Portuguese Taxation

Moving to Portugal?

Like many Francophones, more and more people are being drawn by the charms of Portugal. And the reasons are: touristic as well as climatic and financial, that will allow you to live a comfortable retirement, that could have been much more modest in your country of origin.

The advantages for your budget, do not derive only from the favorable cost of living or lower property prices, but also lies in the favorable tax measures for foreign investment. What are they? Here is what this article is about, focusing on clarification of the taxation system in Portugal.

Non-Habitual Resident status

The first measure in Portuguese tax law resulted through the creation of the Non Habitual resident status, which we talked about in a previous article, but remember, the best benefits offered by this law, came into force on January 1, 2013. To enjoy this status you must meet the following criteria:

You have to stay in Portugal for more than 183 days/ year ;

• Or prove that your housing in Portugal is your main habitual residence;

• Or that you belong to a tax resident family up to 31 December;

• Or you are a retiree from the private sector.

 
By meeting these conditions, you get a tax benefit of 10 years, that offers a discount on income tax in the country of origin.

Other fiscal benefits

Portugal is also open to foreign working class. As such, including: artists, architects, health professionals, academics, computer technicians and other professions, related to information (such as data protection), researchers, among others many liberal and technical professions, that provide added value to the Portuguese economy. These categories also include business owners, executives, managers and investors, from which the country can benefit by their knowledge, rather than simply enrichment.

For all of these foreign workers, taxation system in Portugal is also attractive for:

• 0% tax on your income earned abroad;

• 20% tax rate on income from professional activities in Portugal.

 
The latter includes, of course, a possible salary received in Portugal, but for any dividends, interest or capital gains from foreign sources, the exemption will be total in Portugal.
Another requirement is, however, not to be a tax resident in Portugal during the last 5 years.

Other taxation advantages in Portugal

The decision of the EU Court of Justice in 26 February 2015 had interesting implications for the establishment of Francophones in Portugal. With this decision, housing owners in France, if they are not considered to be French residents, they are not subject anymore to the CSG and CRDS taxes for their French income, as these are social contributions and taxes on income.

Moreover, the wealth tax does not exist in Portugal, which makes many see with wide eyes the possibility to migrate to this new Eldorado. This will continue to be applied in France for those who maintain their properties, but these are not forbidden for selling - to reinvest in Portugal. If these financial investments held in France, are in the form of PEA, life insurance, among others, will be exempt from this tax.