Foreign retirees in Portugal could pay the minimum Personal Income Tax (IRS)

  • ECO News
  • 15 September 2017

The measure is being studied for the 2018 State Budget. On the table is a flat rate, between 5% and 10%, for the future unconventional residents in Portugal.

The Portuguese Government is assessing the possibility of having a minimum IRS (Personal Income Tax) rate for foreign pensioners who want to live in Portugal under the unconventional residents’ regime. According to Jornal de Negócios, the measure is being studied for the 2018 State Budget.

For now, a flat rate is said to be on the table, between 5% and 10%, for future non-conventional residents; those who already have that statute are not included in the measure.

Therefore, it is expected that the taxation is low enough not to discourage them from coming to Portugal but, at the same time, the new rate hopes to satisfy countries such as Sweden, who wrote to the Finance ministry asking for the end of the double non-taxation of pensions that Portugal offers foreigners.

As for pensions, Portugal offers a zero taxation for unconventional residents; for the remaining cases, it depends. This regime was very criticized especially by Northern European countries, who accused Portugal of promoting unfair tax competition.

Unconventional residents in Portugal  include:

  •  those who remain in the country for a total of more than 183 days;
  • those who own real estate with the intention of using it as their usual residence;
  • emigrants who want to return to Portugal;
  • those who have not been considered residents for tax purposes in the five years prior to their request of being included in this regime.