The Portuguese parliament has approved changes to the IRS Code that will allow expats spending part of the year in Portugal to escape taxation of their pension income.
The move is designed to further entrench Portugal in general and the Algarve in particular as Europe’s premier destination for retired expats.
The Portugal News reports that, “that one of the requirements is that the pensioner be a non-habitual resident for Portuguese income tax purposes while the second is that the pension is an occupational pension, paid from a foreign source.
“Should these requirements be met, the pension will not be taxed in Portugal and depending on the provisions of the applicable tax treaty, it is also usually non-taxable in the source country for the duration of residence in Portugal.”
There have been increasing moves in the recent past by a number of popular expat destinations to push home a competitive advantage over their rivals. Some countries have put in place favourable property buying conditions while others have concentrated on tax breaks for expats.
This is all part of a growing trend of popular offshore locales competing for the lucrative expat dollar, pound or euro.
All Which Offshore readers in this situation are reminded that the best way to ensure that your savings are in the most tax efficient instruments as possible is to consult an expat focussed Independent Financial Advisor.