consideration of past employment shall be taxable only
in that State; and

(b) social security benefits and other public pensions paid by a Contracting State
to a resident of the other Contracting State or a citizen of the United States may be taxed
in the first-mentioned State.

http://www.irs.gov/pub/irs-trty/portugal.pdf

Now the Portuguese have decided (since about 2009) that they won't tax that income for 10 years -- and other forms of income -- provided you fulfill various criteria. (They also give retirement visas quite easily.):

3. Income in category H (pensions) - n.º 6 do art.º 81.º do CIRS
Portuguese non-regular residents that have obtained category H incomes in
foreign countries, have exemption if these incomes
are from contributions that
have not been deducted under Art. n. 2 of Art. 25. of CIRS and if the conditions
below are met:
a) They are taxed by the source State/nation, according to the
convention to eliminate double taxation held by Portugal and the
source State; or
b) They cannot be considered to have been obtained on Portuguese
territory as per Art. 18, paragraph 1 of the CIRS.


http://info.portaldasfinancas.gov.pt/NR ... RNH_EN.pdf

I imagine there's some paperwork, but it can't be too much more taxing than existing FATCA/FINRA requirements. And spending six months each year in low-cost Portugal can't be too aggravating. Anyone got personal experience with this?

Here is one article. There are plenty of others if one googles Portugal and NHR.

http://www.alpromar.com/index.php/compo ... tax-scheme
euroman
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by euroman »

I did look into into it, as I am considering to take advantage of the NHR scheme myself.

My understanding of the NHR scheme is that it works as follows (I write this from an EU perspective): all income categories that MAY be taxed by the source country according to the tax treaty Portugal has with this country, will not be taxed by Portugal.
The trick the NHR scheme uses to make it attractive is that although when the source country is allowed to tax it according to the tax treaty, in practice the source country often does not tax it, and than Portugal doesn't tax it either (example are dividends).

But any income category that is not taxed in the source country according to the tax treaty but falls within the Portuguese tax jurisdiction, will be taxed in Portugal according to their tax system (but here the NHR scheme can differ from what ordinary residents pay for certain income).

As tax treaties often use a standard OECD layout (but not always!), the NHR scheme in practice usually means:

- pension,interest and dividend payments not taxed in Portugal

- but capital gains are taxed in Portugal (28%) because the tax treaty usually assigns this to country of residence

But you need to check the tax treaties between Portugal and the source countries for each income category to be sure. Investment funds often use a tax friendly jurisdiction in the EU like Ireland, therefore for investments domiciled in Ireland, you need to check the tax treaty between Portugal and Ireland (and in this case interest and dividends will be tax free).
111
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by 111 »

Interesting. I'm living in Portugal right now and, though I'm moving this summer, it is definitely on the list of places I will consider retiring to in like 20years.
euroman
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by euroman »

111 wrote:Interesting. I'm living in Portugal right now and, though I'm moving this summer, it is definitely on the list of places I will consider retiring to in like 20years.
If you are or have been resident in Portugal, you are not allowed anymore to use the NHR scheme.
Topic Author
dgdevil
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by dgdevil »

euroman wrote:
111 wrote:Interesting. I'm living in Portugal right now and, though I'm moving this summer, it is definitely on the list of places I will consider retiring to in like 20years.
If you are or have been resident in Portugal, you are not allowed anymore to use the NHR scheme.
111 will be OK after 5 years, no?
euroman
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by euroman »

dgdevil wrote:Is anyone familiar with Portugal's non-habitual resident (NHR) scheme, which gives big tax breaks to tax residents for 10 years? As far as I can tell, withdrawals from IRAs, 401(k)s, etc would be completely tax-free in both countries.

Under the longstanding tax agreement between USA and Portugal, private pension income is taxed only in the country where you are a tax resident (ie 183 days):

1. Subject to the provisions of Article 21 (Government Service):
(a) pensions and other similar remuneration derived and beneficially owned by a
resident of a Contracting State in consideration of past employment shall be taxable only
in that State; and

(b) social security benefits and other public pensions paid by a Contracting State
to a resident of the other Contracting State or a citizen of the United States may be taxed
in the first-mentioned State.

Disclaimer: I am not a tax specialist, therefore I cannot guarantee the following is correct:

this quote from the tax treaty between Portugal and USA is interesting, as it gives two examples of what in my understanding will and will not be taxed in Portugal:

- as pension income is assigned to Portugal, it will be taxed in portugal (unless maybe NHR scheme has special rules for treating pensions)
- as social security and public pensions MAY be taxed in USA, Portugal will not tax it. If it's tax free or not depends on how the USA deals with social security for non residents.

I found it quite confusing to determine of certain income is tax free or not. I wondered why Portugal did choose this complicated way to decide if it will be tax free or not, and not simply made everything tax free. I think they want to avoid to be called a tax haven.
If any other country complains about this scheme, they can always counter that the country can tax the income for the non-resident themselves if they would want to (for example in the case of dividends).

For anyone interested in the NHR scheme, I recommend reading this download:
http://www.nonhabitualresident.com/download.html
TedSwippet
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

dgdevil wrote:...
1. Subject to the provisions of Article 21 (Government Service):
(a) pensions and other similar remuneration derived and beneficially owned by a resident of a Contracting State in consideration of past employment shall be taxable only in that State; and
...
http://www.irs.gov/pub/irs-trty/portugal.pdf
The quote you've include above is from Article 20, paragraph 1 of the US/Portugal treaty. However, if you read on you will find this under the section entitled PROTOCOL:
1. With reference to Article 1 (Personal Scope):
...
(b) Notwithstanding any provision of the Convention except paragraph (c) of this provision, a Contracting State may tax its residents (as determined under Article 4 (Residence)), and the United States may tax its citizens, as if the Convention had not come into effect.
...
(c) The provisions of the preceding subparagraph (b) shall not affect:
(i) the benefits conferred by a Contracting State under paragraph 2 of Article 9 (Associated Enterprises), under paragraphs 1(b) and 4 of Article 20 (Pensions, Annuities, Alimony, and Child Support), and under Articles 25 (Relief From Double Taxation), 26 (Non-Discrimination), and 27 (Mutual Agreement Procedure); and
(ii) the benefits conferred by a Contracting State under Articles 21 (Government Service), 22 (Teachers and Researchers), 23 (Students and Trainees), and 29 (Diplomatic Agents and Consular Officers), upon individuals who are neither citizens of, nor have immigrant status in, that State.
Paragraph 1(b) of the Protocol is infamous US treaty 'savings clause' that generally denies treaty benefits to US citizens living outside the US.

On my reading, and assuming you are a US citizen, your 401k and/or IRA withdrawals would still be taxable to the US because Article 20, paragraph 1(a) is not an exception to the savings clause. Note though that I too am an amateur at reading tax treaties, so you should not treat my interpretation as definitive.

(As it turns out, as a non-US citizen holding a 401k from time spent working in the US, I had already been exploring this option for myself. I'm a few years out from 59.5, so who knows what the rules will be by then, but I'm compiling a list of possibilities. Portugal may work well for me for both my US and UK retirement withdrawals ...)
Topic Author
dgdevil
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by dgdevil »

Same boat as you. In this case is there a distinction between US citizen and US tax resident?
TedSwippet
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

dgdevil wrote:Same boat as you. In this case is there a distinction between US citizen and US tax resident?
By 'US tax resident' you mean green card holder?

Possibly. The US/Portugal and US/UK treaties differ on this in an interesting way. For the UK -- the one with which I'm most familiar -- the savings clause explicitly ropes green card holders into the category of 'US citizen'. The Portugal treaty does not, but only mentions 'US citizens'. Under US tax laws (at least when it comes to obligations; not so much with rights) green card holders are usually synonymous with citizens, but the Portugal treaty seems explicit here.

Wonkish. And interpreting tax treaties correctly is a black art, so the above may be entirely bogus.
Last edited by TedSwippet on Tue May 19, 2015 5:34 am, edited 1 time in total.
Topic Author
dgdevil
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by dgdevil »

This is why Deloittes, KPMG charge the outrageous bucks. Anyway, if this becomes commonplace, it is less incentive to do Roth conversions.
TedSwippet
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

...and I've just remembered this, which may hole the plan below the waterline for a green card holder too. At least if they intend to remain a green card holder.

Taking tax treaty benefits while a green card holder classifies you as a non-resident for that year, and this endangers the green card. If it is considered revoked because of non-residence -- relatively likely for a year or two, and I would imagine highly likely for ten -- this not only loses the green card but also raises the spectre of the execrable 877A expatriation tax.
If you are a long-term resident and you claim treaty benefits as a resident of another country pursuant to a tax treaty, you may be subject to the expatriation tax. Please refer to the expatriation tax provisions in Publication 519, U.S. Tax Guide for Aliens, and in later questions.
http://www.irs.gov/Individuals/Internat ... ardHolders
As a non-US citizen and already a non-green card holder though, it might still work for me.
111
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by 111 »

euroman wrote:
111 wrote:Interesting. I'm living in Portugal right now and, though I'm moving this summer, it is definitely on the list of places I will consider retiring to in like 20years.
If you are or have been resident in Portugal, you are not allowed anymore to use the NHR scheme.
Well, that would suck. But, I'm not sure if it applies in my case or not as I am a diplomat. I live here, but I'm not really a "resident".
Alicja415
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by Alicja415 »

Everywhere on the internet, I can find discussion of the NHR scheme with regard to pensions and social security income.
I am in a different boat and can't seem to find that information anywhere. The treaty is very obtuse.

My husband and I are considering moving to Portugal from the US because our employer is about to give us both the option of working remotely.
We are college professors and most of the recent growth has been online. However, this does not fall into a special category here are we would not be doing any teaching in Portugal of Portuguese students, nor are we doing anything relating to intellectual property of our colleges.

In any case, we have both US and EU citizenship. When we looked at moving back to his home country (Poland), that treaty suggested that all of our income (despite being paid in the US) would be such that Poland would be considered our "tax home" and we would have to pay very large income tax, as well as huge self-employment taxes, more than doubling the income taxes we currently pay in the US.

So, we are considering the NHR scheme in Portugal. Would I have to pay taxes in the US, from income, or would I be exempt for 10 years?
Since, in theory, the US can tax my income tax...
The Double Taxation parts and the US taxation on worldwide income, with a $100k or so exemption, are throwing wrenches into my calculations. The exemption is especially tricky.
TedSwippet
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

Alicja415 wrote: Wed Feb 21, 2018 11:29 pmIn any case, we have both US and EU citizenship. When we looked at moving back to his home country (Poland), that treaty suggested that all of our income (despite being paid in the US) would be such that Poland would be considered our "tax home" and we would have to pay very large income tax, as well as huge self-employment taxes, more than doubling the income taxes we currently pay in the US.
You should not generally get fully double-taxed, either with or without a treaty, at least on ordinary income. The primary taxing rights would go to your country of residence, and you would take either the 'foreign earned income exclusion' or a 'foreign tax credit' for any tax paid to that country before paying anything to the US. In almost every case this results in no US tax owing.

There are definitely odd cases where some double-tax can occur. For example the NIIT is not creditable under any treaty. And while it is not full double-tax, the US generally ignores other countries' tax-advantaged savings accounts, some pension accounts, and any completely tax-free gains in sale of personal residence, so there are certainly areas where US citizens living outside the US may still find themselves with punishing and painful US tax liabilities.

If however you are just saying that Polish income tax rates are double what you would pay if you stayed in the US... possible I suppose (I haven't looked), but while many countries have higher tax rates than the US, they are not normally more than double. So I suspect you may have your wires crossed here somehow; not sure, though.
Alicja415 wrote: Wed Feb 21, 2018 11:29 pmSo, we are considering the NHR scheme in Portugal. Would I have to pay taxes in the US, from income, or would I be exempt for 10 years? Since, in theory, the US can tax my income tax... The Double Taxation parts and the US taxation on worldwide income, with a $100k or so exemption, are throwing wrenches into my calculations. The exemption is especially tricky.
As long as you remain US citizens you would not get any 10 year exemption from US taxes, but I think you should still be able to use the $100k FEIE.

That's a question best answered by a US citizen living outside the US, though. Not really me, then. I'm a non-US citizen not living in the US.
lynneny
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by lynneny »

I was considering retiring to Portugal (but have decided to go with Mexico) and read about Portugal's exclusion of U.S. pension and social security income for the first 10 years of residence in Portugal.

But I'm 61, and plan to take social security at 70, so by the time I could take advantage of the exclusion, the 10-year period would be almost up, and I'd only benefit for a year or two. And most of my social security will likely be taxable in the U.S., so not sure how much I would have saved anyway (when you're working, you can use the Foreign Earned Income Exclusion to avoid U.S. taxes on your first $100,000 in income, but that only applies to earned income. Retirement income isn't eligible for the FEIE.
TedSwippet
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

lynneny wrote: Fri Feb 23, 2018 11:57 pmI was considering retiring to Portugal (but have decided to go with Mexico) ... Retirement income isn't eligible for the FEIE.
Indeed. This is an unfortunate consequence of US citizenship. Other nationalities can take advantage of Portugal's (and any other countries') attractive deals for retiree pensions. US citizens cannot.
don.camillo
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by don.camillo »

Has anyone looked into the treatment of deferred compensation payments (under the 30% withholding imposed as a qualified deferred compensation for covered expatriates) und der NHR scheme? Would those be taxed in Portugal as well at time of payment and under which rate, the NHR rate of 20% or the regular rates?
TedSwippet
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

don.camillo wrote: Mon Mar 12, 2018 10:05 amHas anyone looked into the treatment of deferred compensation payments (under the 30% withholding imposed as a qualified deferred compensation for covered expatriates) ...
Covered expatriate. Ouch. This vicious law is the reason I am no longer a US resident.

My understanding of it is that the 30% is the US withholding rate but (perhaps?) not the final US tax rate, IRC Section 877A(d)(3)(B)(ii). For 401k plans I could not find anywhere in 877A where the appalling expatriation rules alter any US tax that would finally be due (with the caveat below about overriding US tax treaties in effect). I could easily have missed something in this rat's nest of legislation, though.

Section 877A does apparently violate many treaties for IRAs and other 'ineligible' deferred compensation items, as well as 401ks. On a 401ks it appears to lead to you paying the higher of the US or local rate on withdrawals by overriding treaty clauses that would otherwise reserve exclusive tax rights to the country of residence; the actual outcome would depend on whether you live in a country with higher or lower taxes than the US. On IRAs and other deferred compensation, it can lead directly to double-tax on retirement savings. It is a horrifying tax law.

Short answer is, then, don't know and can only guess, sorry. If you do uncover how this would actually work I would be grateful if you could pass on your findings.
don.camillo
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by don.camillo »

I think I read that as a covered expatriate you have to instruct the party holding the deferred compensation to withhold 30% at time of Distribution and you have to sign for not applying for any relief under any treaty in effect at that time. Failing to do either would result into mark-to-market taxation of the deferred compensation at time of expatriation.

My key question though is how does the NHR scheme look at deferred compensation? Is that regarded as part of the taxable income in Portugal at time of distribution and if yes at what rate is it taxed? the 20% flat rate or the regular rates?
treller
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by treller »

I have a question about renouncing US citizenship to avoid US tax if I moved to Portugal under the NHR program.

My Wife is a US citizen so after 8-10 years we would likely move back to the US which would be college time for our kids. I assume I can then apply for US citizenship or easily become a green card holder as my Wife and children were born in the US (I was born in the UK and became a US citizen approx. 5 years ago).

I have a lot of assets in my name (house, rental properties and substantial 401K & Roth IRAs) although we have been filing taxes jointly.

Thanks
T
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rterickson
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by rterickson »

I would suggest consulting both a tax attorney and an immigration attorney before embarking on this scheme. You might end up still owing US taxes and not be able to visit again, much less re-establish citizenship.

https://travel.state.gov/content/travel ... broad.html
TedSwippet
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

treller wrote: Wed Aug 01, 2018 6:57 pmMy Wife is a US citizen so after 8-10 years we would likely move back to the US which would be college time for our kids. I assume I can then apply for US citizenship or easily become a green card holder as my Wife and children were born in the US (I was born in the UK and became a US citizen approx. 5 years ago).
In theory, if you renounce US citizenship and then later re-apply for US residency you run the same immigration gauntlet as any other non-resident alien, something it sounds like you have already experienced. With a US citizen spouse you might be in a relatively good position, then.

Practice may follow theory, but it's not guaranteed. You will be at the mercy of a consular officer, and the one assigned to your case might take a dim view of earlier renunciation. A few higher-profile renunciants have reported issues with getting US visas after renouncing. Who knows what changes in immigration law the US might come up with in the decade or so that you are outside the US. And there is always the possibility that the US could change tax law to your disadvantage, for example with something like Ex-PATRIOT:
The Ex-PATRIOT Act was a proposed United States federal law to raise taxes and impose entry bans on certain former citizens and departing permanent residents. The law would automatically classify all people who relinquished U.S. citizenship or permanent residence in the decade prior to the law's passage or any future year as having "tax avoidance intent" if they met certain asset or tax liability thresholds or had failed to file any required federal tax forms within the preceding five years.
If US citizenship is precious to you, probably best to avoid renouncing as there are no guarantees you can later reclaim it. Otherwise, if you can tolerate the possibility that you might be unable to go back to the US to live, the tax saving could be worthwhile.

All part and parcel of the 'joy' of the US's near-unique citizenship-based taxation regime, I'm afraid.
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Lieutenant.Columbo
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by Lieutenant.Columbo »

TedSwippet wrote: Thu Aug 02, 2018 3:11 pmAll part and parcel of the 'joy' of the US's near-unique citizenship-based taxation regime, I'm afraid.
TedSwippet,
I apologize if the answer to this question can be found in the replies above, but I kind got overwhelmed with the different scenarios that have been discussed.
Is there any tax-related advantage in Not becoming a US citizen for a EU citizen currently a US lawful permanent resident married to a US citizen, if the couple planned on living retirement in the EU/Portugal/Spain?
Thank you.
Lt. Columbo: Well, what do you know. Here I am talking with some of the smartest people in the world, and I didn't even notice!
TedSwippet
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

Lieutenant.Columbo wrote: Thu Aug 02, 2018 3:29 pmIs there any tax-related advantage in Not becoming a US citizen for a EU citizen currently a US lawful permanent resident married to a US citizen, if the couple planned on living retirement in the EU/Portugal/Spain?
Green card holders are taxed the same as US citizens, so worldwide no matter where they live. In that sense, a green card holder gets all the same US tax disadvantages as a citizen.

Where things differ is on the 'stickiness' of the status. A US citizen is a citizen for life or until renunciation. Renouncing costs $2,350 currently, and since it was raised from $0 to $450 in 2010 to $2,350 in 2015, this trajectory suggests it might move higher still. On renouncing, the ex-US citizen has to navigate the potential for a confiscatory US 'exit tax'.

In contrast, a green card holder can (at least, at the moment) surrender the green card and return to pure non-resident alien status for $0 in fees. However, if not residing in the US but also not surrendered the green card, the status lapses into a sort of limbo after a couple of years, so that it may be invalid for immigration purposes but still a tax burden -- that is, full-on US tax responsibilities but with no actionable right to live in the US any more. Clearly this is problematic not just for the individual but also under conventional international law, but that's the reality unfortunately.

A long-term green card holder would also have to navigate the US's execrable 'exit tax', so the motivation here if one is to leave, is to do so before hitting the asset or income limits or before becoming a long-term resident. That would be eight years, but could be as few as six as the IRS counts years in perverse ways.

If you genuinely will leave the US and never return after retiring, avoiding US citizenship and getting out before becoming a 'covered' expat under the horrible 'exit tax' rules will probably give you the better tax result. You -- but not your wife, unless she also renounces -- will then be free to invest in EU-based mutual funds, use local non-US tax advantaged savings vehicles, hold and sell property without tangling with US capital gains taxes, and generally operate unmolested by the IRS.

As a married couple however, you will then have to watch out for US estate and gift tax issues where money passes from your US citizen wife to you as a non-resident alien. The limits here before US estate and gift tax issues arise are much lower than for transfers to a US citizen. One clear way of mitigating this if you are sure you will not return is for your wife to renounce her US citizenship once in the EU, provided she has or can gain a non-US citizenship, that is.

No impact on US social security payments. These are paid to non-resident aliens with enough credits in the same way as citizens. Private pensions such as an IRA or 401k should also be drawable, although there can be a level of hassle here -- some providers are known not to properly apply tax treaty rates, leaving you with a mess that has to be cleaned up by filing a 1040NR tax return annually with the IRS, an onerous chore you would generally hope to never have to do again once you have disconnected from the US bureaucracy.

Dealing with US taxes as non-US citizens is a minefield. You will want to be sure of your future plans before taking any action that cannot be easily reversed. If I were in your shoes, I would probably not apply for US citizenship. All you are missing out on is a vote, and as compensation for that you get a free pass out of any jury duty. If you later decide to stay in the US forever you can become a citizen then. Otherwise, it will be much easier to lose the green card status if you decide instead to live out your lives outside the US.
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Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by Valuethinker »

TedSwippet wrote: Mon May 18, 2015 3:53 pm
dgdevil wrote:...
1. Subject to the provisions of Article 21 (Government Service):
(a) pensions and other similar remuneration derived and beneficially owned by a resident of a Contracting State in consideration of past employment shall be taxable only in that State; and
...
http://www.irs.gov/pub/irs-trty/portugal.pdf
The quote you've include above is from Article 20, paragraph 1 of the US/Portugal treaty. However, if you read on you will find this under the section entitled PROTOCOL:
1. With reference to Article 1 (Personal Scope):
...
(b) Notwithstanding any provision of the Convention except paragraph (c) of this provision, a Contracting State may tax its residents (as determined under Article 4 (Residence)), and the United States may tax its citizens, as if the Convention had not come into effect.
...
(c) The provisions of the preceding subparagraph (b) shall not affect:
(i) the benefits conferred by a Contracting State under paragraph 2 of Article 9 (Associated Enterprises), under paragraphs 1(b) and 4 of Article 20 (Pensions, Annuities, Alimony, and Child Support), and under Articles 25 (Relief From Double Taxation), 26 (Non-Discrimination), and 27 (Mutual Agreement Procedure); and
(ii) the benefits conferred by a Contracting State under Articles 21 (Government Service), 22 (Teachers and Researchers), 23 (Students and Trainees), and 29 (Diplomatic Agents and Consular Officers), upon individuals who are neither citizens of, nor have immigrant status in, that State.
Paragraph 1(b) of the Protocol is infamous US treaty 'savings clause' that generally denies treaty benefits to US citizens living outside the US.

On my reading, and assuming you are a US citizen, your 401k and/or IRA withdrawals would still be taxable to the US because Article 20, paragraph 1(a) is not an exception to the savings clause. Note though that I too am an amateur at reading tax treaties, so you should not treat my interpretation as definitive.

(As it turns out, as a non-US citizen holding a 401k from time spent working in the US, I had already been exploring this option for myself. I'm a few years out from 59.5, so who knows what the rules will be by then, but I'm compiling a list of possibilities. Portugal may work well for me for both my US and UK retirement withdrawals ...)
Do you have any reassurance ANY European country will want aging Brits w their healthcare bills post Brexit?

I always thought that was a little issue that the likes of Farage (who has admitted to applying for German citizenship for his children) were nicely omitting.

If you are going to go, go now, or get Irish citizenship if eligible. Or German or whatever.

Canada and Australia restrict British migrants over 40 don't see why the EU member states will not? After all to get Jersey residence you need *loads* of money.
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Location: UK

Re: Become Portugal tax resident ... pay no tax on US pension income for 10 years?

Post by TedSwippet »

Valuethinker wrote: Fri Aug 03, 2018 5:43 pm
TedSwippet wrote: Mon May 18, 2015 3:53 pm (As it turns out, as a non-US citizen holding a 401k from time spent working in the US, I had already been exploring this option for myself. I'm a few years out from 59.5, so who knows what the rules will be by then, but I'm compiling a list of possibilities. Portugal may work well for me for both my US and UK retirement withdrawals ...)
Do you have any reassurance ANY European country will want aging Brits w their healthcare bills post Brexit?
Not much. As you can see, I wrote this well before the Brexit vote.

A country might aim policy at importing ageing foreigners as an alternative to exporting healthcare professionals. I am now looking further afield than Europe. If I am going to encounter immigration paperwork and bureaucracy anyway, I might as well. SE Asia looks particularly interesting.
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