Expat Financial Advice In Portugal
The Wealth Genesis are financial advisors providing British expats living in Portugal with financial investment and retirement services.
For decades Portugal has been a favoured destination for expats thanks to its high quality of life, and low cost of living. The warm climate, friendly culture and relaxed pace of life has made it a haven for those looking to relocate.
The generous tax advantages Portugal offers to expats have undoubtedly also been a draw for many, but some things have changed in 2024- including the closing of the NHR (Non-Habitual Resident) scheme, and the introduction of a new tax break for highly skilled workers.
If you’re thinking of moving to Portugal, its crucial to consider your financial goals, and how you can make the most of your money. Use our comprehensive financial guide to familiarise yourself with the tax system, find out what will happen to your pension, and explore the many options available in terms of investment, retirement and inheritance.
Article Summary
01 Key Tax Changes for 2024
It’s no secret that Portugal has long been favoured by expatriates for its generous tax regime. However, those moving to the country in 2024 will unfortunately no longer benefit from the popular Non Habitual Residence regime, which was closed for new applicants at the end of 2023.
Otherwise, the Portuguese tax system remains mostly unchanged, apart from some updates to income tax rates.
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Income Tax
Residents of Portugal are taxed on their worldwide income (you qualify as a resident if you spend more than 183 days a year in the country), including employment, pension and rental income.
Non- residents are taxed on all income sourced from Portugal (although it does have various tax treaties worldwide, including with the UK, so you won’t be taxed twice).
The updated Portuguese income tax rates for 2024 are:
03 Capital Gains
50% of All profits made from selling real estate in Portugal are added to your overall income and taxed at the rates listed above. This applies to individuals with permanent residency and non- residents.
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There is, however, an exemption for individuals who are selling a primary residence- no tax will apply if they use the profits to purchase a new primary residence either in Portugal or anywhere in the EU.
Residents aged 65 and over can also avoid capital gains tax when re-investing into an eligible pension or insurance policy.
Gains made from stocks, shares or bonds are taxed as investment income (see below).
04 Investment Income
Portugal applies a flat tax rate of 28% to any investment income, including interest or dividends, and profits from shares, securities and bonds. However, tax residents can choose to be taxed at one of the above rates from the income tax bands if that proves to be more tax efficient.
If your investments are based in a jurisdiction classed as a “tax haven” by the Portuguese Government (this includes Guernsey and Gibraltar) this rate is increased to 35%.
05 Non Habitual Residence Scheme (NHR)
Portugal closed the NHR scheme in 2023, but some applicants may still be able to apply if they can prove that they applied for residency and secured a property or employment in 2023.
If you currently have NHR status, you will retain the benefits until the end of your 10 year term. Following this, you will be required to pay the same rates for capital gains, income and investment taxes as all other Portuguese residents.
Speak to one of our advisers to discover how we can restructure your investments or assets to make the transition from your NHR status as tax – efficient as possible.
06 Portugal’s Highly Qualified Tax Advantage
In place of the NHR scheme, the Portuguese Government has introduced a new tax incentive targeting highly qualified or skilled professionals and investors.
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Those skilled in favourable industries such as higher education, scientific research and technology can enjoy a flat tax rate of 20% on all income (from both employment and self-employment) for a period of 10 years. You must not have been a resident of Portugal within the last 5 years to qualify.
The current list of ‘High Value Added’ (HVA) professions includes:
· Architects
· Doctors
· Engineers
· IT professionals
· Lawyers
· Professors
· Researchers
· Scientists
· Teachers
· Veterinarians
· Artists
· Athletes
· Musicians
· Entrepreneurs
The list is constantly evolving, for more information and to check if your profession or business qualifies for the HVA scheme, contact the Portuguese Immigration and Borders Service (SEF).
07 Inheritance Tax (Stamp Duty)
Portuguese law is very favourable compared to other countries when it comes to inheritance tax. In fact, Portugal does not actually impose inheritance tax at all, but rather a ‘stamp duty’ at a flat rate of 10% on all assets that are passed to anyone outside of your immediate family. This means that spouses, children, grandchildren or parents do not pay any tax on inheritance.
It is important to note that Portugal operates under a policy of forced heirship, meaning the spouse and/or descendants of an individual may be able to claim parts of their estate, regardless of what may be written in their will. Consulting with a specialist in Portuguese estates and inheritance tax is highly recommended.
08 Property Tax in Portugal
If you’re planning on moving to Portugal, you may be considering investing in property. There are a few different types of taxes you may incur, both in the initial purchase and on an ongoing basis, so it’s important to factor these fees into your budget.
09 Property Purchase Tax
The IMT is the initial transfer tax you will pay when purchasing any property in Portugal. The amount will depend on the municipality, the value of the property, and whether it will be your primary residence or a secondary investment.
You may also incur a stamp duty if you take out a loan or mortgage to purchase property, this can range between 0.5% and 0.6% of the value.
10 Municipal Property Tax
IMI is a Portuguese municipal tax which works in a similar way to council taxes in the UK. Most regions charge a rate of 0.3% - 0.45% of the value of the property, but in some rural areas it could be as high as 0.8%.
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High Value Property tax (AIMI)
Portugal imposes a specific wealth tax to properties valued over €600,000 (€1.2 Million for married or co-habiting couples). This applies regardless of residency status.
Anything above the threshold will be taxed as follows:
12 Investing in Portugal
With stable and consistent economic growth, favourable tax policies and low unemployment rates, Portugal continues to be an attractive environment for foreign investors.
However, with the NHR scheme coming to an end, and with many foreign residents coming to the end of their 10- year NHR term, it’s crucial to ensure that your investments in Portugal are tax efficient.
Whilst investment accounts are taxed at the local capital gains rate of 28%, Portugal has a different tax regime for life insurance policies. Structuring your assets under one of these policies can significantly reduce your tax bill and make your money go further.
13 How Does My UK State Pension Work In Portugal?
If you’re planning to retire in Portugal, you can usually still receive your UK state pension. The payments can be made into your new Portuguese bank account, with any annual increases applied just as if you were living in the UK.
It’s important to contact the Department for Work and Pensions (DWP) and HMRC promptly to avoid any double taxation and to ensure continued payments.
If you have a private pension, transferring it abroad can be simple. Click below to discover the various options available.
14 Healthcare
Fortunately, British citizens can enjoy the expat life in Portugal without struggling to find healthcare options. When it comes to medical treatment, there are a few avenues to explore:
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Public Healthcare (SNS)
To access the Portuguese public healthcare system (Sistema Nacional de Saude), British expats simply need to register at a local health centre once they have obtained a residency visa. Services through the SNS are generally free or low cost, although certain services may incur some nominal fees.
S1 Form For Pensioners
You may be entitled to free healthcare in paid for by the British Government if you are a British pensioner living in Portugal receiving a state pension. For this, you will need to obtain an ‘S1 form’ from to the Portuguese social security system at your local healthcare facility.
Private Healthcare
Many expats opt for private health insurance to supplement the public healthcare service in Portugal. This way they can access care with shorter wait times and with the option of being treated by English-speaking staff.
Bupa Global, Allianz, AXA, IMG and Vitality Global are all great options for private healthcare coverage in Portugal.
Our Verdict
Portugal continues to be a favourable option for expats wanting to start a new life abroad. However, with ever changing tax laws and regulations, it’s more important now than ever to get specialised financial advice to protect your wealth and make your money go further.
The Wealth Genesis is fully independent and regulated to provide expert financial advice to British expats in Portugal.
Our advisers in Lisbon, Faro and Madeira are well versed in local laws and regulations, and experienced in helping clients move their money abroad.
We offer a free initial consultation call to understand your financial position and goals.
To discover how we can help you, use the enquiry button below to schedule a call directly with a member of our advice team.