Retiring in Portugal

Retiring in Portugal


Retiring in Portugal

Retiring in Portugal has been very attractive for expats that wanted to make use of the non-habitual residency rule (NHR) .  To date, foreign pensions that are payable to non-habitual residents in Portugal, have not been subject to Income Tax for the first 10 years of NHR. This has obvious benefits for those retiring in Portugal when one considers the normal Income Tax rates there are from 14.5% to 48%.

 

Budget 2020

It is probably not surprising that there has been some pressure on Portugal to start to tax these foreign pensions for those retiring in Portugal under the NHR rule. Therefore the Budget, not yet ratified, announced that the NHR exemption from tax would no longer apply. There will be a new flat 10% tax applied to foreign pensions. This appears to be a good compromise that still makes retiring in Portugal attractive.

 

Retiring in Portugal – QROPS or UK pension

Well, both are ‘foreign’ pensions as far as Portugal is concerned and, if someone meets the NHR criteria, will be treated the same for Income Tax.

While QROPS may be more expensive than UK pensions, if the pension investor is moving from the UK and has a fund that will be a lot more than £1 million pounds, a QROPS may help with Lifetime Allowance Planning.

 

Summary

Due to its NHR rules, retiring in Portugal is still an attractive proposition and not just for the weather and the food.

Taking advice on the most suitable way to structure pensions to fit in with NHR rules is a must for all of those planning retirement in Portugal.

 

The views expressed in this article are not to be construed as personal advice. You should contact a qualified and ideally regulated adviser in order to obtain up to date personal advice with regard to your own personal circumstances. If you do not then you are acting under your own authority and deemed “execution only”. The author does not accept any liability for people acting without personalised advice, who base a decision on views expressed in this generic article. Where this article is dated then it is based on legislation as of the date. Legislation changes but articles are rarely updated, although sometimes a new article is written; so, please check for later articles or changes in legislation on official government websites, as this article should not be relied on in isolation.

This article was republished on 20th March 2020.


“About

Chris Lean

Chris is a Chartered Financial Planner who writes blogs and articles to simplify and explain some of the financial issues that affect UK expats. Subjects include; hot topics, regulation and the ever-changing world of finance.


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