Torre de Belém, Lisbon

Moving to Portugal? The tax and wealth management essentials to know before you go

While it is never too late to review and adjust your financial planning for living in Portugal, if you are still planning your move, it pays to do your research and take advice before you do. With early and careful planning, you can make the most of tax-efficient opportunities. 

Residence post Brexit

While there is more advance planning and paperwork involved now, most UK nationals can achieve their dream of living in Portugal, particularly if retired.

The D7 Passive Income Visa (D7 Visa) and D7 Passive Income Residency Permit (D7RP) are the most suitable routes for most individuals wishing to retire here. You need to supply supporting documentation including a Portuguese tax identification number; proof of property purchase/rental agreement and of sufficient financial resources; suitable health insurance, and medical and criminal record checks.

Portuguese income tax  

While those qualified as ‘non-habitual residents’ receive beneficial tax treatment (see below), other Portugal tax residents are liable to Portuguese tax on worldwide income. Certain capital gains are added to income whereas others are exempt or taxed at a fixed rate.

The 2023 income tax scale rates range from 14.5% (for income under €7,479) to 48% (income over €78,834). A 2.5% or 5% solidarity tax is levied on income over €80,000 and €250,000 respectively.

Investment income is taxed at a flat rate of 28% (35% if in a ‘tax haven’).  You can opt for the scale rates.

You are usually considered tax resident after 183 days in Portugal, but it can be earlier if you relocate with the intention of making it your home.

Non-habitual residence regime

New residents (not resident in the last five years) can enjoy 10 years of tax advantages by applying for Portugal’s ‘non-habitual residence’ (NHR) status.

Besides a fixed 20% income tax rate to those employed in ‘high value-added’ professions, NHR lets you receive some foreign income tax free or at a reduced rate. You could also pay no Portuguese tax on gains from UK property.

Tax on UK pension income

Once tax resident in Portugal, your UK state and occupational pensions are only liable for Portuguese income tax. UK government service pensions remained taxed in the UK.

Taxation of personal pensions in Portugal gets complicated so take personalised specialist advice. Most British expatriates are likely to pay tax at Portugal’s income tax rates.

There is no 25% tax-free lump sum in Portugal, so consider taking yours before leaving the UK.

If you obtain NHR status, UK pension income (excluding government service) is taxed at 10%.

Wealth tax on property

Portugal currently imposes a ‘wealth tax’ on high-value local property, regardless of residence.

You are only liable if your stake in Portuguese properties is over €600,000 (potentially €1,200,000 for couples), then only on the value above that. Rates are 0.7% for individuals, 0.4% for companies and 1% for properties over €1 million. Some companies are not eligible for the allowance.

Portugal’s inheritance tax

The Portuguese version of inheritance tax, called ‘stamp duty’, is only charged on assets located in Portugal and at just 10%. Spouses and ascendants/descendants are exempt.

If you remain UK domiciled as many British expatriates do, your worldwide estate remains subject to 40% UK inheritance tax (above the thresholds).

Timing your move to save tax

 The Portuguese tax year runs from January to December, whereas the UK is April to April. The two countries apply different capital gains tax rules and rates. Weigh up whether it’s more tax efficient to sell UK assets while still UK resident, or wait till you are resident in Portugal, then time your move accordingly.

Minimising tax

Don’t assume what was tax efficient in the UK is tax efficient elsewhere. UK ISAs, for example, are taxable in Portugal, but Portugal can provide its own tax planning opportunities, particularly on capital investments. Many expatriates, for example, benefit from holding capital in a structure similar to an offshore life assurance policy or bond that acts as an investment wrapper to a conventional portfolio.

Succession law imposes

Portugal’s ‘forced heirship’ succession law dictates how assets are passed on. Your spouse and direct family could automatically inherit at least half your worldwide estate even if you wish otherwise.

The Portuguese regime will apply by default, but you can opt for the EU ‘Brussels IV’ succession regulation to override it.

A helping hand

Cross-border wealth management is complex, with all the different various elements potentially having an impact on the others. For example, how you own assets can have repercussions on taxation and your estate planning options.

Speak to a specialist adviser who can provide a strategic financial plan for the whole process, from your planning stages in the UK right through your retirement years in Portugal and should you return to UK in future.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice. 

Keep up to date on the financial issues that may affect you on the Blevins Franks news page at

By Dan Henderson

Dan Henderson is a Partner of Blevins Franks in Portugal. A highly experienced financial adviser, he holds the Diploma in Financial Planning and advanced qualifications in pensions and investment planning from the Chartered Insurance Institute (CII). |