IN PORTUGAL, A ‘GOLDEN’ TAX SYSTEM IS ATTRACTING SWISS PENSIONERS

RNH – The ‘non-habitual resident’ status is attracting more and more older people to settle in Portugal. Agencies have specialised in helping people purchase property

In Portugal, a ‘golden’ tax regime is attracting Swiss pensioners to the Atlantic coast

Mobility The “non-habitual resident” (RNH) status is prompting more and more senior citizens to settle in Portugal

Agencies have specialised in helping people buy property

Portugal, with its sunny beaches, its cuisine and… its tax system. Since 1 January 2013, European pensioners wishing to rent or buy property in the country have been exempt from income tax for a decade. Provided they live there for more than 183 days a year, under the ‘non-habitual resident’ status.

This tax haven is accessible to a significant number of Swiss pensioners, as prices range from €2,000 (CHF 2,180) per square metre for a country house to €7,000 for a flat in central Lisbon.

In Switzerland, agencies specialising in helping people change their tax residence have also sprung up. 

In Portugal, it is possible to buy property for 5 to 8 times less. A property with 25 hectares of land located an hour from Lisbon costs 550,000 euros – the price of a three-room flat in Switzerland.” It is also possible to save around €1,500 in monthly expenses thanks to the low cost of living there. All this, just a 2½-hour flight from Geneva.

These advantages clearly have an impact on the statistics from the Federal Department of Foreign Affairs. In 2013 – the year the non-habitual resident status was introduced – 173 people aged 65 or over settled on the Atlantic coast. That is 56 more than in 2012 and 63 more than the previous year. The consular centre currently counts 697 Swiss nationals aged between 66 and 100 who are resident in Portugal.

The Maison du Portugal agency, for its part, completes around 70 property transactions a year. To help its clients settle in, it even offers 20 hours of Portuguese lessons at the Camões Institute: “Since the introduction of the new tax measures, we have received three times as many enquiries,” explains Cécile Gonçalves, listing the various reforms implemented by the centre-right Portuguese government. In addition to European pensioners, other sections of the population can also benefit from tax advantages. This is the case, for example, for individuals in the liberal professions. Non-Europeans willing to spend €500,000 on a property or invest €1 million in the country are granted a long-term residence permit, valid throughout the Schengen area. The famous “golden visa”.

For the government – which has set up a website dedicated to foreigners, livinginportugal.com, listing all the information on the country’s tax system and property market – any means is acceptable to revive the national economy, which has been hit hard by the crisis. By the end of 2011, Portugal had 735,000 vacant homes, according to the National Statistics Institute. This represents a 35% increase compared to 2001. In 2014, one in four homes was sold to foreigners – 23,000 houses and flats – according to figures from the Portuguese Association of Estate Agents. By the end of June, 2,420 ‘golden visas’ had been granted to non-European citizens, including 1,947 to Chinese nationals, followed by Brazilians and Russians. This represented a total investment of €1.46 billion, according to figures from the Portuguese authorities.

In 2014, the Algarve – a coastal region in southern Portugal – was voted the best destination for retirement by the American magazine International Living, which has been compiling these rankings for thirty years.

When the non-habitual resident status was launched, 173 Swiss retirees settled in Portugal

Taxation in Portugal

In Portugal, there are several types of tax: IRS (personal income tax), IRC (corporate income tax), IVA (VAT), IMI and IMT, a kind of council tax and property tax for homeowners, ISV (vehicle purchase tax) and IUC (single road tax).

Income tax (IRS) for pensioners

Portugal currently offers all foreign pensioners (who have worked in the private sector) as well as Portuguese nationals living abroad a 10-year income tax exemption. To qualify for this exemption and become a non-habitual resident, you must reside in Portugal for at least 183 days a year, prove that you have not lived there during the last five years, and transfer your main source of income there.

At the end of the 10-year exemption period, you will pay income tax like any other Portuguese pensioner, unless the Portuguese government extends the exemption period.