Are you moving to Madeira as an expat? You’re not the only one. Madeira draws people from all over the world with its stunning views nice weather, and laid-back way of life. The island has long caught the eye of expats, thanks to its tax perks under Portugal’s Non-Habitual Resident (NHR) tax plan. But with the NHR plan ending in 2024, it’s now crucial for expats heading to Madeira to get help from a tax lawyer or certified accountant. To follow the latest rules and make the most of any remaining tax benefits, you need to understand these tax changes. Here’s why new and recent expats in Madeira should talk to a tax expert:
1. Understanding the Changes: The Phase-Out of the NHR Regime
The NHR tax regime has an impact on expats moving to Madeira. It gave them a chance to enjoy big tax cuts for up to ten years. But this is ending in 2024. Still, expats who already have NHR status or fit the grandfathering rules can keep these benefits.
If you’re planning to move to Madeira and want to qualify under what’s left of the NHR framework, you need to act now. Get in touch with a tax lawyer or certified accountant right away. These experts can check if you’re eligible under the grandfathering rules. They can help you apply before the regime ends. They can also explain how these changes will affect your taxes in the long run.
2. Getting to Grips with Portugal’s Updated Tax Rules
Once the NHR program stops taking new applicants after 2024, foreigners moving to Madeira will have to deal with Portugal’s regular tax system. Portugal taxes its residents on all their income from around the world, including money earned in other countries. This can be tricky for foreigners if they get money from different places, like pensions, dividends, or rental properties.
A tax expert or lawyer can help you understand this system. They can explain how your foreign income will be taxed, what tax breaks you might still be able to get, and how to follow all of Portugal’s tax rules.
3. Steering Clear of Paying Taxes Twice After NHR Ends
For expats moving to Madeira, the risk of double taxation has an impact on their financial planning. They might end up paying taxes in both their home country and Portugal. This worry grows stronger with the NHR phase-out. Portugal has signed tax agreements with many countries. Yet, figuring out how these deals work can be tricky.
A tax expert or accountant can look at your case . They’ll check which countries you earn money from or own things in. This helps make sure you’re not overpaying on taxes. These pros can fine-tune your tax setup and use any perks from these agreements to your benefit.
4. Managing Real Estate Transactions and Property Taxes
Buying property in Madeira is many expats’ dream, but they need to understand how taxes affect these investments. Portugal has several taxes related to real estate, like the Municipal Property Transfer Tax (IMT), Stamp Duty, and ongoing property taxes (IMI).
A tax lawyer or accountant can give you advice on the tax responsibilities of buying property, help you structure the purchase to save on taxes, and make sure you follow local tax rules. They can also help you register the property for tax purposes and tell you about possible deductions or exemptions you might qualify for.
5. Business and Investment Opportunities After NHR
Although the NHR program gave individuals tax breaks, Madeira’s International Business Centre (IBC) still has tax perks for companies. If you move to Madeira and want to launch a business or invest, you can still take advantage of the IBC’s lower corporate tax rates.
Getting help from a tax lawyer or certified accountant will make it easier to understand the business tax setup after NHR. These experts can guide you through applying, help you set up your business to save on taxes, and make sure you follow all the rules.
6. Estate Planning and Inheritance Tax Considerations
Expats think estate planning is crucial if you own property or have big assets in Madeira or other places. Portugal doesn’t charge inheritance tax on close family members, but it’s key to understand Portuguese inheritance laws and how they might affect your estate.
A tax lawyer can guide you through these laws making sure your assets go where you want and letting you know about any taxes your beneficiaries might have to pay. As tax laws change with the end of NHR, estate planning will become even more important for expats who want to protect their wealth.
7. Managing Pensions and Social Security
Understanding how Madeira taxes pensions and social security contributions is crucial for expats retirees. Once the NHR regime ends, Portugal might tax foreign pension income. Portugal has agreements on social security with many countries so your overseas contributions could still count in Portugal.
To clarify how these agreements apply to you, structure your pension income for tax efficiency, and ensure you’re contributing properly to Portuguese social security, consult a certified accountant or tax lawyer.
8. Self-Employment and Freelancing in Madeira
If you work for yourself or do freelance gigs, figuring out Portuguese taxes without the NHR program might be tough. Portugal has its own rules for income from self-employment, including required social security payments and rules about invoices through the Portuguese tax system.
A certified accountant can help you sign up as self-employed, handle your invoices, keep track of what you spend, and follow the latest tax rules. They can also help you find ways to pay less tax by using all the deductions you’re allowed.
9. Penalties for Non-Compliance
As the NHR program winds down, Portugal’s tax officials will keep a closer eye on expats moving to Madeira and other taxpayers to make sure they follow local rules. If you don’t meet your tax duties, you could face big fines, penalties, and legal trouble.
Getting a tax lawyer or certified accountant helps you follow all Portuguese tax laws, including any new rules that come up after NHR ends. This can help you steer clear of expensive penalties and needless worry.
10. Custom Money Advice for Expats Without NHR
After the NHR program ends, foreigners moving to Madeira will need more specialized money advice to handle their taxes well. Dealing with income from other countries changing money, and planning for retirement might get trickier without the big perks the program used to offer.
Tax experts who have worked with people from other countries can give you personal money plans that look at your specific situation. This helps you to still make smart tax choices and keep your money safe.
12. Keeping Up with Tax Law Changes
As the NHR program goes away Portuguese tax laws will keep changing. For people from other countries, it’s important to stay in the know about these changes. This helps you to follow the rules and make sure your tax plan still works well.
A tax lawyer or certified accountant keeps track of these changes. They make sure you know the latest rules and give you advice on changes you need to make in your money plans.
14. Wealth Protection and Long-Term Tax Planning
Without the NHR’s tax perks, people moving to Madeira must look into other ways to protect their wealth and plan for taxes in the long run. A tax expert can help you change how you set up your assets, income, and investments. This helps to lower your tax bills while following the law.
With advice made just for you, you can keep growing your wealth and plan for a stable financial future even as the tax scene in Madeira shifts.
15. Peace of Mind Amid Uncertainty
Relocating to a foreign country is already complicated, and the end of the NHR program adds more confusion about tax and legal duties. Hiring a tax lawyer or certified accountant gives you peace of mind. You’ll know experts who understand Portuguese law inside and out are handling your taxes.
16. Overcoming Language and Cultural Hurdles
Madeira attracts many expats, but the language gap can still cause problems with legal and tax issues. Non-Portuguese speakers often struggle to understand Portuguese tax papers, messages from officials, and legal terms.
A tax expert in your area who speaks both Portuguese and English can help close this gap. They’ll make sure you get all the details and steer clear of mix-ups or mistakes.
FAQs
1. Is it too late to apply for NHR status in 2024?
New applications for NHR status will end in 2024, but if you qualify under the grandfathering rules, you may still be able to apply. It’s essential to consult a tax lawyer or certified accountant to see if you meet the eligibility criteria.
2. Can I still benefit from tax breaks after NHR is phased out?
While the NHR regime will no longer be available, there may still be other tax planning opportunities, such as Madeira’s International Business Centre (IBC). A tax professional can help you explore these options.
3. How can I avoid double taxation now that NHR is ending?
Double taxation treaties between Portugal and other countries remain in effect even after the NHR phase-out. A tax lawyer or accountant can help you understand how these treaties apply to your situation and reduce your tax liability.
4. What are the tax implications of buying property in Madeira post-NHR?
Property taxes, such as IMT and IMI, will still apply, but a tax lawyer or certified accountant can help you understand and manage these obligations effectively.
The information in this article on “Madeira Tax Rate” is for general informational purposes only and is not intended to constitute legal advice. While every effort has been made to ensure the accuracy of the content, laws and legal procedures can change, and the specifics of each case can vary widely. Therefore, readers are advised to consult a qualified professional or attorney in Portugal for advice tailored to their circumstances before taking action. This article does not create an attorney-client relationship between the reader, the authors, or the publishers. The authors and publishers are not liable for any actions taken or not taken based on the content of this article.
Catarina graduated in Law in 2021 from the Faculty of Law of the University of Coimbra. She has been a member of the Bar since 2023.
