Along with Greece, Ireland and Spain, Portugal’s economy has taken a severe battering in recent months, forcing Moody’s credit rating agency to downgrade the nation’s long-term credit ranking by two steps to A1 in July of this year.
Concerns remain heightened relating to Portugal’s economic growth potential in the medium term too, which has served to reduce the country’s overall appeal as a place to move to as an expatriate, particularly in retirement.
No one wants to commit themselves to a country when it’s facing economic uncertainty – but fortunately the Portuguese are aware of this fact, and as a result the government has introduced a new incentive to encourage foreign residents to relocate to the nation, and bring their much needed wealth with them. In this article we’ll reveal why it could now be worth considering Portugal as a place to live abroad – in other words, let us give you just 1 very good reason to consider retiring to Portugal…
Portugal is perhaps one of the unlikeliest countries in Europe to be labelled a tax haven, given that it’s highest rate of income tax is a lofty 42% and it comes into effect on earnings over just 64,624 euro (£54,860)…however, thanks to a change in government thinking, Portugal is now a temporary tax haven for certain qualifying foreign residents.
The government has introduced a 10-year income tax exemption window for foreign residents moving to live in Portugal – and this extends to retirees moving in and receiving their income in the form of a pension. The tax holiday has been backdated to the 1st of January last year, and it really benefits anyone who moves to live in the country and who comes with foreign sourced income from a nation where there is a double taxation agreement in place with Portugal.
So, if you’re a British retiree with a pension income, you can conceivably now live in Portugal for 10 years and not pay any income tax at all during that period. You may still be liable for capital gains tax however, but according to comment in the Daily Telegraph: “Legitimate offshore structures are available to shelter gains and income regardless of the new 10 year exemption.”
What all of this means is that Portugal has become a new tax haven in the heart of attractive Europe – and so what with its excellent climate, beautiful beaches, plethora of golf courses, fantastic property options and excellent quality of life, Portugal is now a top hotspot to consider for retirement abroad.