Expat tax exemption attracts wealthy pensioners to Portugal

The rush to migrate to Portugal since the beginning of the year is linked with the country’s new ruling on tax exemption for wealthy retirees.

Since the new rules were introduced, more than 200 millionaire pensioners able to satisfy the Portuguese government’s handful of requirements have made the move, joining a huge number of Britons already in the country. However, Portuguese retirees are less than happy about the new rules, as they are facing a tax levy of 3.5 per cent which can rise to 40 per cent if they earn more than €7,500 on top of their pensions.

The expat tax-exemption package applies to retirees who spend part of each year in the country and has, together with a similar law enacted three years ago, lost the country around 30 million in tax revenue. The motivation behind the new law would appear to have been connected with pressure from Swedish interest groups, with the legislation now covering retirees from all EU countries.

Requirements for tax exemption status include the receipt of an overseas occupational pension as well as part-time residence in the country, and the new law allows pensioners to be exempt from income tax both in Portugal and in their home country. One obvious benefit to Portugal is the expected increase in expat retiree arrivals.

Portugal has long been a popular destination for retirees from the UK, with the country second only to Malta in a recent survey. Cheap properties, sunshine, a relaxed lifestyle and an established expat community have all featured strongly in pensioners’ decisions to relocate.