July 24, 2019

Portugal property tax – the benefits to overseas buyers and investors

Portugal property tax

Portugal property tax: just how is it benefiting overseas property buyers? 

Many Brits love investing in Portuguese property and no wonder why. It’s stunning and has so much to do and see, which makes buying a holiday home in Portugal very appealing to many.

A lot of people who have retired like to invest in Portuguese property, they can really make the most of the sunshine and relaxing lifestyle that it has to offer. A big secret of theirs, though, is their bestkept preferential tax regime for new, long-term residents.

The Non-Habitual Regime (NHR) for new tax residents is an area that not many expatriates look into – digging deeper than the surface is crucial, to know the ins and outs of a country’ real estate market. By doing so, a person, couple or family can really reveal incredible benefits, which is why reviewing the options is a great idea.

The Portuguese government introduced the NHR regime in 2009 to entice people to move to their country. encourage individuals and families to move to Portugal. This regime provides beneficial tax treatment for the first 10 years of residence and is open to those in retirees and those who are still employed.

The qualification for this regime is restricted to those who have not been tax resident in Portugal for any of the last five tax years – it’s very simple with little complications.

Any income received from a UK pension is exempt from Portuguese tax provided it is:

• Taxed in another country under the terms of the tax treaty; or

• Is not regarded as Portuguese source income under Portugal’s domestic legislation.

This indicates that UK pension income can be excluded from taxation in Portugal and the UK, which is a definite situation for private pensions, UK company pensions and the UK State Pension. This is an attractive element for those looking to live there – Portugal property tax isn’t bad at all.

The rate of tax falls after five years, making it only 60% of the profit taxable and after eight years, it drops to just 20%.

These policies for Portugal is particularly important to UK nationals living in Portugal, as tax rules and regimes there are seemingly benefiting people a lot. And what is better yet is that so many people are now looking to buy a second home abroad, so understanding such great taxation regimes in countries such as Portugal can really influence buyers decision on location.

Written by Gemma Smith

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