Banning non-resident pensioners from fiscal paradises: fracture in Portugal

Stop tax havens for foreign pensioners: a twist in Portugal

Portuguese foreign pensioners will no longer have their tax breaks withdrawn. Prime Minister António Costa recently announced that Portugal will stop granting tax exemptions to foreign pensioners from 2024. The decision was taken in order to cope with the growing crisis in the real estate market in the country.

The decision taken by Costa is due to the fact that maintaining these exemptions would lead to an unjustified increase in real estate prices and the continuation of tax inequality. Therefore, the government has decided to stop this practice with the coming of next year.

The tax incentives were introduced in 2012 to attract foreign capital to Portugal. At that time, the country was facing serious economic problems due to the debt crisis. Initially, the benefits were fully granted to foreign pensioners living in the country for at least half a year.

This measure has attracted around 10,000 foreign retirees, mainly from France, the UK and Italy, who have chosen mainly the Lisbon region and the Algarve resort towns to live in. The presence of retirees has helped the country's recovery, especially in Portugal's real estate sector.

According to a study by the Francisco Manuel dos Santos Foundation of Portugal, the value of housing in Portugal increased by 78% between 2012 and 2021. This number is in contrast to the 35% growth in the entire European Union over the same period. Rental prices are still up 11% in the second quarter of 2023. Portugal has therefore decided to end tax exemptions for foreign pensioners from 2024 in order to deal with the crisis in the real estate market and ensure greater tax fairness in the country. While the benefits already provided will remain in place, this significant change in Portugal's tax policy will directly affect thousands of foreign retirees who have chosen the country as their new home.