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Retirement in Portugal: towards the end of the tax benefit

2020-01-28T08:07:16.761Z


Many French retirees have chosen to go to Portugal to take advantage of the sun and the tax exemption from


"Portugal or the tax haven for foreign retirees", headlined last April Sábado, a local weekly newspaper. Except that the tax advantage with an exemption from income tax (RNH) for ten years to attract foreign retirees to Lisbon or to the seaside resorts of the Algarve could partly disappear.

The ruling Portuguese Socialist Party has proposed to tax 10% of European pensioners residing in Portugal in an amendment to the 2020 finance law. This measure should only apply to new residents.

In recent years, Portugal has attracted thousands of European pensioners. According to estimates, they are today nearly 30,000 retirees to benefit from the RNH, including a third of French. But in total, there are at least 50,000 French expatriates in Portugal.

A lifeline during the crisis

In the midst of the financial crisis, the country had granted these retirees this tax measure in 2009 on the condition of residing in Portugal at least six months a year. After 10 years, the progressive tax system is then subject. This provides for a maximum tax rate of 56.5% for income over 250,000 euros per year.

Henceforth, Portugal, which was on the verge of bankruptcy in 2011, leading it to request a loan of 78 billion euros paid by the European Union and the IMF began to regain growth from 2013 to reach 3, 5% in 2017.

Unemployment has gone from over 17% in 2014 to 6.4% today and the public deficit is about to disappear, at 0.2% of GDP, unheard of since the advent of democracy in 1974.

Soaring property prices

The arrival of retirees has collateral effects. These retirees are the first buyers of real estate, which has the consequence of overheating prices in cities like Lisbon or Porto. As a result, many citizens were forced to leave the city centers.

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In addition, this RNH status has provoked criticism in Europe. Sweden and Finland have withdrawn from tax agreements with Portugal so as not to lose the tax revenues of their elderly citizens. The Portuguese Left Bloc party also opposed the scheme, which is considered unfair to national retirees, who must pay tax on their pensions.

Source: leparis

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