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The tax cost for those who come to invest in northern Portugal
Are you a French tax resident looking to move or invest in Portugal? Please note that you will be subject to Portuguese legislation. and that it will allow you to reduce the cost of your taxes.
To assist you in your process, Authentic Portugal provides a list of important factors to consider.
This includes taxes, tax regimes, and how to succeed in your investment in Portugal. Discover the essential points to know before moving to live or offering rental properties in Portugal.
If you are investing in Portugal, what taxes are relevant to you?
If you want to make an investment in Portugal or live in Portugal, here are the taxes that may concern you:
- Income Tax for Individuals (IRS):
Portugal applies a progressive tax system on the income of individuals. Portuguese tax residents are subject to IRS on their worldwide income, which means that your French income and other foreign income may be considered when calculating the tax.
- Property Taxes:
Portugal imposes taxes on the ownership of real estate through Municipal Property Tax (IMI) and Municipal Tax on Real Estate Transactions (IMT). The rates and specific rules vary depending on the location and value of the properties.
Tax regime for foreigners wishing to live in Portugal
Portugal offers an advantageous tax regime for new residents. The NHR (Non-Habitual Resident) regime allows foreign nationals to benefit from a tax exemption for a period of 10 years on foreign-source income, provided that this income is considered to come from a country with which Portugal has concluded a double taxation avoidance agreement.
This can be particularly advantageous if you have high income from abroad.
In Portugal, tax residency is determined by the criterion of habitual physical presence. If you reside in Portugal for more than 183 days during a calendar year or if you have a permanent residence at your disposal there, you will be considered a Portuguese tax resident.
Taxation is a complex subject, so it is recommended to consult a specialized tax advisor to obtain precise information regarding your personal situation.
Tax laws in Portugal may evolve, so it is essential to stay informed about any changes.
Moving to Portugal and reducing taxes
As a French tax resident, it is possible that you may pay fewer taxes by relocating to Portugal, depending on your financial situation and applicable tax laws. Here are a few reasons why this might be the case:
- Income tax rates: Portugal applies progressive income tax rates, which can go up to 48%. In comparison, income tax rates in France can reach 45%. Depending on your income level, you may benefit from lower taxation in Portugal.
- Inheritance and gift taxes: Portugal applies lower tax rates on inheritances and gifts compared to France. This can be advantageous if you plan to transfer assets or money to your heirs.
- Possible tax exemption if you qualify for the Non-Habitual Resident (NHR) tax regime.
Each situation is unique, and it is essential to obtain a precise assessment of your personal circumstances. Factors such as the amount and source of your income, your asset situation, and tax treaties between France and Portugal can influence the amount of taxes you will pay.
If you wish to explore the northern region of Portugal before investing and settling down, we offer numerous vacation rentals, allowing you to discover the region and fall in love with the authentic charm of Portugal.