Residency / Healthcare / SIPPS

[jonboy]

I am starting to research a potential full time move to Portugal and am weighing up the options of keeping a UK base to keep UK residency and NHS. The other fact that this exercise has thrown up is the tax regs on SIPPS. If you plan on taking the 25% tax free lump sum then think twice before taking residential status in Portugal before you take ( or qualify at age 55 ) the lump sum or you will loose the right to do so. ISA's SIPPS can be left in situ along with the CGT exemption but no further funds can be added and any income arising from these tax wrapped assets will count as income in Portugal.

Not having been exposesd to Portuguese healthcare thus far can anyone give advice feedback ( clearly depends on the state of your health and whether or not you have existing conditions ) but in general how do the two services compare ?

JB

[steve]

Do you mean state healthcare? If so I have found the hospital system to be pretty much like the UK used to be. Sometimes the language can be a problem if you don't speak Portuguese but apart from some of the older nurses and doctors most speak some English. Since the wrong answer to a question from a specialist or a doctor can be catastrophic it pays to be careful and ask for an English speaker to be there to translate if necessary. Unfamiliarity with the proceedures can be disturbing at first but the standard of care I have found to be good. I use the private hospitals when my health insurance covers it and my experiences there have generally been positive albeit that the ward facilities often do not come up to the standards you find in UK private hospitals. For major stuff most people go to the LIsbon hospitals. I had major surgery in a private hospital in Lisbon but I had the follow up chemo and radiotherapy at the state Barlavento hospital and the Lisbon IPO. Obviously you have to wait around at times but this mirrors previous experience in the UK and the standard of treatment was excellent. I have found that the doctors and specialists are inclined to be more direct than their UK counterparts- " If we are not suceessful you will die" sort of messages. The private hospital at Alvor is generally good in my experience although there are people who have stories to the contrary. They do, however, tend to perform extraction operations on your credit card in my view although the cost of most procedures is lower than a private hospital in the uK would charge. The duty doctor system there is first class and costs no more than going to see a doctor privately in Carvoeiro or Lagoa. Any necessary tests or examinations can be done on the spot as opposed to having to go to another clinic after seeing a local doctor.

The doctor situation under the state system is problematical. It is impossible to get on a doctor's list in Carvoeiro or Lagoa and vacancies which arise tend to go to the realatives of existing people on the lists. After some years I was finally allocated a doctor at Parchall but it takes an age to get an appointment and I have always gone elsewhere because I could not wait. The walk in emergency service at the local health centres is cheap and convenient but I have found the quality of attention received to be very patchy indeed and no one seems to bother to ask if you are on medication before prescribing drugs. There are plenty of private doctors about but they charge 45 - 50 euros for a consultation although I believe that there are some local health insurance plans which will meet some of this cost. I guess that the problem with starting a plan here for many expats will be that they will have pre existing conditions which may n ot be covered.

The main drawback here is the cost of prescribed medicines. The state healthcard gives a discount on medicines but you still have to pay for them and the cost can mount up. At one time the monthly cost for my wife and myself was about €180. As a guide y mblood pressure tablets cost about €26 a month. There are no free prescriptions for pensioners and there is no prescription charge system. You simply pay the price of the drug less the discount. Where they are available generic drugs are cheaper but the doctor has to say on the prescription that he/she consents to these. By way of a small bonus you can claim back against your tax here 30% of the annual cost of drugs at 0 or 5% IVA and a certain amount of stuff at 20% provided that this is supported by a doctors prescription. As with so many things here you need to retain all the relevant receipts in the correct format.

I have not used the UK system, NHS or private for many years and so I do not know how these compare to Portugal now.

[shanagarry]

These two posts are enormously helpful - thank you both.

We are permanently moving to Carvoeiro later this month and have a SIPP (with a commercial property in it) but am also evaluating the Health Service system.

I will continue to work as a self-employed Portugal based consultant in my UK based business as I will have to travel to and fro at least once a month to begin with. I am hoping that will reduce over time. We have rented our family home in the UK (which just clears the mortgage) and in 3 years time should be able to draw an income from the SIPP as the mortgage on the commercial property will be cleared. Should we see an improvement in house prices over the next 3 years we will sell our UK home.

I have received price quotations for health insurance and am staggered at the cost. I have a repeat medication requirement and can always collect that on visits back to the UK in the early days. I wouldn't want to be doing that indefinitely and on the occasions we have been in Cvo and I have run out - I take the box to the chemist and they replenish it - at a charge of course. Being over 60 the NHS provide it free of charge.

I have taken tax advice that suggests I will not be in a position to exit the UK tax system until such time as the family home is sold - the consultancy income could be declared in Portugal but it seems pointless having two tax jurisdictions to account to. If anybody has been or is in a similar position - I would really appreciate the benefit of your experience

[steve]

As a resident in Portugal I think that you will find that legally you are liable to render a return to the IRS here in respect of your world wide income and rely on the Double Taxation Agreement between Portugal and the UK to resolve the issue of paying tax in two places on the same income. If you are not tax resident in the UK are you sure that you have a UK tax liability for income arising there apart from any income that cannot escape deduction of tax at source? UK domicile is a different matter and I doubt that even after the passage of the requisate time period HMC&E would accept an election for Portugal as a domicile of choice while you still own property in the UK. The principal benefit of a change to domicile in Portugal is of course related to the more beneficial position as regards inheritance tax here.

Yes health insurance is expensive particularly if you start later in life. If you can claim any past connection with public sector employment even of a tenuous nature you might find that CSHealthcare offers a more reasonable deal. When I moved out here a few years ago Medal the insurance brokers in Portimao were offering a good medical insurance policy with less of the bells and whistles at very reasonable rates. I am not sure whether this is still available - I had heard that it was not -but it might be worth enquiring.

Although people seem to get away with repeat prescriptions in the UK, the official ruling given to me by the then Department of Health in 2002 was that if you are absent from the country for more than 2 months you should be struck off your doctors register and would have to reapply for inclusion again on return to the UK. I suppose it all depends what the authorities actually know and how friendly you are with your local health practitioner. Retaining a home in the UK will obviously help here.

I would stress that I have no professional expertise in the field of personal taxation and the foregoing merely reflects information I have picked up in resolving my own position.

[shanagarry]

Steve

I am genuinely appreciative of you taking the time to set out details of your own experience. For the reasons you mentioned my preference is Portugal but I have had so much 'varied' advice - even a book sent to me by Blevins Franks wasn't totally 'clear'.

I will persevere.

Thanks again.

[jonboy]

Yes thank you so much to you both for the replies. There is nothing like pooled knowledge and experience to help make decisions and even if one ends up taking professional advice , at least you are armed with a good understanding of the issues and able to ask the right questions.Once again thank you for taking the time to answer.

JB

[steve]

I have to say that it is worth seeking more than one set of advice. I consulted one Portuguese accountant who had big 5 experience in the UK and was very much by the book but not very strong on DTR. To be fair the IRS were only at the time training their own people up in this area. I spoke to a second very knowledgeable accountant of the old school who took the view that it was only necessary to declare enough to keep the taxman happy. This has been traditionally a very prevalent Portuguese view but I suspect that the IRS are more on the ball these days and use computer data bases to compare notes. It is worth noting that for the first time the Modelo3 for 2009 requires IBAN and BIC for foreign accounts generating declared income. It seems that the IRS are waking up to the fact that foreign residents are a potential source of useful additional revenue as many people based on past advice are probably not declaring all that they should be.

I have not found the local Financas too helpful in trying to find out why allowances apparently due were not credited. The answer seemed to that all the information had been input to the central computer and therefore the results must be correct. I think the answer was probably that the allowances were not given against income generated in the UK even though this was taxed here but as the sum involved was small I did not bother to pursue the matter. I think that DTR is still a bit of a vague area. The simulation model in the online Modelo 3 programme cannot deal with DTR and so you cannot simulate your tax payable if overseas tax has been paid on any part of the income being declared.

Civil Service and Military pensions are exempt from taxation here but you still have to declare the income to establish the rate of tax payable on any other income declared. The IRS computer then seems to take the exempt income out but add it back again later with some sort of notional tax credit against it. If anyone knows how this bit of the system works I would be glad to hear from them.

It pays also to check the advice given by the companies that publicise their services as tax and savings experts. I know personally of one quite disturbing incidence of incorrect advice with significant tax implications.

[MrsR]

We are not residents in Cvo but have had a villa for six years. However, luckily we have had no call to use the healthcare system until this week. My son -( almost 40 years of age - they never grow up!) - came headfirst down a slide at the waterpark and cracked his head on the bottom of the pool. He was very lucky not to damage his neck or spine but had to be taken, by the waterpark management, to Loule hospital for 5 stitches. The treatment he received was first class. He was taken straight in, cleaned up, stitched up and x-rayed. He was given the x-rays to bring back to England and was charged a total of 8 euros. He then called the waterpark people and was taken back to his wife and children, all within an hour. Not a parch on the NHS. The following day his eight year old son was awake all night with ear-ache and the following morning attended the clinic above Smilers in Cvo. He saw a doctor and was diagnosed with an outer ear infection (no doubt swimming underwater too much) and given ear drops. Again, excellent treatment. They are due to fly home tomorrow so lets hope there are no more disasters. By the way, my daughter in law had to go on holiday with crutches after a hip operation three weeks ago and they were not very happy with the wheelchair treatment given by Jet2 in Leeds/Bradford airport. What a family! The youngest is the only one of the family who is ok but he is the one who didn't get the train ride! (See Train in Square).

[shanagarry]

Steve

Forgive my ignorance - what is DTR?

[steve]

Double taxation relief.

[jonboy]

I think the health care aspect will be a problem as both my wife and I have repeat prescriptions in UK - total 6 items every 2months and it would appear that this will add up to a significant monthly cost. Then also factor in healthcare for two x mid fities people and.......

JB

[jonboy]

There does appear to be some in consistency between what farmicias will or will not give out otc? I am told that one farmacia in Lagoa and another in Silves will dispense anti b's otc whereas the main farmacia in Carvoeiro won't. Are there other examples of medicines that in UK require a prescription that can be obtained in Portugal OTC.. I know ventolin is available otc, others?

Thank you

JB

[shanagarry]

I have to take Candesartan and Lanzprazole - both of which are prescribed here but available OTC in both Farmacias in Carvoeiro and Lagoa - by just showing the box!

[jonboy]

That's encouraging... as my wife has something similar. Guess we will have to bring the boxes on our next visit and make enquiries at the local farmacias...

Thank you

[shanagarry]

They cost €20 and €18 respectively for a month's supply.