Expat Investing in Portugal

Portugal has been an attractive destination for investors and high net worth individuals for years, given the attractiveness of its NHR regime (non-habitual residence) and golden visa programs. However, for international investors and expats alike, where is the best place to invest your money? This guide will run through your investment account options in Portugal, as well as the relevant tax treatment of any growth.

How Are Investments Taxed in Portugal?

Capital gains tax in Portugal is fairly straightforward - the proceeds of shares of selling investment funds is taxed at a rate of 28%, regardless of tax status. Certain assets, such as cryptocurrencies, fall under a different tax regime and are currently tax-free if held for at least a year. Note, these tax laws are subject to change and it's essential to speak with a regulated tax adviser for a professional opinion.

Offshore Investment Accounts In Portugal

Typically, most expat investors will hold their investment accounts overseas, and it's rare for British/US expats to hold local investments with Portuguese banks or institutions, given the lack of investment options and costs associated.

Offshore Investment accounts in Portugal fall under the above tax-regime of 28% capital gains tax. However, note that Portugal has certain blacklisted jurisdictions, of which an additional punitive tax is applied to any investment growth.

Be certain to check that your investment accounts are not based in any of these jurisdictions which are deemed as tax-havens by the Portuguese government, as you will have to pay an additional punitive tax taking your total tax rate on the investments up to 35%.

The Portuguese Bond Reducing Your Tax In Portugal

An alternative to using a traditional offshore investment account as a resident in Portugal is considering investing in a Portuguese Compliant Investment Bond. This type of account combines elements of investment and insurance, and by doing so is classed as an ICAE (instrumento de capatacao de aforro estruturado - translating to 'structured investment for attractive savings').

An ICAE is codified in Portuguese tax law, and as such offers many benefits to international investors. By holding a Portuguese Bond for 8 years, you can reduce your tax liability by over 60%, dropping your effective tax rate on any gains from 28% to just 11.2%. This type of investment also offers UK inheritance tax benefits as the funds will remain outside of the jurisdiction of HMRC. To understand more about the Portuguese Bond and how it can be used to optimise your financial planning in Portugal, see our guide here.

What Is The Best Investment Account For Expats In Portugal?

The key consideration as to which account is best for you depends on how long you intend to remain in Portugal, as well as your individual tax status.

If you are looking to invest some money for 5 years or less, an offshore investment account is likely best for you. This will give you flexibility and portability, should you look to move again in the future - just be sure to check the location of the investment account to make sure you don't fall foul of reporting requirements and incur an additional punitive tax liability in Portugal.

If you intend to retire and remain in Portugal for the long-term (5 years or longer), the Portuguese Bond is likely your best option. No other accounts can compare with the tax-efficiency of an ICAE, and together with your financial adviser you can structure the investments in line with your future goals and requirements.

Expat Wealth Management Services In Portugal

If you have over £100,000 of assets to invest in Portugal, our expert, independent and regulated advice team can help. Our holistic and whole of market approach to investment management helps to ensure your money is working for you, as well as being optimised for tax purposes in Portugal.

To understand how we can help you, schedule an initial discovery meeting with a member of our Portugal financial advice team using the diary below.

FAQs

  • You can find a comprehensive list of all blacklisted jurisdictions here

  • Yes you can, if the platform is happy to take you as a Portuguese resident. Any growth will be taxed at the 28% capital gains tax rate in Portugal.

  • There are several to consider - Morningstar, Novia Global and Ardan are a few of the best options. Be sure to consult with an adviser before making a decision.