WHAT YOU NEED TO KNOW ABOUT… …MOVING TO PORTUGAL TAX-EFFICIENTLY

THERE’S

no doubt that Portugal is a fantastic place to make your home, but did you know it can also offer financial advantages?

If you are planning to move to Portugal, with early, careful financial planning you can make the most of taxefficient opportunities and avoid potential mistakes.

Tax residence in Portugal

You are usually considered Portuguese tax resident after 183 days in the country, but it can be earlier if you have a permanent Portuguese home – potentially even the day you arrive.

Once resident in Portugal, your worldwide income and certain gains become liable for Portuguese taxation, so understand how Portugal taxation will affect you and take steps to be prepared for it.

A decade of tax breaks awaits

The good news is that Portugal offers generous tax benefits to new residents for their first 10 years here through its ‘non-habitual residence’ (NHR) scheme.

Under NHR, those employed in Portugal in a ‘high value-added’ profession pay a flat 20% income tax rate, rather than the usual rates up to 48%. This regime can benefit retirees too, as foreign pension income is taxed at just 10%. Not only that, non-habitual residents can also receive most foreign income tax-free in Portugal.

You could qualify for NHR if you have not been Portuguese resident within the last five years, so aim to apply once you move.

Minimising your tax bill

Don’t assume what was tax efficient in the UK is tax efficient elsewhere. UK ISAs, for example, are taxable in Portugal, but Portugal can provide its own tax planning opportunities.

Even outside of NHR, Portugal can be a tax-efficient home, including the potential to enjoy extremely favourable tax treatment on investments. Many expatriates benefit from holding capital in a structure similar to an offshore life assurance