Portugal has long been a favoured tourist destination for Europeans, but thanks to some tax incentives introduced by the Portuguese government many tourists are now deciding to extend their stay.
Besides the obvious benefits of around 300 days of sunshine in the south coupled with the low cost of food and property, there are now three tax breaks that particularly appeal to retired people, foreign workers and business owners.
Tax Breaks for Pensioners
Foreign pensioners who stay in Portugal for at least 183 days per year can enjoy an exemption from paying income tax. This can mean a saving for some retirees of up to €30,000 euros a year. According to the Chamber of Commerce and Franco-Portuguese Industry, over 4000 people emigrated to Portugal from France last year, most of them of pensionable age.
Portugal is particularly attractive to the older generation due to the mild climate (kind to bones and joints!) and the fresh produce and healthy cuisine. In addition, the cost of living is generally 25% lower compared to the big European countries. And the safe environment, coupled with the friendly nature of the Portuguese – many of whom have excellent English, French and Spanish language skills – means Portugal is now among one of the top destinations for older expats.
Tax Breaks for Workers
For those who still work and are paying a high tax rate in their current country of residence, Portugal offers a tax category called a “non-habitual resident” where a low flat tax rate of 20% on earnings are applied.
This status can be kept for a maximum of 10 years and can be used by anyone in the following professions: actors, architects, artists, auditors, college professors, company managers and directors, computer technology and data processing professionals, dentists, doctors, engineers, musicians and scientists.
The other plus-point for workers is that rent and property prices in Portugal are very low, allowing many workers to live easily within their budget (and with the added advantage that many properties come furnished with either a private or communal swimming pool.)
Tax Breaks for Entrepreneurs
For non-European business owners looking for a quick way to take up Portuguese residency and take advantage of the tax breaks, there is a fast-track system called a Golden Residence Permit.
To qualify for this investor visa, the applicant must put in a minimum capital investment of €1,000,000 (this also includes investment in shares); create at least 10 jobs with the project; and acquire a property for a minimum of €500,000.
From a business point of view, Portugal has improved hugely in recent years now much of the red tape that bound the country previously has been cut – company incorporation can take as little as one day, licensing regimes have eased their requirements, and the buying and selling of real estate now follow much simpler procedures.
So with these tax incentives, Portugal is now looking even sunnier not only for retirees but also for entrepreneurs and workers. For more information on how to relocate to Portugal, including help with accounting, company formation and opening bank accounts, please contact our team via our contact page or call our office on +33 (0) 1 53 57 49 10.
