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Where Taxpayers and Advisers Meet

Working remotely in Portugal for UK company

jaymalone
Posts: 5
Joined: Sat Jul 29, 2017 2:02 pm

Working remotely in Portugal for UK company

Postby jaymalone » Sat Jul 29, 2017 2:18 pm

Hello,

I am in discussions with my (UK) employer about working remotely from Portugal. I am an employee, not a contactor.

The most likely outcome is that I will be a tax resident in Portugal (spending more than 183 days there and having a home) but that I would also be considered a tax resident in the UK under the statutory residency test (spending about 100 days in the UK with accommodation available to me). Looking at the tax treaty between the two countries (with non-expert eyes!) I think that Portugal would win the tie-breaker.

My question is whether I would pay UK income tax or whether it would be left to Portugal, having won the tie-breaker.

I found some material about overseas workday relief on the HMRC website but I'm not sure that it is relevant since it seems to pertain to someone who spends (e.g.) the first half of the year on one place and the second half in another. In my case I will be going backwards and forwards.

Thanks in advance for anyone who can offer advice!

maths
Posts: 7479
Joined: Wed Aug 06, 2008 3:25 pm

Re: Working remotely in Portugal for UK company

Postby maths » Sat Jul 29, 2017 4:48 pm

If you are a British citizen and UK resident and have typically worked in the UK then I'm not sure that you would be treated as Portuguese resident under the DTA tie-breaker test.

However, if this is the case (ie for DTA purposes your are Portuguese resident) you will be exposed to Portuguese tax on (I assume) your total salary from your UK employer.

If you work in the UK for part of the time you will be exposed to UK tax on the salary attributable to the UK duties (and presumably would be able to offset the UK tax against any Portuguese tax on the same part of the salary.

jaymalone
Posts: 5
Joined: Sat Jul 29, 2017 2:02 pm

Re: Working remotely in Portugal for UK company

Postby jaymalone » Sat Jul 29, 2017 9:50 pm

Thanks, that's helpful.

My partner and our son will relocate to Portugal. I'll probably spend more than 50% of my work time there and getting on for 100% of my leisure time there. When I read the relevant section of the treaty I thought that these factors would probably mean that Portugal was my 'centre of vital interest'. But I realise that it's not a straightforward determination.

If Portugal did win the tiebreak, would the UK tax be (roughly speaking): (days worked in the UK/days worked in Portugal)*(UK tax at 100% level)?

maths
Posts: 7479
Joined: Wed Aug 06, 2008 3:25 pm

Re: Working remotely in Portugal for UK company

Postby maths » Sat Jul 29, 2017 10:36 pm

Allocation is on a just and reasonable basis.

Broadly:

gross salary x [uk work days/total number work days in year].

Ludo85
Posts: 1
Joined: Wed May 02, 2018 10:48 pm

Re: Working remotely in Portugal for UK company

Postby Ludo85 » Wed May 02, 2018 11:19 pm

Hello,

@JayMalone can you share your experience since last summer as an employee?

I find myself in a similar situation, altho my current employer is telling me they are now not comfortable with me working remotely in Portugal for tax reasons, so I am now researching my options as a potential contractor via setting up my own limited company in UK or Portugal or potentially as an employee through an umbrella company in the UK.

Before getting onto the tax implications of the various contractor type permutations, @JayMalone can you share your experience since last summer as an employee?

Many thanks in advance.

jaymalone
Posts: 5
Joined: Sat Jul 29, 2017 2:02 pm

Re: Working remotely in Portugal for UK company

Postby jaymalone » Tue Jun 05, 2018 3:40 pm

Hello,

@Ludo85, sorry for the delay in replying. I only just saw your message.

My employer had out tax department look at my case and decided there was pretty much zero risk of me being deemed a 'permanent establishment' in Portugal and so they let me go ahead.

I have made the move and so far it has all gone as smoothly as I could have hoped. Things are very different here from in the UK though and it takes a bit of getting used to. Do you speak Portuguese or have someone close who does? It's a big help with trying to figure it all out!

Cheers,

John

barry_bama
Posts: 1
Joined: Sat Jun 23, 2018 8:17 pm

Re: Working remotely in Portugal for UK company

Postby barry_bama » Sat Jun 23, 2018 8:25 pm

@jaymalone Is registering for tax in Portugal as simple as telling HMRC your new address?
Are there any further steps that your employer had to take regarding your payroll?
Any tips nudges to more information are much appreciated.

Cheers,

Barry

jaymalone
Posts: 5
Joined: Sat Jul 29, 2017 2:02 pm

Re: Working remotely in Portugal for UK company

Postby jaymalone » Tue Jul 24, 2018 5:59 pm

Hello @barry_bama,

I'm still working my way through it but the answer to your question is no, that's not how you become tax resident in Portugal. To register as tax resident in Portugal you first have to visit the town hall where you live and demonstrate that you have adequate financial means and social security to cover yourself (a bank statement and and S1 form, assuming you are covered by UK social security, will do). You then visit the local tax office and register as tax resident.

Note that, if you do this, you will be tax resident in both the UK and Portugal until you notify HMRC that you are resident in Portugal and that you wish to become non-resident in the UK. The implication of this is that both countries will be obliged to tax you. Ultimately you will end up paying no more tax than the maximum of the two countries but I have been advised that this is not a good way to proceed.

stemaher
Posts: 1
Joined: Wed Oct 17, 2018 1:22 pm

Re: Working remotely in Portugal for UK company

Postby stemaher » Wed Oct 17, 2018 1:36 pm

Hi

I am also looking in to this.

My company (UK Based) has agreed to allow me to work remotely from Portugal, my wife been Portuguese which is not always a help...

I will be living in Portugal for most of the time coming back to the office in the UK once every 4 to 6 weeks and will maintain an address here, I would really prefer if I can continue to pay UK tax as the tax in Portugal is significantly higher and would make it difficult to remain.

I attended BLIP last week and spoke with HMRC there who suggested that if the company was Portuguese and I was paying tax via PAYE all he believed I would have to was possibly complete some sort of tax return form proving my salary had been taxed in the UK, however his Portuguese colleague may be able to confirm upon his return...

My wife returned just as I started to speak to him and as his English was not too great my wife took up the conversation ( this is where I thought it was useful), however after coming away I asked what he said, only to find out that they had been speaking about something else...doh!!! not so useful now..

Anyway she has been to the financial department to ask there, but again I feel the granular detail was not discussed and they thought I would be working in Portugal.. So having done a quick search online (as I am currently back in the UK) I am still no wiser... and would welcome others experience.

One thing I did get from the expo in Portimao was a couple of numbers for HMRC who they said would be able to advise more.

With Brexit coming up I am seeking to obtain residency or citizenship which has made this a little more complex.

mw01
Posts: 6
Joined: Tue Dec 18, 2018 5:18 am
Location: Birmingham
Contact:

Re: Working remotely in Portugal for UK company

Postby mw01 » Tue Dec 18, 2018 5:24 am

I will be living in Portugal for most of the time coming back to the office in the UK once every 4 to 6 weeks and will maintain an address here, I would really prefer if I can continue to pay UK tax as the tax in Portugal is significantly higher and would make it difficult to remain.
From what you mention I think you'll struggle to use your UK tax residence - which seems to be what you want.
With Brexit coming up I am seeking to obtain residency or citizenship which has made this a little more complex.
This is where things get confusing. Usually to get residency you need to show a commitment to your new location. I'm not familiar with Portugal's laws, but I suspect they'll want to see you spending a good portion of your year in the country. That may be required once again for citizenship (though marriage may help).


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