Retired in Portugal

Tax Benefits for Pensioners in Portugal

Tax Benefits for Pensioners in Portugal
The legal regime has been in place since 2009, but the tax law was clarified in the 2013 State Budget Law. Thus, since the beginning of 2013, the Portuguese government has allowed any foreign pensioner who wishes to establish their habitual tax residence in Portugal, and who has not had a tax residence in Portugal in the last 5 years, a tax exemption for a period of 10 years, which can be extended.
Therefore, anyone receiving a pension paid in a country with which Portugal has established a Double Taxation Agreement will be exempt from taxes in their country of origin because they are now tax resident in Portugal. As a result, they will not pay taxes in Portugal under the special legal exemption rules that have now been established.

Portugal has thus become a more attractive country from a tax point of view within the European Union. In order to benefit from this status, the person concerned must obtain the status of "Non Habitual Resident".

In practice, what this means is that a pensioner who obtains a pension in their country of origin and transfers their tax residence to Portugal will be totally exempt from tax. This measure is a strong incentive for the property market, since pensioners can buy their dream house or farm in Portugal, financing the purchase with the monthly amount they no longer pay in retirement in their country of origin.

Non-residents of the European Union who are willing to invest in Portugal by buying a property worth at least 500,000 euros can obtain the so-called Golden Visa - a permit to live in Portugal permanently.
Finally, not only pensioners can benefit from a highly advantageous tax regime, but also professionals who carry out a high value-added activity, such as doctors, engineers, architects, psychologists and others who appear on a list drawn up by the Tax Administration, if they obtain the aforementioned "Non-Habitual Resident" status, will benefit from a reduced IRS rate of just 20%.

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