Tax
treaties have been signed between Portugal and other countries of the European
Economic Area. These treaties mostly follow the standard OECD tax treaty model
and thus allocate the right to tax pension income to the country of residency
of the tax payer.
Internal
Portuguese tax rules, resulting from the financial crisis of 2008, were rolled
out in an effort to attract wealthy citizens from other countries by exempting certain
income types, including pensions, from Portuguese income taxes. This exemption
was limited to a period of up to 10 years. The new immigrants do not pay the
normal Portuguese income taxes, but indirectly bring wealth to the country by locally
buying properties, goods and services.
The Portuguese tax exemption
has induced pensioners from all over Europe to move to Portugal. They most
often came from Nordic countries (Sweden and Finland) and also from Belgium,
France and Germany. These countries were obviously not very happy with the loss
of income, resulting from fiscal emigration of a part of their population and
have put growing pressure on Portugal to change the rules.
Their
efforts now seem to bear fruit as plans have been unveiled by the Portuguese government
to change the tax exemption into a limited taxation. Mention has been made of
the planned introduction of a 10% tax rate.
This new
rate is in line with the lowest possible Belgian tax rate on pension lump sum
payments, for persons, who retire at the age of 65 years or after a full
45-year working career. For other Belgian pensioners, the tax rates still remain
higher (between 16,5% and 20%), but for them the tax incentive to relocate to
Portugal will also significantly decrease.
We will need to await the further rolling out of the new tax rules by the Portuguese government, but it is likely that the recent announcements regarding the proposed changes will already start to slow down the flow of Belgian tax migrants to the country.
Fiscaal kluwen van de gemeubelde verhuur
+32 (0)476 49 09 01
Rijsenbergstraat 150
9000 Gent
Belgium
Portugal planning to tax immigrating pensioners
Portugal planning to tax immigrating pensioners
Related posts
Time for…. retirement
Belgian taxation of real estate income on behalf of non-residents – interest deduction soon to be ended
De strijd om de gemeubelde verhuur in het buitenland
NEED CONSULTANCY?
SOCIAL MEDIA
CONTACT
Contact[email protected]General Terms and Conditions
Categories Tags