Spain / Portugal Tax Avoidance (Non Habitual
Tax Resident / Residency)
One of the benefits of this property on the border of Portugal
and Spain is that you can avoid paying taxes! Under the Portuguese
tax regime changes of 2009, foreigners in a large number of professions
(fairly ambiguous and therefore easy enough to qualify) are able
to register as "non-habitual tax residents"; similar to
the so-called Spanish "Beckham's Law" (now nowhere as
advantageous as it used to be, certainly nowhere near as good as
the current Portuguese non-habitual tax residency regime).
Of course, you should contact a specialist tax advisor to be sure
you qualify, what the actual advantages are and that what we say
is correct. But here is a list of the benefits of the Portuguese
tax avoidance regime, as we see them, aligned with other benefits
of living, and being able to work / operate a business 3 minutes
away in Spain from where you live in Portugal.
- You are not taxed on your worldwide earnings as long as those
earnings are subject to taxation in the country in which you earn
them (even if you are not taxed on them; for example UK company
dividends if you are classified by HMRC as non-resident in the
- A reduced income tax rate of 20% for any earnings within Portugal.
- The above benefits last initially for 10 years and currently
can be renewed.
- You are able to do work for your non-Portuguese businesses and
travel to those countries as a non-tax resident business owner
there (of course, as long as you qualify as non-resident in the
- If you operate a business is in Spain, not only can you benefit
from your rights under the double taxation treaty to reduce your
income tax exposure, but you can also benefit from much more preferential
business taxation rates in Spain.
- It can not be stressed enough the enormous benefit of operating
your business in one country at an arm's length to where you are
legally resident in another country.
- You are able to work at home still. EC rules on home workers
/ working allow you to do work for your Spanish company from your
home in Portugal. Go to Spain for morning coffee (superb cafes
in Spain), pop into your business address, come back home to Portugal,
do some work in your home office amongst your family.
- If you operate a limited company in Spain (Sociedad de Responsabilidad
Limitada), which you can do as a foreign national resident outside
to EU / EC law regarding cross border use of company cars,
you are able to buy a Spanish registered car in the Spanish company's
name and yet use it personally in Portugal. This is immensely
beneficial as Portugal has a huge back door tax masquerading as
vehicle registration charges, plus Spanish dealers sell in volume,
so you can get better discounts as well as lower taxes. For example,
a mid range BMW will cost you €14,000 less in Spain than
in Portugal. Not only this, but you can claim half the VAT you
paid on the car back from the Spanish tax man, so the saving becomes
around €16,000 taking that same example. Not only that,
but insurance, fuel and road taxes are normally less in Spain
too! What is more, providing there is no formal agreement between
your (Spanish) limited company and you regarding your private
use of the car, there is no income tax element in Portugal for
having / privately using a company car; it is like having your
cake and eating it too.
- You can sign up for Spanish private health care for your entire
family and as a tax deductible item; Spanish health care is generally
a lot better than in Portugal, while insurance is actually cheaper.
Spanish private health care gives you access to the hospitals
in Vigo, just 25 minutes away. Of course, your Spanish health
care insurance provider should also provide you with cover throughout
the EU, including Portugal.
- Offices / shops / workshops abound for rent just over the border.
In Salvaterra de Miño an office / shop with large workshop
areas in the back will cost from around 200 Euros per month, a
small officer / shop somewhere around 100 Euros. With unemployment
high in Spain yet where the locals have a good work ethic, running
a business and employing someone / a number of people is not expensive.
Spain also actually provides incentives for businesses with apprenticeship