Financial Advice In The Algarve, Quinta Do Lago
LEARNING OBJECTIVES
We provide bespoke, high quality and relevant financial advice to British Expats in the Algarve.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How to structure your pensions in Portugal post UK budget and NHR
Tips to maximise tax-efficiency in Portugal after NHR
What An ICAE is and how it works
Vital considerations for Expats in the Algarve
The Wealth Genesis is an independent and regulated wealth management firm with financial advisers in Quinta do Lago, Lisbon and the wider Algarve region.
In this article, we will detail how you can maximise your finances post NHR.
The popular NHR scheme has now come to a close for entering British Expats, as well as likely running out for existing beneficiaries of Portugal's attractive tax scheme.
UK Pension Planning In Portugal Post NHR
If you have an existing QROPS plan in Portugal, you may be happy with your existing pension scheme. However, after the Labour Government's 2024 budget, British Expats will soon no longer be able to utilise QROPS pensions, as they will now be subject to the Overseas Transfer Charge of 25%.
Instead, if you are looking for flexible access draw-down, multi-currency options, a wide investment choice and ongoing management, your best option will now be the Non-Resident SIPP, or International SIPP. You can read more about how this type of pension works for Non-UK residents in our guide here.
If you have UK pensions in Portugal and have not transferred these, we would encourage all Portuguese residents to ask their pension providers the following questions:
Can I continue to manage my pension fund and choose the investments?
Can I take my money as and when I please?
Are multi-currency options available?
Is my UK pension going to be taxed at source, even if I'm a Non-UK resident?
If the answers to any of the above create issues, we would encourage clients to engage with a regulated European Financial advisory firm such as ourselves.
Maximising Tax Efficiency Post NHR
Once NHR runs out, you will be taxed on your worldwide income in Portugal at the applicable tax rates. Investment income and capital gains will be taxed at a flat rate of 28%.
However, there are investments and certain tax wrappers you can use to drastically reduce the amount of income and capital gains tax you pay in Portugal post NHR.
These are called 'Instrumento de Capatacao de Recursos' (ICAE), loosely translating to structured attractive savings vehicle.
The Portuguese Bond | ICAE
The ICAE, or Portuguese Bond, is essentially a life insurance policy underpinned by investments, which is built to fit within the Portuguese tax system and compliant with Portuguese tax law.
These types of investment acccounts can massively reduce tax you pay on the growth, slashing your tax bill by over 60% when held long enough.
Working with a local cross-border Portuguese Financial Adviser, you can structure the investments and use any type of instrument, including equities, ETFs, mutual funds and alternatives to reach your financial goals. The cost of these policies vary depending on the amount invested, but typically range between 0.20-0.50%.
Avoiding Tax Penalties In Portugal
If you do hold any type of investment account as a Portuguese resident, make sure you seek tax advice on the treatment of the growth and withdrawals. Note, Portugal has several popular jurisdictions which are blacklisted in Portugal and come with punitive tax charges, totalling up to 25% of the capital gains.
You can check the applicable jurisdictions on the government website here.
Expert Financial Advisers In The Algarve
The Wealth Genesis has expertise and presence in Portugal to provide the highest quality financial advice to Expats in the region.
From pension planning, to investments and tax-efficiency, our advisers can structure your finances to thrive within the post NHR landscape in Portugal.
To schedule an initial free discovery call or face-to-face meeting, use the diary below.
