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Today we are hoping to clear up the confusion about one VERY important topic: Residency Status vs Tax Status.
We’ve noticed many people confusing these two – and in particular when we talk about different visas or programs such as NHR in Portugal.
Residency and Tax Residency are two different terms. You can have a residency in one country, without being the tax resident there, hence not paying taxes in that country.
In order to relocate to another country, you naturally have to have some sort of immigration (Visa) status. You’ve probably heard about the famous Green Card for the US or PR in Canada.
Golden visas are also common immigration visas that we talk about on this channel – Portugal golden visa and Thailand golden visa being among the most popular.
however, these have nothing to do with your tax situation! (well almost nothing)
Once you legally immigrated to another country, via visa application, you have the right to live and work in that country – you become a resident.
NOW if you spend most of the year in this country, you will get a certain tax status. Here is where things like HNR in Portugal come to play. There are legal ways to reduce your taxes, and some countries let foreigners get tax benefits and exclusions.
NHR is not an immigration visa or visa at all. It’s the favorable tax status of foreigners in Portugal.
So you’ll need to look at these terms from 2 perspectives: immigration and taxes.
Immigration has to do with visas, residency status, citizenships – anything with your legal status in a country.
Taxes and tax residency have to do with where are you supposed to pay taxes, and here we will talk about programs such as NHR, exclusions on foreign source income, etc.
Taxes are almost always bound with your residency status, BUT it is really important to understand the difference.
Just because you have a residency somewhere doesn’t mean that you are taxable in that country.
Who are we and what do we do?
We are Offshore Citizen team. We help people become global: get a second passport, set up a second residency, pay less taxes, do banking abroad, etc.
We have lots of interesting articles on different topics, we have relevant information up to date.
Author: Michael Rosmer
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