Taking advantage of tax systems benefits & financial planning

Tax & financial planning

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If you're a wealthy person considering relocating to Portugal and become a tax resident under the Non-Habitual Residency (NHR) programme's tax regime, it is crucial to understand the nation’s taxation system and have a solid financial plan in place.

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Portugal offers several tax breaks and incentives for expats under the NHR tax regime alongside visa residency status, and with proper financial planning, you can optimize your tax position and ensure a smooth transition for the next 10-20 years through support from one of our team of experts. Here are some uncomplicated and helpful tips to guide you through the taxation aspects and financial planning you must consider.

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Portugal Non-Habitual Residency tax regime (10 year):

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1. Non-Habitual Resident (NHR) Regime: take advantage of Portugal's Non-Habitual Resident (NHR) regime, which offers significant tax benefits for the first ten years. Under this regime, non Portugal based incomes such as dividends, royalties and rental income are taxed at 0% and overseas pension income carries a 10% tax rate. This can be further enhanced through advice from one our team where you could potentially pay as little as 3.8% tax each year for up to 20 years through our proprietary financial model.

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2. Tax Residency: to benefit from the NHR tax scheme, you need to establish tax residency in Portugal. You must also have residency through either a visa such as with a D7 visa or be a member of the EU. You must also ensure you meet the criteria set by the Portuguese tax authorities, such as not having been a tax resident in Portugal in the last 5 years. Consult with one of our expert tax advisors to understand the residency requirements and plan your move accordingly. Alternatively, talk to one of our team about other visa programmes such as the Digital Nomad Visa (D8) and the Golden Visa.

3. Wealth and Inheritance Tax: one of the many appealing aspects of Portugal's tax system is the absence of wealth tax and inheritance tax for direct heirs. This means your wealth and assets are not subject to these taxes, providing an advantage for wealthy individuals and families.

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4. Double Taxation Agreements: take advantage of the double taxation agreements between Portugal and the UK and some other countries to prevent being taxed twice on the same income or assets. These agreements ensure that you receive relief or credits for taxes paid in one country against your tax liability in the other. For tax purposes, consult with a tax advisor to understand how these agreements can benefit you and optimize your tax position.

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5. Estate Planning: consider the implications of your estate planning when relocating to Portugal and get advice on this from one our experts. Let us help you familiarize yourself with Portuguese laws regarding wills, inheritance, and estate distribution. We can help you engage the services of a qualified estate planning attorney to help you navigate these matters and ensure your assets are distributed according to your wishes.

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6. Capital Gains Tax: under Portuguese tax law, capital gains from the sale of immovable real estate property are subject to tax. However, if you're over 65 and have owned the property for more than three years, you may be exempt from capital gains tax. It's essential to consult with one of our tax advisors to understand the specifics and plan your property transactions accordingly.

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7. Wealth Management and Financial Advisors: engage with our expert wealth management team and financial advisors which offer expert cross-border taxation guidance. They can help you structure your assets, investments, and different source income streams in the most tax-efficient manner, in relation to your current home nation and Portuguese tax laws. Our knowledgeable professional experts can assist you in optimizing your wealth and ensuring compliance with different jurisdictions.

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8. Comprehensive Financial Plan: We can help you develop a comprehensive financial plan that aligns with your long-term goals and considers your tax situation, investment strategy, retirement planning, and estate planning. Work with our financial planners who specialize in international relocation and understand the unique challenges and opportunities that come with such a move.

Conclusion: Relocating to Portugal as a wealthy resident offers tax advantages and lifestyle benefits.

By understanding the taxation system, taking advantage of the tax regime, and engaging professionals for financial planning, you can optimize your tax status and ensure a successful transition. Tax consulting is recommended, seek advice from tax advisors, estate planning attorneys, and financial experts to develop a tailored strategy that aligns with your objectives and safeguards your wealth in both your homeland and Portugal domicile.

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Disclaimer: The guidance above should not be fully relied upon and does not constitute formal instructed professional advice. In relation to tax advice in Portugal, please engage and instruct a regulated professional for all tax advice and structured financial planning. Please contact Portugal Pathways if you would like an introduction to one of our professional advisors.

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