Do you think that is reasonable?
Additionally everyone I know has their own insurance and pays for all of their health bills. And that‘s only for urgent things, planned surgeries are usually done in the home country anyway.
The way you wrote this makes it sound like people only take home €9600 on €80000 and thats rather misleading.
The calculator here shows it's not anywhere near 88% though in most cases: https://investomatica.com/income-tax-calculator/portugal
Income Before Tax 80 000 €
Income Tax - 25 472 €
Solidarity Rate Tax 0 €
Social Security - 8 800 €
Total Tax - 34 272 €
Take Home Pay 45 728 €
Total Deductions - 8 800 €
Average Tax Rate 42,8 %
@binarycrusader: I can‘t reply below. It‘s not 35% but 34,75%. It‘s easy to find that online and this rate is not depending on the person. A foreigner or nomad does by definition not have a Portuguese employer. They have to pay the employer part themselves. It‘s that simple.
@binarycrusader: It‘s mentioned on countless sites related to the NHR and Golden Visa and all of these things. I talked this through with two Portuguese accountants. Is that enough?
What you call the marginal rate is applied to the full salary as far as I know. And the social security is also applied to the full amount unless the person is employed by a Portuguese company that would pay half.
Even the most optimistic tax accountants say around 70% minimum is to be paid with various options applied. That would leave 24.000. Portugal has many loopholes of course, but the idea of the article or OP was that these loopholes are not needed or unfair. While I‘m saying they are needed or otherwise nobody would go there.
Now let me add that many nomads also have to pay into various things from their home countries. While there are double taxation agreements the story on health insurance and retirement funds and social security is much more complicated.
Unless you cut all ties to home you can come out with even less.
So if it's facts, got sources?
https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/c...
The top marginal rate is 48% at 78834 €, so if you earn 80k€, that 48% is applied to 2k. Regular marginal tax rate stuff.
Social Security is separate, just checked my own salary sheet and it's 11% for a regular employee. The employer pays the rest, if you are both employee and the employer you must pay both parts.
This gives you a monthly pay after tax of 3811€ (way above average in the country, which unfortunately is really low)
Leaving around < 2000 net. And as I said that‘s without the mandatory social security problem on foreign income.
However you will need to contribute for at least 15 years before you qualify for a pension, and as you say there are no deductions for private pension plans, so you lose out there.
I suspect you are being 'taken to the cleaners', but not necessarily deliberately by anyone.
1. Nomads are not employed by Portuguese companies.
2. They could give up their home health insurance, but then they cannot remain residents of their home countries where this is mandatory. And since nomads are nomadic they cannot leave Portugal. The insurance would usually only work there.
3. And the retirement fund is the far bigger chunk.
In short, the laws of different countries do not align so the tax deductable things do not align either. This is exactly the reason why the Portuguese government has introduced these measures in the first place.
2. I assume you are talking about Americans? You can't expect tax breaks just because your home country doesn't offer universal healthcare!
3. Indeed private pensions are not tax deductible here, but that doesn't mean taxes are higher, it means they are not less!
The 88% you said sounds more like your actual living expenses, not the tax you pay to the Portuguese government. So don't call it tax, because it is not.
NHR has unfortunately been abused by people who were in fact largely resident here, and the Portuguese are quite right to close the loophole. You want to benefit from Portuguese society? Then you contribute.
So yes, it would be more but it would be doable. While the non-tax issues largely lack these agreements causing more problems.
Of course. By a portuguese company, you say it yourself. The company pays half of the social security.
And 42% only sounds low because that‘s that final tax rate in this example after all deductions. Like in most countries that is often 5-7% lower than the nominal tax rate that we think about and compare.
https://taxsummaries.pwc.com/portugal/individual/taxes-on-pe...
More importantly the social security is applied in full as well and it‘s 11% for the employee and 23% for the employer and if there is no Portuguese employer it‘s 34% on top of the regular taxes.
There are many options to work around this, all legal and there on purpose. I‘m not denying that. My point is only that these options are necessary and fair.
> Furthermore, that social security contribution buys into one of best defined benefit pension schemes still available anywhere.
Ridiculous. It‘s not even close to being funded in the long term. It‘s one of the worst on the continent where all of them them some problems.
During the IMF "bailout" pensions were reduced nominally. This was a political choice, and the party that did that will never win an election again as long as all those pensioners live.