Portuguese government to tax expat retiree pensions

Published:  19 Sep at 6 PM
Want to get involved? Become a Featured Expat and take our interview.
Become a Local Expert and contribute articles.
Get in touch today!
Portugal’s foreign retiree community’s pension payments are about to become taxable, according to the country’s Finance Minister.

The introduction in 2009 of a special tax break for ‘non-habitual residents’ has seen an increase in Portugal’s popularity as an international expat retirement hub, but confirmation that the government is now planning to introduce a new income tax regime is certain to cause concern in the expat community. When quizzed by journalists, the Finance Minister stated the necessary amendment would be enforced some time in 2018.

Asked to state the reasons behind the decision, FM Mario Centeno said the change was being considered in order to maintain ‘good tax relations’ with other EU member states. He denied any link between the move and the need for Portugal to increase its total tax revenues, adding that Finland, the Netherlands and Sweden amongst other EU states had expressed discontent over the present tax break granted to expat pensioners. According to Centeno, it’s necessary for Portugal to maintain its fiscal independence, but equally important to respect tax frameworks in Europe.

Earlier this year, Swedish Finance Minister Magdalena Andersson stated Swedes emigrating to Portugal are more than happy to take their totally tax-free pensions with them, suggesting that their destination decision is strongly influenced by that country’s special deal for incoming pensioners. Her stance is straightforward, in that pensioners must pay taxes on income either in their home country or in their new tax jurisdiction, and includes her belief that non-taxation of expat pensions in Portugal is unacceptable.

Should the change go ahead, it will be the second time the Portuguese government has backtracked on its promises to expatriates. In 2002, offshore companies owning real estate in Portugal subject to similar tax advantages were thrown into chaos by the removal of their special tax regime. Those who suffered most from the change were the many thousands of expat retirees who’d legally used the route to purchase holiday and retirement properties. Those affected were forced to incur huge capital gains tax and stamp duty bills in order to change their property registrations to private ownership.
Like this news?

Comments » No published comments just yet for this article...

Feel free to have your say on this item. Go on... be the first!

Tell us Your Thoughts On This Piece:

Your Name *
Email * (not published, needs verification one time only)
  • Facebook
  • Follow us on Twitter
  • RSS feed
  • Facebook

Latest Headlines

News Links

News Archive