Are you considering moving to Portugal from the USA? Are you considering moving to eternal spring Madeira Island from the USA? Then this blog post is for you.
Our team of professionals has written down ten tips you should follow when moving to Portugal from the USA, specifically to Madeira Island.
1. Getting a taxpayer number is your priority
Without obtaining a taxpayer identification number (NIF), you cannot file your residence visa application, open a bank account, rent or buy real estate property. Assuming that the country where you currently reside is outside the European Union or the European Economic Area, you must appoint a tax representative until you effectively relocate to the country (i.e. become a resident for tax purposes).
2. Different visas, different residency requirements
Residence visas, such as the Golden, D7, or Digital Nomad Visa, enable you to reside in Portuguese territory. But distinctions must be made on the number of days you are required to be physically resident in Portugal, depending on the type of visa you have applied for:
- Golden Visa – seven days per year;
- Any other kind of visa – six consecutive months or eight non-consecutive months.
Given the above, applying for any other type of visa other than the Golden Visa triggers Portuguese taxation on your worldwide income. Therefore, we suggest you speak with an internationally experienced tax advisor before applying for a residence visa to understand your potential liabilities in Portugal.
3. Moving to Portugal from the USA starts the embassy
If you are not applying for a Golden visa, your visa application starts in the country where you reside with the respective Portuguese diplomatic mission. In some countries, you can file applications for Portuguese residence online. When applying for a residence visa, our team at MCS can assist you in ensuring that all documentation is in order.
4. Secure a residence
D7 or Digital Nomad Visa applicants must secure a residence in Portugal before application. This means that when applying for these types of visas, you must already have a rental contract (preferably six months or longer and renewable) or have acquired a property.
If you are considering relocation to Madeira Island, our team of real estate lawyers can contact reputable real estate agents who will assist you in finding a property that meets your requirements.
5. Contact a Portuguese tax advisor
Personal tax accountants that are well-known for their knowledge of international taxes should be the choice of expats. It is essential to not only be familiar with the peculiarities of the Portuguese Personal Income Tax but also have a comprehensive awareness of foreign jurisdictions and the ability to communicate with your tax consultant back in your country.
MCS has assisted its private and corporate clients with European and Non-European OECD tax-compliant jurisdictions for more than 25 years. We are, therefore, in a position to assist you with your immigration from a personal income tax standpoint.
6. Income restructuring must occur prior to relocation
If you are considering making the most out of the NHR scheme, your current income structure must be analyzed and adapted before your effective relocation. Depending on its complexity, this process can take anywhere from three months to a year. Involving a Portuguese tax advisor and your US tax advisor is crucial so everything can go as smoothly as possible.
7. Complement your public health insurance
Under Portuguese law, all legal residents in Portugal can apply for the Portuguese National Healthcare System (those living in the Autonomous Regions are entitled to use for the Regional Healthcare System). Notwithstanding the free access to public healthcare in Portugal, in the Autonomous Region of Madeira and the Autonomous Region of the Azores, we always recommend our clients hire private health insurance to complement the public one.
8. Freelancing is bureaucratic but not impossible
If you intend to continue your self-employment/freelancing activity in Portugal (i.e. not through a foreign or Portuguese entity), you must register with the Portuguese Tax and Customs Authority and follow Portuguese rules concerning invoicing.
9. Social Security
Those who are freelancers or employed by a Portuguese entity must make social security contributions based on the income earned. If you are not required under law to make social security contributions, this will not affect your access to free healthcare, and after 12 months of residency, you may apply to make voluntary social security contributions. After 15 years of social security contributions in Portugal, one can apply for old age retirement.
10. Opt for an integrated approach
When dealing with relocation, always opt for an integrated approach by a multidisciplinary team capable of providing relocation advice not only from immigration but also from a taxation standpoint.
At MCS, we can assist you with your tax and immigration matters in Portuguese territory. This article is provided for general information purposes only and is not intended to be, nor should it be construed as, legal or professional advice of any kind. Should you have any questions, please do not hesitate to contact us.
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more