Portugal – a year after Brexit. What changes have we seen in the last 12 months that could affect British holiday homeowners, people thinking of moving to Portugal, or those already living there?
Holiday homeowners will be feeling the effects of Brexit more than those who were already living in Portugal. The 90-day rule means they now have to restrict the number of days they can enjoy their Portuguese home. And, things have indeed become more complicated for UK nationals applying for residence now, particularly those who want to work.
British expatriates who have residency in Portugal before Brexit continue to enjoy life there as they did before. The good news is that the benefits of retiring to Portugal still exist, including tax advantages. However, a year after Brexit, cross-border expert advice has never been more critical.
So, how has Brexit changed the ways in which you can take advice on your finances and use UK financial services?
EU residents and UK-based financial advisers and services
When the UK left the European Union on 31 December 2020, its citizens and businesses lost the automatic freedom of movement they had enjoyed for 40 years.
The UK no longer holds the passporting rights, which allowed financial advisers and institutions to provide services from the UK to any country within the EU without further regulatory clearances required. This applies to banks, investment and insurance companies, stockbrokers, and advisers.
You may still use a UK-based financial adviser or service if they can confirm they are regulatorily compliant in providing those services to you as an EU resident and notify you of any limitations that may now be in place.
Using a Portugal-based adviser would not only avoid these issues, but you’ll also benefit from their local, up-to-date knowledge and experience. A good option is to seek financial management from a company that provides cross-border advice for both the UK and Portugal. This will ensure you receive consistent services and avoid any nasty surprises.
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 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. This applies even if you own a property in Portugal.
This 90-day limit applies across the EU (within the Schengen zone). Once you have used up your allowance, you’ll not be permitted to enter another Schengen country without a visa until you have spent enough time outside the area.
Applying for visas and residency for Portugal a year after Brexit
It’s true that these days there are a few more twists and turns in the road to that dream retirement in Portugal. But if you know the way, it’s still very doable. The D7 Passive Income Visa (D7 Visa) and D7 Passive Income Residency Permit (D7RP) are now the most 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’ll need to meet some basic requirements. You must first obtain a Portuguese NIF number for tax identification purposes and open a Portuguese bank account.
The supporting documentation you need to provide for the residency permit includes:
- Proof of purchase or the rental agreement of your property in Portugal.
- Valid travel insurance covering all medical expenses and a health insurance policy.
- Proof that you have enough financial resources to support yourself, including proof of regular foreign passive income and the last six months of UK bank statements.
- UK criminal record check.
The D7 Visa allows for two entries – each allowing a stay of up to four months – 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.
To make a smoother transition, it is better to consult with an immigration specialist to complete the application and submit documents. This should be done between 60 – 90 days before you expect to move and can then be forwarded to the Portuguese Consulate in the UK.
Download our free Portuguese Passive Income Visa Guide
Portugal Golden Visa
The Portuguese Golden Visa (PGV) has been a popular option, though the rules around the investment required have changed from January 2022, which may make this a less attractive option than previously.
A key benefit is that it does not commit you to spend six months in the country each year to maintain residency, you only need 14 days of physical presence across the first two years of the PGV. It, therefore, provides both residence authorisation and freedom of movement, so you are virtually free to spend as much or as little time in Portugal as you want.
To be eligible for this visa, you’ll 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 Portuguese property (minimum investment is generally €500,000), but from 1 January 2022, the popular locations of the Algarve, Lisbon, Silver Coast, and Porto no longer qualify.
However, 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.
Download our free Portuguese Golden Visa Guide
Tax residence for Portugal a year after Brexit
You’re a resident in Portugal for tax purposes if you spend more than 183 days a year there or have a permanent home in Portugal. Whether you have a pre-2021 residence card, or D7 or D7RP visa, you are likely to be a tax resident of Portugal and need to declare your worldwide income and gains accordingly. If you have the golden visa, it’ll depend on how long you spend in the country. Seek cross-border tax planning advice to find out how you mitigate taxation in Portugal, particularly on your investment capital and pensions.
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’ve 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 from Blevins Franks.
Contact us today to make an enquiry.
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.