Ask the Experts: Must I pay top-up tax in Portugal on my UK home?

The Telegraph – April 2015

Howard Bilton, chairman, The Sovereign Group

Q. I am a UK national resident for tax purposes in Portugal and own a residential property in the UK which is rented out. The tax payable on this property amounts to a rate of 20pc whereas the rate in Portugal would be 28pc. Are the Portuguese tax authorities allowed to charge me the difference of 8pc by way of Portuguese tax?

A. Yes, if you are resident in Portugal you are liable to Portuguese tax first and foremost. Rental income from a UK property is taxed at source in the UK irrespective of tax residency of the property owner so you will first pay tax on the rental income in the UK. You should receive a credit for taxes paid in the UK against taxes due on the same income in Portugal thanks to the tax treaty in place between Portugal and the UK, leaving you only to pay the difference. More…


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