Portugal is set to end tax exemptions for foreign residents and also scale back its golden visa scheme.
In proposed changes to the 2020 state budget, the ruling Socialist Party has revealed plans to raise the tax rate on the overseas pensions of so-called non-habitual residents (NHRs) from zero to 10 per cent.
This follows complaints from Finland and Sweden that, when combined with bilateral tax treaties, the current rules result in effectively a zero-tax rate on private pensions for foreigners.
The proposals would also exclude the cities of Portugal and Lisbon from the ‘golden’ visa scheme.
Currently, foreigners who purchase a property for 500,000 euros or more are granted a Portuguese residence permit. Not only does this entitle them to live in Portugal, but it also grants them the right to travel freely within the EU’s Schengen area. It is a scheme that has proved highly controversial, with critics accusing the scheme of allowing wealthy foreigners to effectively buy EU citizenship.
However, by removing the country’s two biggest cities from the scheme, the Portuguese government believes there would be a notable decrease in the number of people using the scheme.
Since it started in 2012, roughly 8,200 foreigners have taken advantage of the golden visa scheme. Of these, purchases in Lisbon and Porto are estimated to have accounted for two-thirds of this total.
The scheme is thought to have added almost 5-billion euros to the country’s economy in the past seven years.
It is believed these proposals will be passed by the minority Socialist government, and will be put to a full parliament vote, possibly next week.
Article published 29th January 2020