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Advantages of Living in Portugal

There are many advantages of being a resident of the Algarve The way of life as well as the people, food, the climate beautiful coastline and countryside The list goes on and on. Not only is it an amazing location to live in, Portugal offers many advantages from a fiscal point of perspective.

To get the most out of your move, prompt planning for your finances and taxes can be extremely beneficial. Even if living in this area for a long time and you are a resident, it is important to review your plans to ensure that they’re up-to-date.

Here are the most important concerns regarding wealth management that you have understand and prepare for.

Residence tax

After you have become a resident and become a resident, you are subject to Portuguese taxation on all income worldwide as well as certain capital gains therefore, you should be ready for this.

Taxpayers are generally considered resident after three months in Portugal However, it may happen earlier, if you decide to move in the hope of making the country your residence. Be aware of the rules regarding residency in the country from which you originate. In the case of UK laws, as an instance you may accidentally trigger tax residency, and then be to pay British taxes in the next 16 days.

If you have a plan and have the flexibility to change your timing, your relocation can help reduce tax obligations and increase opportunities for both countries.

Visit this website for their moving to Portugal guide

Portuguese fiscal system and NHR

New residents are eligible for substantial tax advantages for the first 10 years under Portugal’s “non-habitual residency” (NHR) system. To be eligible, you must have resided in Portugal within the last five years. You must apply to the tax office in your area as soon as possible after your arrival.

Apart from a set 20% tax rate for income for professions with a high value, NHR lets you receive some income from abroad tax-free or at a lower rate. There is also tax on your gains in Portugal. Portuguese tax on profits made from UK properties.

In addition to NHR, Portugal can be extremely efficient in taxation for foreigners. Although income is taxed with progressive tax rates that can reach 48 percent, there are many ways to cut taxes off your pension and investment income So, consider exploring your possibilities.

Your savings and investment

A risky mistake could be thinking that the tax system used back home is tax-efficient in Portugal. UK ISAs for instance are tax-deductible to Portuguese residents.

Once you become residents of the United States, you have the chance to take advantage of advantageous tax advantages for capital investment.

If you are moving to a new location, taking a look at your financial position can ensure that you’re properly diversifying, and that everything is put in place in the best method for the new situation. Contact a local advisor who knows the Portuguese tax system and can provide tax-efficient solutions to your wealth and assets.

Currency

When you’re living in Portugal and you pay your bills in euros, storing your savings as well as investments in Sterling can make your earnings susceptible to fluctuating exchange rates. Find structures that permit diversification by holding investments in a variety of currencies, and allow you to select the currency for your withdrawals.

Property buying and selling

If you’re still planning your move, a key factor to think about before you make a move concerns the fiscal implications when buying and selling a property. What is the ideal moment for you to dispose of your UK home and then purchase the Portuguese home in order to minimize the capital gain tax? Are you required to pay Portuguese “wealth tax” on your new residence? What can you do to get the most benefit from the available allowances and reliefs? Planning ahead can save you thousands of dollars in unnecessary tax.

UK pensions

Learn about your options for pensions and the tax implications prior to making the right decisions.

People who qualify for non-habitual residence are entitled to an unbeatable 10% tax rate on pension earnings and withdrawals of 10 years or more however, make sure you are aware of the regulations.

A lot of British expatriates gain from moving UK pension funds to QROPS, which is a Qualifying Recognised Overseas Scheme (QROPS) or investing a lump sum into more tax-efficient options to Portugal. There’s no universal formula for an assured retirement, therefore personalized, controlled pension advice is crucial.

Estate planning

According to Portuguese succession law in the event that you do not decide to take action, ‘forced heirship rules can automatically transfer some of your global inheritance to the immediate relatives members, regardless of your intentions. Spouses and ascendants/descendants are exempt from the Portuguese version of inheritance tax (‘stamp duty’), but other heirs could be liable for 10% when receiving Portuguese assets.

UK citizens are often able to remain in the UK even after having lived abroad for many years, which puts your estate at risk for 40 percent UK taxes on inheritance. Proper estate planning can make sure that your estate goes to the heirs you choose without paying more tax than is necessary.

With expert advice from a specialist in cross-border issues, and an early, thoughtful planning, you can dramatically reduce the tax burden and also have security to rest and enjoy your fresh life here in Portugal.

Tax rates, scope , and reliefs can vary. All statements regarding taxation are based on our knowledge of the current tax laws and practices that may changes. Tax information is summarized but individuals should seek specific advice.