Dear Editor,
With interest I’ve read your latest news about income tax for foreign retirees living in the Algarve.
Would it be possible to provide us with more information?
I’m a full-time resident here, receiving a pension from my home country and am paying my IRS to Portugal.
Do I understand that in such a case I benefit from IRS exemption.
Name and address withheld
Editor’s note: We asked Gavin Scott, Senior Partner at Blevins Franks to reply to our reader: “I am afraid that this Non-Habitual Residents Scheme only applies to people coming to live in Portugal, it does not apply to people who are already resident here.
The scheme was devised to attract wealthy foreigners to move to live in Portugal. It is only available to people who have not been a Portugal tax resident for any of the previous five years.
So unfortunately the scheme will not apply to you since you already live here, and you need to continue paying tax on your pension as usual.
For those who are eligible, the scheme provides substantial tax exemptions for the first 10 years of tax residence, starting from the first calendar year of residence, provided they meet the residence requirements for Portugal for each of those 10 years. They would need to register as a ‘non-habitual resident’ with the Portuguese tax authorities.
If any readers have not yet moved to Portugal and think they could be eligible for the scheme, they should ask a financial adviser for advice on their situation as the rules are quite complicated.
The 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; an individual should take personalised advice. www.blevinsfranks.com”
