Portugal is considering the introduction of a tax on expat pensions to maintain ‘good fiscal relationships’ with other EU states.
The plan is to introduce a minimum tax rate on expat pensions for foreign pensioners moving to Portugal.
During an EU meeting, Mário Centeno, the Portuguese finance minister, said: ‘We have been looking at this issue for some months already, taking into consideration realities in other European countries. We believe that some adjustments are necessary, but above transparency, we believe in good European fiscal relations.’
However, the news was not welcomed by the national real estate agents’ association, who called the proposal ‘a crass error’.
No deadline was set for the tax on expat pensions to be introduced, nor was it confirmed if the tax would be a flat rate of five or ten per cent. The minister said that several studies still needed to be completed before a rate and a date were announced.
It is also believed that the tax rate will not be retrospective, only applying to future residents looking to benefit from the so-called non-habitual resident programme.
Following the announcement by the finance minister, the president of Portugal’s national real estate association APEMIP spoke out against the plan.
Luís Lima said: ‘We seem to destroy whatever works well in Portugal. We created golden visas which brought in thousands of euros in foreign investment but quickly became the target of bureaucratic problems and blockages, which have damaged its credibility.’
He continued: ‘Now, we are targeting the non-habitual resident programme, which has been one of the primary reasons for the recovery of the property market just because other countries are dissatisfied. It’s absurd.’
Portugal’s Golden Visa scheme has been one of the most successful in Europe, with overseas property investors making up 20 per cent of the Portuguese property market last year. A figure expected to increase in 2017.