Guide to Survival, Travel, Entrepreneurship, Investment and International Taxation Online Business, Taxes and Financial Freedom for Beginners

By Ethan L. Sterling, Ph.D.

has never been so economical and profitable to move, travel and take advantage of foreign opportunities.
The Internet has changed the rules of the game and now the lack of information is the biggest obstacle to INTERNATIONAL FREEDOM.
That's why you have this guide: to learn how the world works, which are the best countries to start a business and to live happily. In this book you will discover useful and curious data that will broaden your horizons.
The countries that will no longer have SECRETS for you are:
Portugal.
Romania.
United Kingdom.
Andorra.
Malta.
Cyprus.
Jersey.
Estonia.
Georgia.
Ireland.
Isle of Man.
Nicaragua.
Panama.
Paraguay.
Cayman Islands.
British Virgin Islands.
Jamaica.
Costa Rica.
Curaçao.
Bahamas.
Barbados.
Bermuda.
Chile.
Mexico.
Uruguay.
Dominican Republic.
Argentina.
Guatemala.
Malaysia.
United Arab Emirates.
Hong Kong.
Philippines.
Singapore.
Thailand.
Seychelles.
Get your copy now and eliminate any border!

• Language: English
• Publisher: Handbook for Entrepreneurs and Investors
• Release date: Jan 15, 2024
• ISBN: 9798224467570

Book preview

Portugal

Colors: A green stripe on the left,

a red stripe on the right, a coat of arms

red with white and yellow details and

blue on a yellow circle.

Portugal is a country with most of its territory in the Iberian Peninsula, the southwest of Europe, surrounded by Spain and the Atlantic Ocean. It also has two archipelagos: Azores and Madeira. The latter is particularly interesting from a fiscal point of view.

Its official language is Portuguese and its currency is the euro. It is part of the European Union and the Schengen area.

Taxation

Worldwide taxation for residents: all income, both domestic and foreign, is taxed. And territorial taxation for non-residents: you only pay for what is generated in Portuguese territory.

It is a very interesting country, from a tax point of view, as a bridge country (the one you use to leave the tax residence of your country of origin before becoming a perpetual tourist and lacking tax residence, it is appropriate because it is not considered a tax haven and that can save you complications), for retired pensioners (you are taxed at 10%), to bank profits from crypto assets (Portugal has been favorable to cryptocurrencies and their sale is not considered capital gain as long as you have kept them for more than one year), and for entrepreneurs with businesses abroad that can benefit from the NHR (even temporarily).

The income tax is called Imposto sobre o Rendimento das Pessoas Singulares (IRS). For residents it is progressive and ranges from 14.5% for those earning below 7112 taxable euros per year to 58% for those above 80,822 (2023 data).

The IRS for non-residents is a flat rate of 25%.

There are certain deductions If you are married the total income is divided in two to determine which bracket each one is in. You can file jointly.

There is a solidarity tax that applies for incomes over 80 thousand euros at 2.5% and for incomes over 250 thousand euros at 5%.

There is no inheritance tax or gift or inheritance tax when the relationship is direct: between parents and children or partner (either spouse or civil union).

What you are charged is the tax on legal acts: if it is a natural person 10%; for legal persons 21% (plus possible surcharges).

It is mandatory to contribute to the Social Security (SS) if you work in the national territory, you will do it with a percentage of the salary, 23.75% for the employers and 11% for the employees. The employer is responsible for making the withholding and paying it before the 20th of the following month. If you are self-employed, you must also contribute a percentage of your income.

Investment income, interest and dividends (from companies resident in Portugal) are subject to a withholding tax of 25%.

If you earn money from rentals, these have a withholding tax of 25%. Royalties have a 16.5% withholding tax.

If you sell real estate the profits will be taxed in your income tax and you will also have to assume municipal taxes (Impuesto Municipal sobre Transmisiones Inmobiliarias or IMT), although you may be exempt if you have an authorized company.

You can find complete and updated information on the Portuguese government website: portugal.global.pt, in the section on the tax system, under Investing in Portugal (https://www.portugalglobal.pt/ES/InvertirenPortugal/Sistema%20Fiscal/Paginas/ImpuestoMunicipalTransmisionesInmobiliariasIMT.aspx).

The Non-Habitual Residents (NHR) program is a special regime available to foreigners who have not been taxed in the country for the last five years for a maximum of 10 years. To be granted it you must prove to be someone of high value to the country (see below for more information) and you will have a flat tax (IRS) of 20% on your net income.

In addition, you can get a tax exemption for certain economic activities, rents, capital gains, copyrights, investments... In principle only if that income has been taxed (or is likely to have been taxed) in a country with which there is an agreement (CDI), or that complies with the tax model of the Organization for Economic Cooperation and Development (OECD). In other words: the money does not come from a tax haven or from Portuguese soil.

The NHR does not exempt you from SS payments.

Madeira: is an archipelago located almost a thousand kilometers from Lisbon. The Madeira Free Zone has interesting Madeira benefits for companies: you would only pay a maximum of 5% tax on the profit. This makes it very interesting, taking into account the Portuguese CDI, to have a holding company (i.e. a company owns other companies, which are known as subsidiaries).

The requirements are 75 thousand euros in assets and at least one employee who, if you have tax residence in Madeira, could be yourself.

It is a very attractive option for entrepreneurs looking to relocate, as is the Canary Islands Special Zone: warm, touristic, safe islands where the quality of life is relatively very high. Although the latter requires a higher investment and more employees.

Since 1986, when Portugal joined the European Union (EU), this territory gave rise to what we know as the Madeira International Business Center (MIBC).

This status is periodically renewed, currently approved until 2027. It includes, in addition to the aforementioned corporate tax of only 5%, in some cases, dividends are tax exempt. Double taxation (DTA) and investment treaties signed by Portugal apply. Capital gains are not taxed as long as the assets have been held for more than twelve months. This fact has become famous for its attractiveness to banks in fiat money (euros) money coming from the blockchain of some cryptocurrency.

Nor will you have to pay if you want to sell a subsidiary company or in the payments that the company makes to its shareholders. It is not considered a tax haven. It is not in any of the international lists. You will have a VAT number from the first moment, so it is a good option to operate within the EU.

Portugal has totalization agreements (recognition of Social Security contributions) with Andorra, Angola, Argentina, Australia, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Cape Verde, Chile, Croatia, Cyprus, Denmark, Estonia, Finland, France, Germany, Greece, Guinea, Hungary, Iceland, India, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Morocco, Mozambique, Netherlands, Norway, Polynesia, Polynesia, Poland, Portugal, Slovenia, Slovakia, Spain, Sweden, Switzerland, United Kingdom, United States, Greece, Guinea, Hungary, Iceland, India, Ireland, Channel Islands, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Moldova, Morocco, Mozambique, Netherlands, Norway, Polynesia, Quebec, Philippines, Romania, Sao Tome and Principe, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tunisia, Turkey, Ukraine, United Kingdom, United States, Uruguay and Venezuela.

Also double tax treaties (DTAs): Algeria, Algeria, Andorra, Angola, Austria, Bahrain, Barbados, Belgium, Bulgaria, Canada, Cape Verde, Colombia, Côte d'Ivoire, Croatia, Cuba, Chile, China, Cyprus, Cyprus, Denmark, Estonia, Ethiopia, Finland, France, Georgia, Germany, Greece, Guinea-Bissau, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Ireland, Slovakia, Slovenia, Spain, United Arab Emirates, United States, Israel, Italy, Japan, Kuwait, Latvia, Lithuania, Luxembourg, Macau, Malta, Mexico, Moldova, Montenegro, Morocco, Mozambique, Netherlands, Norway, Oman, Pakistan, Panama, Peru, Polynesia, Qatar, Romania, Russia, San Marino, Sao Tome and Principe, Senegal, Singapore, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, East Timor, Tunisia, Turkey, Ukraine, United Kingdom, United States, Uruguay, Venezuela and Vietnam.

Residency and passport

If you are a non-EU citizen (from outside the European Union) you may need a visa to enter the country for business or as a tourist, this is the so-called short-stay visa (vistos de curta duraçao), which allows a maximum of 90 days in the country and does not entitle you to work.

There are a number of countries that are part of the Visa Waiver Program, they do not need this document to enter, but your stay cannot exceed 90 days in a period of 180 days. Check depending on which country you have a passport from.

If you want a residence visa you will have to apply for it. This is different depending on whether you are going to be self-employed, employed or if you are going to invest. Let's look at each case.

If you are going to work as an employee, it is your employer who must make the application. Portugal applies the EU Blue Card Directive, so if you have one of the professionals regulated in the agreement or prove a higher qualification, you will be able to get it.

For investors there was the Portuguese Golden Visa, which allowed people to obtain a residence permit with an investment of 450 thousand euros, but since March 2023 it is no longer available. This permit, in force since 2012, served almost twenty thousand people, mostly from Brazil, USA and China (from where more than half of them come from). They will only renew those visas that are linked to a home that serves as the first residence of the owners, of their children, or as a permanent rental.

The Portuguese socialist government has decided to stop offering it, along with other measures such as limiting licenses for tourist apartments (which proliferated with Airbnb) to try to control the rental market.

The attraction of the wealthy population (compared to the national population) raised prices drastically, making Lisbon one of the cities with the most expensive rents in 2022, above Madrid, Barcelona or Milan. The working population had to move to the outskirts (this process is known as gentrification).

This new legislation contains two benefits for landlords: taxes on profits will be lowered (gradually over the next few years) and, in case of delinquency (tenants who do not pay), the State will assume the rent payments and possible eviction.

Too late to become a resident? No, just take into account the facilities that exist outside of the nerve centers, where there is abundant and empty housing, sometimes in need of renovation, but that is something that the government has put its hand to: imposed the forced rental of those unoccupied (understood as there is no one at least one hundred days a year, although excepting the cases of emigrants, those who are away for health or professional reasons, second homes and enterprises with low occupancy)), the municipality rents it to the owners (at the price they consider fair) and rents them back.

We will see how you can do it step by step, but first take into account other considerations.

A non-EU citizen who wants to stay with his family in Portugal must request special visas for them from the consulates or embassies of their countries. It is a visa made for these cases of family reunification (visto de residencia para efeitos de reagrupamento familiar).

The NHR or non-habitual residence is a program that attracts a lot of attention, although sometimes there is confusion. First of all, to apply for it you will have to have a European Union passport or have previously obtained residency in Portugal.

To get the NHR you need to have one of the professions of interest in Portugal, this requirement is not difficult to fulfill, you should check if your occupation qualifies you or, if not, become one of those professionals, one way to do it is to open a company in the country (or abroad) and be, therefore, executive director. one of the professions of interest.

It is also necessary that you have an experience at your disposal in Portuguese territory.

It does not require a minimum length of stay in Portugal, but you must have your residence (previously) in one of the countries on the white list of the European Union.

Do you want to qualify for the NHR? According to the Table of high value-added activities for the purposes of Article 72 (10) and Article 81 (5) of the Tax Code.

I - Professional activities (CPP codes):

112 - Chief executive officer and executive director, companies

12 - Managers of administrative and commercial services

13 - Production and specialized services managers

14 - Managers of hotels, restaurants, commerce and other services

21 - Specialists in physics, mathematics, engineering and related techniques

221 - Physicians

2261 - Doctors of Dentistry and Stomatology

231 - University professors

25 - Specialists in information and communication technologies (ICT)

264 - Authors, journalists and linguists

265 - Artists, creators and performers

31 - Technicians and intermediate-level professions in science and engineering

35 - Information and Communication Technology Technicians

61 - Market-oriented skilled workers in agriculture and livestock farming

61 - Market-oriented skilled workers in agriculture and livestock farming

62 - Skilled market-oriented forestry, fishing and hunting workers

7 - Skilled workers in