The bilateral alliance between the United Kingdom and Portugal is one of the oldest in the world, dating back to the 14th century. Both the UK and Portugal are members of the NATO, the UN, and the European Union (EU), though they do not share a common currency. Commerce and tourism are among the most popular economic activities that connect the UK and Portugal, with more than 2 million Britons travelling to Portugal annually and more than 60,000 British nationals living and working there for at least part of the year. There are currently no restrictions on sending money from the UK to Portugal, however, any account holdings that exceed EUR €50,000 must be declared to the Banco de Portugal, the country’s central bank.
Since Portugal and the UK are both EU member states, UK citizens are not required to obtain a visa to enter Portugal, whether for tourism, business, or study. All British nationals will have to present a valid UK passport to gain entry. For more information on living in Portugal as a UK citizen, please refer to the site of the UK Foreign and Commonwealth Office.
Portugal has a modern and sophisticated banking system. There are a wide range of services available, including savings accounts, current accounts, business and joint accounts. Online banking is a common feature of all Portuguese bank accounts. All banks in Portugal belong to a national grouping called Multibanco, an interbank network that links ATMs, automatic payments, and mobile and online banking services.
In most cases, it is advisable to wait to transfer money from the UK to Portugal until after having opened a Portuguese bank account. Generally, it is required that the individual opening the account present themselves in person at a local bank branch. It is relatively easy for UK nationals and citizens of other EU countries to open a Portuguese bank account. You will have to present proof of identification in the form of a passport or ID card, an NIF (foreign identity) number, proof of a local Portuguese address in the form of a utility bill, and a residency card.
Residents and non-residents are taxed differently in Portugal. A UK national will be considered a resident if they remain in Portugal for more than 183 days during a 12-month period. In this case, individuals may be taxed for both locally earned income as well as any earnings from other countries.
Portugal has double taxation treaties with 71 countries, including the UK. British nationals who become residents of Portugal can be exempted from paying high tax rates on overseas earnings.
For those who are residents of Portugal and are employed by a domestic business, taxes are deducted directly from earnings. This is usually done on a sliding scale ranging from 10.5% to 42%. On the other hand, non-residents of Portugal are taxed only on income earned in Portugal and at a flat rate. The tax year in Portugal is from January 1 to December 31, whereas the tax year in the UK is between April 5 to April 6 of the following year. UK expats are responsible for filing tax returns between February 1 and March 15 for income from salaries or pensions, and between March 16 and April 30 for any other sources of income. It may be in your best interest to get the help of a professional tax advisor in order to fully understand Portuguese tax requirements.
Portugal is the UK’s 11th largest market for exports within the European Union and the 30th largest worldwide. Bilateral trade between the UK and Portugal totals around GBP £3bn. The main goods imported to the UK from Portugal are transport equipment, vehicles, and clothing. The main imports include chemicals, fuel, and machinery. Tourism and transport comprise the main aspects of revenue from UK, amounting to approximately 75%. Portuguese wines and food items continue to grow in popularity in the UK.
UK direct investment in Portugal amounted to EUR €5bn in 2009, according to the Portuguese Consulate General in the UK, and in 2011, direct investment from the UK accounted for 13.8% of all foreign direct investment in Portugal. UK foreign direct investment in Portugal is focused mainly in the financial and tourism sectors. The UK sends the second highest number of tourists to Portugal of any nation worldwide.
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