Spanish expat haven popularity under threat from Portuguese tax deal

Published:  14 Oct at 6 PM
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In a bid to attract expats away from neighbouring Spain, Portugal is offering a new tax exemption scheme eliminating double taxation of any income from overseas.

The new tax deal means that all income from overseas sources, including pension payments, will not now be subject to double taxation for at least 10 years. The scheme will apply to new arrivals who have not been resident in the country during the previous five years, although top-level professionals such as engineers, professors and technicians working within Portugal will be taxed at 20 per cent.

Spain has launched a similar scheme, but its five-year limit is considered to be too short to attract high-earning expats. Also, the requirement that applicants cannot have been tax-resident in Spain during the last 10 years is less generous than Portugal’s version, and the tax rate is an unattractive 24 per cent.

The scheme now presented by the Portuguese government has been on the statute books for five years, but has not been actively taken up or promoted. At present, local estate agents are seeing an upswing in enquiries from potential UK migrants and are expecting their German equivalents to follow suit in the near future.

Meanwhile in Spain, the thousands of Brits caught up in the country's infamous property scams have been given a gleam of hope via the awarding by a Spanish court to four British families of £140,000 in compensation. The landmark ruling has taken 10 years to arrive, although lawyers expect another fight may be necessary before the families get their hands on the money.
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