It has been over a year now since the UK left the European Union. And while British expatriates continue to enjoy the life they were used to in Portugal, there have been some changes to understand and get used to, some more inconvenient than others.
Holiday homeowners will be feeling the effects of Brexit more than residents as they now have to restrict the number of days they can enjoy their Portuguese home. And things have become more complicated for UK nationals applying for residence now, particularly those who want to work, but the benefits of retiring to Portugal still exist, including the tax advantages.
Non-residents limited to 90-day visits
You should have an up-to-date residence permit if you were living in Portugal before December 2020. This means you can enjoy the same citizen’s rights as you had before.
Without an official Portuguese residence permit, as a ‘third country’ visitor post-Brexit, UK nationals can now only spend up to 90 days in any 180-day period without a visa, even if you own Portuguese property. This 90-day limit applies across the Schengen zone.
Applying for visas and residency for Portugal a year after Brexit
The D7 Passive Income Visa (D7 Visa) and D7 Passive Income Residency Permit (D7RP) are suitable routes for most individuals wishing to retire to Portugal and who have the financial resources to support themselves.
To qualify for the D7 Visa or D7RP, you will first need to obtain a Portuguese NIF number for tax identification purposes and open a Portuguese bank account. You will also need to provide supporting documentation including proof of purchase or rental agreement of your property in Portugal; valid travel insurance covering all medical expenses and a health insurance policy; proof of enough financial resources to support yourself, and a UK criminal record check.
The D7 Visa allows for two entries, up to four months each, during which time you can convert to the D7 Passive Income Residency Permit. The D7RP is then valid for two years and renewable for a further three years by reconfirming the key qualifying criteria such as health insurance.
Portugal Golden Visa
The Portuguese Golden Visa (PGV) has been a popular option, though the rules around the investment required changed from January 2022, which may make this a less attractive option.
A key benefit is that it does not commit you to spending six months in the country each year to maintain residence, you only need 14 days of physical presence across the first two years of the PGV.
To be eligible for this visa, you will need to make a substantial qualifying investment in Portugal (as well as provide similar documentation as for the D7 visa above). Most people opt to buy a property (minimum investment generally €500,000), but from January 1, 2022, this is no longer possible when buying property classified for habitation in most coastal areas and cities such as Lisbon and Porto.
However, it is still possible to obtain the Golden Visa by investing in a property classified for other uses, such as tourism, meaning that many resort areas in the Algarve still have qualifying properties for sale. There are also areas in the Algarve such as Monchique, Aljezur and parts of the interior in councils such as Loulé that are considered low density and/or “interior”, thereby also still qualifying for Golden Visa investment.
There are other qualifying investments you can make, with their own minimum amounts, so the Golden Visa is still an option for those with the required capital.
You are resident in Portugal for tax purposes if you spend more than 183 days a year or have a permanent home here. Whether you have the pre-2021 residence card or D7/D7RP visa, you are likely to be tax resident here and need to declare your worldwide income and gains accordingly. If you have the golden visa, it will depend on how long you spend in the country.
UK-based financial advisers and services
The UK lost financial services passporting rights with Brexit and UK based advisers are no longer authorised to give advice within the EU. As 2021 went on, more UK based advisers conceded they could no longer appropriately advise nor service EU resident clients. This also applies to banks, investment and insurance companies, stockbrokers etc.
If you still use a UK-based financial adviser or service, confirm they can still legally provide you with regulated services, or if there are limitations. Will you have to return to the UK for advice? Does their professional indemnity insurance cover you in the case of poor advice?
There may be more changes to come. The pandemic may have delayed some measures, and as the UK develops rules that do not need to be aligned with its European neighbours, the differences could widen and present more challenges. But also, as time goes on, everyone will become more used to the new systems and they’ll become the norm.
We’re encouraged to see that, on the whole, Brexit hasn’t put people off moving to Portugal. Regardless of Brexit, from a wealth management point of view, you have always needed to adjust your tax, estate and financial planning to suit the local regime and make the most of what Portugal has to offer, so take specialist cross-border advice.
All information is based on Blevins Franks’ understanding of legislation and taxation practice, in the UK and overseas at the time of writing; this may change in the future.
By Sharon Farrell
Sharon Farrell is a Partner of Blevins Franks in Portugal.