Many French, English and Americans are looking to settle far from the mainstream. For these affluent migrants, the Alentejo is the new eldorado. As a small, diverse country, numerous factors are key to the decision to move to Portugal. These include a mild climate, rich culture, low crime rate and attractive fiscal incentives, to name a few.
What is Forced Heirship?
In many Common Law jurisdictions, testators enjoy full freedom to leave their assets to whomever they wish. However, in other countries, this is not the case. Succession laws define given rights for the heirs. Despite the provisions made in a testament, a will can easily be overturned by these protected heirs. This is called Forced Heirship. Continue reading
3.4 million tourists who visited Portugal in 2018 were housed in Airbnb accommodations. The US company reports that these visits had an impact on the Portuguese national economy in the order of €2 billion, or the equivalent of 1% of GDP. On average, each of these visitors who booked via Airbnb spent €115 per day. Portugal is among the countries where Airbnb has the most significant economic impact, ranking 10th after the USA ($33,800,000), France ($10,800,000) and Spain ($6,900,000).
Despite an inauspicious start in 2009, the “NHR” programme has gained relevance, attracting thousands EU “tax refugees” to Portugal. Since 2014, new applicants have increased by 1400%. Between September of 2018 and March of this year, the number of new non-habitual residents rose by over 26%. Brazilians recorded the most significant jump with a gain of 52%, surpassing the Swedes. Citizens who qualify for “NHR” status pay “IRS” at a flat rate of 20% when they are linked to high added-value activities in Portugal. However, this group of targeted professionals accounted for just 7% of total applicants. Most are pensioners, seeking a 10-year tax holiday on their retirement benefits. In 2017, new “NHR” retirees numbered almost 10,000.
Opinions and proposals, shared on the “Great Debate” website (https://granddebat.fr/) – an initiative by French President Emmanuel Macron to respond to the protests of the “yellow vests” – refer to migrating French nationals who enjoy Portuguese Non-Habitual Residency (“NHR”) as “tax exiles” and to Portugal as “a fiscal eldorado” within Europe. Some participants contend that this double relief (tax exemption for pensions both at source in France and for 10 years in Portugal with “NHR” status) is intrinsically unjust, depriving both states of much-needed tax revenues and increasing the burden on paying taxpayers. The scheme is seen as promoting unfair tax competition among the Member States of the European Union.
Since joining the European Union, Portugal has benefited from extensive economic support. According to the Bank of Portugal, Portugal has received a total of €130 billion since 1986 or ±2.5% of GDP per year. Portugal ranks amongst the highest among countries with EU subsidy allocations. Nevertheless, the movement of money is reciprocal. Portugal also sends funds to Europe: customs duties, agricultural charges, VAT and others. Between 1996-2018, annual transfers have been relatively constant at ±1% of GDP.
The tax-holiday regime for Non-Habitual Residents (NHR), launched in 2009 to entice wealthy foreigners to participate to Portugal’s economic development in exchange for low or no taxation, reveals a very asymmetrical distribution between the two NHR target groups: “value-added” professionals and pensioners. Amongst the 27,367 beneficiaries of the NHR statute allowing for a partial or complete 10-year tax holiday in Portugal, there are only 2,140 “value-added” professionals (8%). Of these, almost half are senior executives of multinational companies. Continue reading
The “VPT” of your property is not directly related to construction costs or its market value (except for the soon-to-be-overhauled Location Coefficient). The Property Evaluation System (“Valor Patrimonial Tributário or VPT”) is a mathematical formula comprised of six factors, working as follows:
Attentive to Local Lodging activities, the tax man is tightening its grip on owners who fail to report and pay their taxes. Online platforms may soon be required to share information on customers, according to the Jornal de Notícias. The aim of the Portuguese Revenue is to avoid fraud and tax evasion. To this end, the ministry is studying ways to force the holiday letting reservation platforms to report “AL” operator data to Finanças.
Over the past seven years, the state has brought in more than 167 million Euros with the issuance and renewal of Golden Visas. The fees charged by “SEF” (“Serviço de Estrangeiros e Fronteiras”) are the result of more than 19,000 visas issued and over 17,000 renewals, a retention rate of almost 90% of investors and households.