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Portugal — The Secret Tax Heaven at Your Arm’s Reach

Home is where the heart is. We all dream of a home of comfort and security. Finding a perfect home is an instinct not only limited to humans but every species look for a habitat that is safe, secured, and free from worries. Just like us, our investments also deserve a loving home, i.e a country that brings the best values to the table.

Portugal is one such country that offers a stable, favorable, and flourishing economy for your investments. It is a proud member of the European Union, the Eurozone, and the Schengen area.  The country boasts of a skilled and English speaking workforce set amidst the well-anchored political and social systems. Along with the investments, it also guarantees an excellent quality of life which gives the investors the long-awaited respite from the hustle of an ever-busy life. As Portugal gears up with its investments in the sectors of real estate and tourism, it is expected that it would soon be one of the leading EU countries for R & D and new technologies.

When compared to other countries, Portugal’s tax regimes indeed reeks of well-tested finesse and quality. The policy designs are done keeping in mind the needs and wants of the individual. It promises an effective yet low tax burden, not only for the natives but also for the non-habitual residents. The benefits are innumerable with updates being done on every economic year.

Here’s a small list of offers that is in store for those who would like to consider Portugal as their future abode for business and residence.

  • Free remittance of Funds
  • The amicable residence permit regime
  • Allowance for free movement within the Schengen
  • Possibility to apply for Portuguese nationality
  • EU passport

The country’s traditional liberalism and celebration of diverse cultures have ushered in well-maintained ties with the rest of the world.  Apart from the EU countries, Portugal also has links with Asia (China, including Macao), Africa (Mozambique, Cape Verde, and Angola) and South America (Brazil).

Why are Ultra and High net worth individuals choosing Portugal?

It is true that many high net worth individuals, who have the intention of acquiring a residence in EU countries, are choosing Portugal. The country has a special tax regime for non-habitual tax residents with certain incredible offers. These facilities ensure the growth of the country by welcoming wealthy individuals and their families. The offers also extend to gift and inheritance taxes, business and rental income, wealth tax, capital gains, dividends, interest, and pension.

The following list is made to provide you with all the necessary information that will give you the clarity that you need.

  • Reduction or deferral of taxation on dividends and other investment income. Scopes for exemption as well, under the non-habitual resident regime. Free remittance of funds for both Portugal and abroad. With proper planning, dividends can enjoy nil taxation else the applicability of a 28% flat tax rate.
  • Exemption of inheritance or gift tax to spouse, descendants, or ascendents. In case of inheritance or gifts to other individuals, either nil taxation depending on the generous territoriality rules or a flat 10% stamp rate would follow.
  • All non-habitual residents can enjoy an exemption for almost all foreign source income and a flat 20% rate for certain Portuguese source incomes (employment and self-employment income).
  • For pension and other life insurance products (including unit-linked), beneficial tax treatment would be applicable.
  • Companies with a license to operate in the Madeira International Business Centre (MIBC), issued before 31st December 2014, would avail a 5% CIT rate until 31st December 2020.
  • The reduced CIT rate applies to income derived from transactions with non-residents (or with other MIBC entities), limited to thresholds of taxable income, and depending on the creation of jobs. The MIBC special tax regime also provides for generous benefits regarding withholding taxes on interest, royalties, and services.
  • The country with its 60+ double tax treaties with different countries and special agreements with regions like Hong Kong, Malta, and Macao is set to be one of the most well-suited business abode. It has more than 50 investment protection agreements along with 15+ tax information exchange agreements signed with the Bermudas, Cayman, and Guernsey. On top of all this, social security agreement makes Portugal one of the most tax-friendly countries of the European Union.
  • Scopes remain open for Portuguese companies to make the most out of the Eu non-discrimination rule and Eu directives on mergers, dividends, interests, and royalties. Not to forget the double tax treaties that would be specifically profitable for high net worth individuals.

The perks of Portugal does not end here but only begins. While the country’s economy and market are ready to be the perfect home for your business and investments, the extravagant beaches await you to taste the luxury that we call life.

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