Tax perks entice more UK citizens to Portugal

24th August 2021

A record number of Brits decided to make Portugal their permanent home in 2020, enticed by the country's low income tax rates for non-habitual residents.

The number of Brits in Portugal swelled by 34% according to the country's borders and immigration service, bringing the total number of British residents in the country to 46,238 - the second largest group of foreign residents after Brazilians.

Brexit has been a huge driver. Before 2016 the numbers either shrank or grew by a maximum of 4% a year, but they've been shooting up since then.

But it's the non-habitual resident status created by the Portuguese Government that is especially practical for British expatriates.

This tax system grants a 10% tax rate or a total exemption for 10 years, if certain conditions are met.

Foriegn income, including pensions, rental income, real estate gains and dividends from the UK are tax-exempt under the system, meanwhile.

The scheme is ending in certain areas from January 2022, including Lisbon, Porto and Algarve coast - where most foreigners traditionally settle - in a move to push property investment towards rural areas.

Talk to us about personal tax planning .