Parliament approves end to “tax eldorado” for foreign pensioners

  • ECO News
  • 5 February 2020

The Parliament gave the "green light" to the PS's proposal to end the regime for non-habitual residents by applying a 10% IRS rate to foreign pensioners.

Portugal’s Parliament approved this Tuesday the end of the tax exemption currently enjoyed by non-habitual residents. The proposal determines that these foreign pensioners will now pay an IRS tax of 10%. The measure will only apply, however, to retirees who now arrive in the country.

In question is the regime for non-habitual residents, which was created in 2009 and has allowed foreign pensioners to “escape” the taxation not only in their country of origin but also in Portugal. However, the proposed amendment puts an end to this “tax eldorado”.

“Non-habitual residents in Portuguese territory are taxed at a rate of 10% in relation to net pension income”, reads the proposal approved with the favourable votes of PS, PSD, PAN. BE and PCP abstained, and the others voted against.

It should be noted that this IRS rate will only be applied to pensioners who arrive in Portugal now; that is, the exemption should be maintained for non-habitual residents already registered as such with the Tax and Customs Authority (AT) or who have already been submitted.