We provide a comprehensive wealth management and tax planning service to Expats living in Portugal, those considering relocating to Portugal and Expatriates who are returning from Portugal to their home country.
There are some very significant differences between the tax regime in Portugal and the way your tax is levied in the UK and other countries and without professional help in understanding the differences there could be a serious negative effect on your wealth. There are even taxes in Portugal that Expats will not have encountered before such as Wealth Tax and Solidarity Tax.
As a resident of Portugal you could be liable for tax as follows:
Income tax of up to 48%
A ‘solidarity tax’ of 2.5% or 5% for higher incomes
28% on interest income
Tax on capital gains when selling property and investments
Annual wealth tax of up to 1% on property interests worth over €600,000
Non-residents could be liable for Portuguese taxes, for example, if you own, or sell property in Portugal.
Tax Planning is Essential
Without proper tax planning you could end up paying considerably more tax than necessary. The rules are complicated and with the introduction of Common Reporting Standards the Portuguese authorities will automatically receive information about your income and asset holdings elsewhere so it is important to ensure that your tax declarations are correct.
Although the regime sounds onerous with our help you should be able to enjoy favourable tax treatment.
If you are a newcomer to Portugal the ‘Non-Habitual Residents’ (NHR) scheme gives special tax benefits to new residents for their first ten years in the country. It also offers a lower income tax rate of 20% if you’re employed in Portugal in a ‘high value’ activity and allows you to receive foreign income – for example investment income pensions and dividends tax-free.
Investments & Pensions
Our advisers are here to help you structure your investments and pensions to ensure that you benefit from the tax efficient schemes available to Expats living in Portugal. It is really important that you recognize that tax efficiency means aligning your assets with your residential status. Holding onto UK investments when resident in Portugal can be detrimental to your wealth and it is equally important to review your pension arrangements preferably before you move to Portugal particularly if you intend to retire there.
Estate planning and Inheritance Tax
Inheritance tax in Portugal is referred to as stamp duty. The tax rates are considerably more attractive than the UK equivalent and can even be 0% for direct family and spouses. What Expats need to remember is that living in Portugal does not necessarily remove your liability for UK Inheritance. UK domicile rules mean that your worldwide assets can still be subject to IHT.
With careful planning our Expat experts will guide you through this complex area of planning to help minimise your liabilities.