End tax exemptions for foreign pensioners moving to Portugal; End of a “buen retiro” that thousands of Italians had enjoyed over the years. The decision was announced by Portuguese Prime Minister Antonio Costa and will come into force as early as early 2024.
“Maintaining the exemptions in the future would be tantamount to prolonging an unjustified fiscal injustice and would be an indirect way of further increasing prices on the real estate market,” explained the socialist head of government. However, the benefit system will remain in force for those pensioners who have already received it, explained the Lisbon head of government.
In 2009, Portugal introduced a series of incentives and bonuses for those moving to the country, with the only requirement that they reside there for at least six months of the year. Precisely because of the undesirable effects (especially the real estate price boom, which hurt the Portuguese), the left-wing government had already weakened the benefits in 2020.
In its first version, the “soft” regime provided a complete tax exemption for foreign pensioners moving to Portugal, using the so-called “non-habitual residence” formula: at least 15,000 people made this choice, 7,000 of them Italians concentrated in the Algarve or in the Lisbon area. In 2020, the first partial reversal introduced a “flat” rate of 10%.
The benefits for pensioners were obvious: the governments of Lisbon and Rome had signed a system of “non-double taxation” in 1976, under which pensioners “living abroad” paid taxes only in Portugal, while benefiting from a lower cost of living compared to Italy . The only condition that Lisbon requires from new arrivals (besides staying in the country for at least six months, even non-consecutive) is to buy a house or sign a rental agreement.
But this last condition has distorting effects in the long term: property prices have risen by 78% in just a few years, causing serious harm to Portuguese citizens.
In addition to Portugal, other European countries are also “tax havens” for pensioners: Malta and the Canary Islands in Spain also offer benefits.
(News will be updated)