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If you’re a UK national living in or thinking about moving to Portugal, it’s important to review your financial planning. This should look at tax efficiency and how your estate planning, investment strategies and pensions can work most favourably for you and your new life in Portugal.

With personalised financial advice from Blevins Franks, you can make the most of what you have while keeping up with the complex tax rules in both Portugal and the UK.

Our team of specialists based in Portugal, Malta and London work together to provide tax advice and financial planning solutions to expatriates living in Portugal. We have two offices that provide support across the whole of mainland Portugal as well as the Madeira islands.

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How You're Taxed in Portugal

Once you’re resident in Portugal, you could potentially pay:

  • Income tax of up to 48%
  • A ‘solidarity tax’ of 2.5% or 5% for higher incomes
  • 28% on interest income
  • Tax on capital gains when selling property and investments
  • Annual wealth tax of up to 1% on property interests worth over €600,000

Even if you’re not resident, you could be liable for Portuguese taxes, for example, if you own, or sell property in Portugal.

In our experience, many UK nationals can save money in tax by moving to Portugal. We’ve found that our clients who have chosen to retire in Portugal enjoy particularly favourable tax treatment on their investments and assets.

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Non-Habitual Residency: Tax Advantages for New Residents

Portugal’s ‘non-habitual residents’ (NHR) scheme gives special tax benefits to new residents for their first ten years in the country. It also offers a lower income tax rate of 20% if you’re employed in Portugal in a ‘high value’ activity and allows you to receive some foreign income tax-free. You could also pay no capital gains tax in Portugal when selling UK property.

Even if you do not qualify for non-habitual residence, Portugal offers some very attractive tax benefits for UK expatriates.

Watch video on non-habitual residency
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Estate Planning for Portugal

The Portuguese equivalent of inheritance tax is stamp duty and is only payable on assets based in Portugal, such as property and vehicles. The rate is 10% for everyone, apart from direct family and spouses who’ll pay no tax at all on inheritances.

Many British expatriates in Portugal may not be aware that they could also face UK inheritance tax, which is determined by domicile rather than residence.

Portugal’s succession law imposes forced heirship. This means that your direct family could automatically inherit a pre-defined proportion of your estate, regardless of whether that’s your intention. However, there are ways to override this rule.

Our advisers can present legitimate options to ensure your estate is distributed according to your exact wishes while protecting your heirs from paying more tax than necessary.

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UK Pension Planning in Portugal

Expatriates retiring to Portugal can enjoy significant tax benefits on UK pension income.

Through the UK/Portugal tax agreement, most UK pensions are taxable only in Portugal. Under non-habitual residency (NHR), UK pensions are taxable at 10% for the first ten years in the country. For other residents, British pensions are taxable at the Portuguese income tax rates up to 48%.

Many expatriates prefer to transfer their UK pension to a Qualifying Recognised Overseas Pension Scheme (QROPS) to unlock tax-compliant opportunities in Portugal.

Blevins Franks can advise you on the pros and cons of all your pension options as well as the local tax implications, so you can make a fully informed decision on the best solution for you.

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Investment Advice for Portugal

Our specialist expertise can make sure your finances are structured as tax efficiently as possible for Portugal, with an investment strategy personalised for you.

We start with an objective assessment of your risk profile so that we can recommend portfolios designed around your personal situation and objectives. We have access to some of the world’s best investment managers to make sure your money works as hard as it can.

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Speak to Blevins Franks to take full advantage of the tax and investment opportunities available to British expatriates living in Portugal. Arrange a free consultation with a local adviser.

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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; individuals are advised to seek personalised advice.

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The Blevins Franks Guide to Living in Portugal

Living in Portugal, buying a Portuguese property or planning to move there? Our paperback guide pulls together the key tax and financial information you need to know to make your life in Portugal as tax-efficient and seamless as possible.

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