Portugal was recently declared the World’s Best Place to Retire by popular expat website International Living. This was thanks to the low cost of living, the beautiful weather and the warm and welcoming Portuguese people.
What many don’t realise, while fantasising about sipping cocktails overlooking the Praia da Marinha, is that moving to Portugal may also have some fantastic tax benefits.
Residents in Portugal are generally taxed on their worldwide income, but in 2009 the government introduced the non-habitual resident (NHR) taxation regime to attract “high-value” residents and investors. It offers Portuguese tax residents exceptions and reduced rates on foreign income for a period of 10 years. For those registered for NHR, foreign pension income is taxed at only 10%.
The NHR uses a very loose definition of retirement, which means you don’t have to stop working when you retire. You’re welcome to maintain your business interests elsewhere in the world and Portuguese employment income may also be taxed at a reduced rate for those who fall under specific categories or professions.