Moving to Portugal? Do it now, says financial adviser
Portugal financial advisers Blevins Franks, with offices in the Algarve and Cascais, have experienced an increase in enquiries from UK citizens considering moving to Portugal since the Brexit referendum in 2016. Partner Matthew Krystman says those wanting to move should do so before March 29, 2019 to ensure guaranteed residency rights.
“There’s a buzz; there’s an energy in Lisbon which is hard to ignore,” says Matthew Krystman, Partner at Blevins Franks Cascais office. “Portugal has changed enormously over the past 15 years. It has made huge strides. You can feel the money pouring in and businesses wanting to be based here. That optimism feeds momentum and people are coming from all over the world to set up companies.”
Part of the reason is that Portugal is in vogue these days. Over the past 20 years, Expo ‘98, the European Football Championship in 2004, the Web Summit in 2016 and 2017, and the Eurovision Song Contest this year have all contributed to projecting a positive image of Portugal on the world stage. Not to mention the warm climate, great food, fine wines, legendary hospitality, world-class infrastructure, high-quality property, excellent international schools and perceived safety in the country. “But it’s more than that,” says Matthew Krystman, who has the prestigious Level 4 Diploma for Financial Advisers. “It’s also about the attractive tax regimes and ease of setting up a business in Portugal.”
The leading wealth management firm in Portugal
Blevins Franks has been the leading wealth management advisory to UK nationals living in Portugal for 25 years. It is owned by its management and locally-based partners.
It has two offices in Portugal: in Loulé, with a team of eight covering Algarve and Southern Portugal; and Cascais, with a team of three covering Lisbon, Porto and Northern Portugal.
It can draw on advice and expertise from any of its 20 offices in seven countries – Portugal, Spain, France, Cyprus, Malta (Operations Hub), Monaco and the United Kingdom (Head Office).
Its team of in-house experienced specialists enables it to provide integrated tax, wealth management and estate planning services to mostly UK clients in Portugal and across Europe. All financial and pension advisers are authorised and regulated by the UK Financial Conduct Authority and are Level 4-qualified.
Attractive tax jurisdiction
“In the past decade, Portugal has created one of the most attractive tax regimes for business and retired EU foreign nationals wanting to move, live and work in the country,” he says.
As a retiree, the Portuguese tax authorities will not tax your pension for 10 years under the non-habitual resident status scheme and “that’s a considerable saving,” says Matthew Krystman.
There is also no inheritance tax in Portugal so, with the right advice and sound financial planning, people can also reduce their estate duties.
There are also benefits in terms of a low 20% flat-rate tax regime for high value-added activities benefitting doctors, architects, dentists, business owners, company directors and investors, providing they are registered as living and working in Portugal.
“Portugal has been very clever, first by bringing wealthy foreign retirees who are investing in property, buying cars, using restaurants, shops and golf clubs. The economy has moved enormously. We can see it in Lisbon and Cascais. Property prices have gone up exponentially, so many more restaurants have opened and that’s great for the economy.
“Lisbon has gone from being the sleepy backwater it was 15 years ago to the ‘it’ place it has become today. It’s been amazing to see the same kind of transformation that took place in Barcelona over 30 years ago happening in Lisbon and Porto now,” he adds.
Urban regeneration and property renovation have undoubtedly been, in part, behind this transformation, as has Lisbon’s popularity as a destination for innovative new tech companies and startups which are helping to drive the economic recovery.
Matthew Krystman cites Beato in Lisbon, which has become a startup hub and incubator, and Second Home in the Mercado da Ribeira, which offers coworking spaces where Blevins Franks has clients.
“Suddenly you have all these entrepreneurs. I have been dealing with international business people who are running business operations in Africa and all over the world but have come to live in Lisbon because of the tax breaks,” he says, adding that the city has become a “mini San Francisco” and when there are entrepreneurs, the energy and buzz attract other companies.
Brexit – the time is now
Blevins Franks has experienced a deluge of enquiries since the UK voted to opt out of the EU and has even had to recruit more staff to deal with the demand. “We’ve seen an increase in enquiries from UK citizens either wanting to move or considering it. Our advice to them is to do so before March 29, 2019 which is the date the United Kingdom leaves the European Union. Of course, there will be a transitional period after that, which ends on December 31, 2020, but no one really knows the exact nature of what will apply in that period or not. So if people want to plan with certainty, they should move before March 29, 2019,” Matthew Krystman advises.
Blevins Franks says that those that do heed the advice will get their residency rights guaranteed on moving to Portugal, which includes the European Union Portugal Residency Card (Autorização de Residência) whereby under existing legislation Portugal and the European Union will guarantee residency rights beyond March 29. The initial Temporary Residency Card (Residência Temporária) is valid for one year but can be renewed for successive periods of two years.
The Permanent Residency Card (Residência Permanente) is valid for 10 years.
Tailor-made financial planning
For the British leaving the UK, it’s not as easy as people think when it comes to taxes. There are Statutory Residence Tests and, as a leaver, it’s important not to spend too many days in any given year back in the United Kingdom in subsequent years in order to keep tax benefits.
Blevins Franks gives advice on structuring their pensions and investments before they leave. “We give people a road map on how to do this, so they are both compliant with Portuguese law and tax efficient.
“Pension legislation changes constantly too, which is why people need advice, and there is an extra property tax layer for IMI. We have to factor in all these changes when offering advice, which constantly evolves. There is no one-size-fits-all solution,” explains Matthew Krystman.
“The tax system in Portugal is different in many ways and if people don’t get the correct advice, they may not take advantage of the tax breaks. There’s a lot of planning involved because what works in the United Kingdom may not work in Portugal and their asset portfolio may need to be restructured as laws, rules and regulations change,” he warns.
Matthew Krystman is at pains to stress that Blevins Franks works with EU jurisdictions such as Luxembourg and Malta but not with blacklisted jurisdictions. “All our investments are compliant with EU law and are placed within the EU. The UK might be leaving the EU, but what we manage, invest in and advise on is within the EU and nothing offshore.
“One of the first things we would do is carry out a financial planning questionnaire, assess the individual’s needs, assets and goals. These vary. Does the client want income and growth or a bit of both? Would the investment be built purely around the client or are subsequent generations involved? There are so many layers and options, and every case is different. Our aim is to produce holistic and tailor-made recommendations that cover all aspects of your assets,” he says.
The law regarding trusts has changed and there has been a lot of work around restructuring trust funds since 2015 from when they have not proved so tax-efficient in Portugal. For all investments, Blevins Franks has links with large and respected investment houses – some of them with their own indices – to offer advice on firms and products to invest in. “At Blevins Franks, we can open up a world of investments to people that they couldn’t get on their own.”
Moving after Brexit
One concern is what will happen to those UK citizens who want to move to Portugal, but for business reasons or delays on property sales, miss the deadline. Will the British be made to feel unwelcome after March 29? On that score, Matthew Krystman allays fears.
“Portugal and the United Kingdom have the oldest alliance in the world. I deal with some people who have been running family businesses in Portugal for generations and one of them reacted by saying, ‘we’ve been in business here for over 150 years, long before Portugal joined the EEC in 1986 and life and business will go on’.
“In my opinion, they will probably have to jump through a few hoops, go through the visa process, some form-filling and applications; where before March 29 they can just walk through customs with their passports and can live and work here.”
But does Matthew Krystman have any regrets moving to Portugal in 2003? “Portugal was fate for me. It brought me everything. I met my wife here and have my wonderful daughter, too. I have made amazing friends and have enjoyed an interesting and rewarding career. For me, this country has been spectacular and has personally made me very happy,” he concludes.
Article submitted by Essential Business – June edition available in newsstands.
By CHRIS GRAEME