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Comment by quonn | Hacker News Reader

It‘s not misleading. You take home 9600 in my opinion.

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.

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3 words make your argument smell: "in my opinion". Are we talking facts or your opinion being represented as facts?

So if it's facts, got sources?

It's a bold face lie, just propaganda. Here's the table from the tax authority for 2022:

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.

Sure. I live there and talked to plenty of local accountants.

Employed by a portuguese company 80000€ / year is taxed average 42.8%, take home after tax: 45728€

This gives you a monthly pay after tax of 3811€ (way above average in the country, which unfortunately is really low)

Right. But as a nomad you cannot just give up your own health insurance and you cannot just stop paying into a foreign retirement fund yourself. Portugal won‘t allow you to deduce that, of course, and it‘s another 1500-2000 per month to subtract in case of private insurance for example.

Leaving around < 2000 net. And as I said that‘s without the mandatory social security problem on foreign income.

Assuming you/your employer are paying social security contributions, then you can give up your own health insurance. People in Portugal tend to have private healthcare plans for everyday stuff, but they are insanely cheap. For urgent/serious things, the public system is effective enough.

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.

I think I have explained the typical situation a few times in this thread but I will try again.

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.

1. Plenty of Portuguese people and foreigners resident in Portugal work for foreign companies without huge tax burdens, plenty more work freelance for foreign clients without huge tax burdens.

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.

isn't the whole point of moving to europe to get away from expensive insurance?

I am European, self-employed. But the health insurance is not free there either. For example in Germany it is around 700 per month privately. Some pay 900. It is independent of the salary if private and dependent on it if public. And you have to either pay into a retirement fund or should do it privately and budgeting around 2000 in total is realistic. In my home country this can be partially deduced. In Portugal not, so it‘s subtracted from the net salary.

I'd suggest you either check if you're not reading "post-tax income" as tax, or change the accountants. Even most miserable accounting doesn't get 70% on 80k annual salary.

@cactusplant: Correct. With a double taxation agreement you always pay the higher tax of both countries. Usually you pay the lower one to one country and the remaining part to the other one. But it depends on the countries and details.

So yes, it would be more but it would be doable. While the non-tax issues largely lack these agreements causing more problems.

@lastdong

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.

Even with the double taxation treaty, wouldn't an American pay the difference in Portugal? That would be significantly more?

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