Becoming a resident in Portugal now presents you with the opportunity to receive your Pension Payments Tax-Free for 10 years!
The government in Portugal has introduced a 10-year tax exemption window of opportunity for foreign retirees who want to retire abroad to live in Portugal, and who want to enjoy a reduced cost of living thanks to having no income tax deducted from their pension.
Along with Greece, Ireland and Spain, Portugal’s economy has taken a severe battering, forcing Moody’s credit rating agency to downgrade the nation’s long-term credit ranking by two steps to A1 last year.
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 bringing their much needed wealth with them by making it beneficial from a tax perspective to become a tax-resident in Portugal.
Portugal is perhaps one of the unlikeliest countries in Europe to be labelled a tax haven, given that its highest rate of income tax is a lofty 42% and it comes into effect on earnings over just €64,624 (£54,860)…however, thanks to a change in government thinking, Portugal is now a temporary tax haven for certain qualifying foreign residents.
The Non-Habitual Resident regime offers a 10-year income tax exemption window for foreign residents moving to live in Portugal. 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 are an Irish 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.
What all of this means is a major step forward in making Portugal a Tax-Free Jurisdiction in the heart of 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.