Portugal: Here Come the French Retirees…
Is Portugal the new tax haven for French retirees? A new law passed on August 3, 2012, and which takes effect on 1 January 2013, exempts Portuguese residents who receive pensions from foreign sources from taxes on their private pensions. France’s Le Figaro reports.
With their straw hats and loaves of bread under their arms, some French retirees could be tempted to migrate to the beaches of the Algarve and the Azores in order to escape taxes in their homeland. Not as busy as Switzerland, and less known than Belgium, Portugal shows promise for the boldest of them who are ready to break all ties with the motherland.
According to Xavier Rohmer, partner attorney at August & Debouzy, French pensioners moving to Portugal could soon be exempt from income tax for pensions from careers earned ??in the private sector.
A new law provides exemption from taxes on private pensions to those Portuguese residents who receive their pensions from foreign sources. There is one condition however: the potential candidate for the new status of “non-habitual resident” cannot have claimed Portuguese tax residence within the last five years. In short, the candidate for exile must be a newcomer. Lisbon wants these immigrants to loosen their purse and support Portuguese economic growth by investing, for example, in real estate.
Minimum Presence of 183 Days Required
According to Xavier Rohmer, the tax treaty between France and Portugal does not oppose such a move because it gives Portugal the exclusive right to tax pensions. However, since January, the country exempts France’s private sector retirees.
For the latter, the Portuguese coast has become a paradise. To take advantage of the new law, French nationals must however become Portuguese tax residents and be able to prove a minimum annual presence of 183 days in Portugal. In addition, they no longer can own anything back in France, and must give up their tax residence. This favorable tax treatment is provided for a period of up to ten years.
Bu Portugal is not a tax haven for everyone since other forms of revenue are still taxed. And for certain types of income (dividends, interest …), France retains the right to levy tax. Portugal wants to one day become the Florida of Europe, but for how long will Bercy tolerate what some already consider to be an anomaly?