Portugal and Pensions

Bathtime

A friend is considering moving to Portugal in retirement he tells me that they encourage people to do so at the moment by offering low tax on pensions.
Anyone know more about this??

SonOf

Anyone know more about this??

yes.......

cfw1994

I have also heard this....plenty you can google to confirm they do appear to offer impressive benefits for 10 years.
For example:

• http://www.makethemoveportugal.com/news/article/10/tax-free-pensions-in-portugal
• https://www.blevinsfranks.com/news/article/NHR-Portugal-ten-years-tax-free-pensions
• https://www.economist.com/finance-and-economics/2018/10/04/loopholes-allow-some-pensioners-in-the-eu-to-retire-tax-free

Having never been there....it is something I suspect I should check into :rotfl:

DairyQueen

Yep, we are considering this.

Note that Madeira is a Portuguese island and has a lovely winter climate. It also benefits from friendly people and a low crime rate.

Just saying.

NedS

Wow, so someone could have a large SIPP plus other pension income, take the tax free lump sum(s) here, retire and move to Portugal and draw the rest as drawdown income in Portugal over the next 10 years tax free. That sounds like a great way of getting assets out of a pension wrapper without paying any income tax.

nigelbb

NedS wrote: »

Wow, so someone could have a large SIPP plus other pension income, take the tax free lump sum(s) here, retire and move to Portugal and draw the rest as drawdown income in Portugal over the next 10 years tax free. That sounds like a great way of getting assets out of a pension wrapper without paying any income tax.

You can do something similar if you are resident in France except the tax rate is 7.5% & you must take it all in one lump sum.

bostonerimus

Double check the U.K. Portugal Tax Treaty. Many pensions ( but not all) are taxed in the country of residence, but that does not necessarily eliminate the tax due on the pension where it arises as it is taken as a tax credit. A cursory reading of the tax treaty seems to show that UK private ( non government) pensions are indeed only taxed in Portugal if you are a Portuguese resident

Thrugelmir

Tax legislation could change at any time.

jamesd

bostonerimus wrote: »

Double check the U.K. Portugal Tax Treaty. Many pensions ( but not all) are taxed in the country of residence, but that does not necessarily eliminate the tax due on the pension where it arises as it is taken as a tax credit. A cursory reading of the tax treaty seems to show that UK private ( non government) pensions are indeed only taxed in Portugal if you are a Portuguese resident

It's right.

A person could also take the whole of the otherwise taxable 75% tax free in one lump.

You must avoid becoming UK tax resident for at least two and likely at least three tax years after doing it. If you return too soon all of the money is taxable in the tax year of return.

lisyloo

Sounds great, but surely reciprocal health care arrangements post brexit are going to be important.

noh

lisyloo wrote: »

Sounds great, but surely reciprocal health care arrangements post brexit are going to be important.

Access to health care in Portugal including Madeira is residence based. Once you have registered as a resident you would be entitled to the same care as any other resident.

https://www.expatica.com/pt/healthcare/healthcare-basics/healthcare-in-portugal-106770/#Healthcare-in-Portugal