In recent years, Portugal has gained significant popularity among expats worldwide due to its attractive tax regimes and various incentives. Two notable programs that have drawn expats to Portugal are the Golden Visa and the Non-Habitual Resident (NHR) regime. However, it's important to note that the Portuguese tax landscape has evolved since the previous information.
The Golden Visa program allows foreign investors to obtain residency in Portugal by making specific investments, such as purchasing property, creating jobs, or contributing to scientific research. This program offers a pathway to Portuguese citizenship and comes with certain tax benefits, including the possibility of obtaining non-habitual resident status.
The Non-Habitual Resident (NHR) regime is a tax scheme designed to attract foreign individuals to Portugal by providing favourable tax treatment for a period of ten years. Under this regime, qualifying individuals, such as retirees or professionals with specialised skills, may benefit from exemptions or reduced tax rates on foreign-sourced income, pensions, and certain types of capital gains.
Besides these programs, Portugal offers other tax advantages that residents can leverage. For instance, when people are downsizing, people generally wish not to reinvest the entire proceeds into another property and more importantly wish to minimise their CGT exposure. The only method is to invest the surplus capital, that of which is not being reinvested in new property, into an insurance policy but to achieve this, the person must be 65+ and needs to initiate the policy no later than six months from the sale of the prime property.
To illustrate the potential benefits, let's consider a hypothetical scenario. John, a UK citizen, decided to retire in Portugal in 2022. He sold his property in the UK and purchased a home in Lisbon for €500,000. By becoming a Portuguese tax resident and qualifying for the NHR regime, John can benefit from a flat tax rate of 10% on his foreign pension income for the next ten years, provided he meets the eligibility criteria.
Moreover, Portugal offers a stable and business-friendly environment, making it an attractive destination for entrepreneurs and digital nomads. The country has implemented various measures to support startups and encourage investment in innovation and technology sectors.
It's important to note that tax laws and regulations can change over time, and it's essential to stay updated on the latest developments. Consulting with a qualified tax advisor or legal professional in Portugal is crucial to understand the specific tax implications and opportunities available based on an individual's circumstances.
Overall, Portugal's tax regimes and incentives continue to make it an appealing choice for expats seeking favourable tax treatment and a high quality of life. It is advisable to research and seek professional guidance to make informed decisions based on the most up-to-date information and individual financial circumstances.
For more information contact Blacktower Financial Management on +351 725 566 190
This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.