Since 2013, Portugal has introduced a near-total income tax exemption (for 10 years) for expatriates moving to the country. Very effective in the early months, is this measure still sufficient to attract new residents? Answer with Cécile Goncalves, director of the Maison au Portugal real estate agency.
La Tribune: How does the tax exemption for new residents work? Is it reserved for senior citizens?
Cécile Goncalves, Director of House in Portugal : The tax advantage introduced in 2013 is based on the status of non-habitual resident, which implies not having been resident in Portugal for tax purposes for the last five years, but is not subject to age or nationality conditions. This makes it possible to attract both retirees, with high purchasing power, and professionals in sectors that need them. This will mainly concern high value-added activities: contractors, architects, designers, etc.
If a French retiree moves to Portugal, he or she will pay no tax on retirement pensions for ten years. Someone who comes to work will only pay 20% in tax on the income he earns from his activity in Portugal, also for ten years.
Could this tax advantage be called into question in the near future? If so, will the exemption be discontinued for those who benefit from it?
All those who have arrived since 2013 will continue to benefit from the tax exemption in any case, because making a law retroactive is unconstitutional in Portugal. What's more, from what we perceive here in Portugal, calling it into question is not topical. The measure was enacted by the current right-wing government, but had already been envisaged by the previous socialist government, so there's a real political consensus. The majority of the Portuguese are in favor of this exemption, in a truly pragmatic move: they know how beneficial it is for the country's economy.
What is the typical profile of an expatriate in Portugal?
In 2015, the top three countries for new residents were Great Britain (23%), China (18%) and France (16%). In the first half of 2016, the French came out on top, accounting for 25.5% of new arrivals, according to Apemip forecasts. Among our customers, we have more than 80% of retirees or people who are about to be and who are anticipating.
Aside from the tax aspect, why do these new residents choose Portugal?
There are many reasons for this: the Mediterranean climate, the authenticity of central Lisbon and certain villages, the coastal aspect, the gastronomy, the culture, and so on. There's a real gentle way of life in Portugal that quickly attracts expatriates. As proof, none of our customers who have left in recent years have yet returned! There's also a real gain in purchasing power estimated at 35% for French people moving to Portugal. It's also a very calm, reassuring country.
Won't the massive influx of new residents drive up property prices?
There are around a quarter of foreign buyers in Portuguese real estate today, which is certainly a large but not insane proportion. But it's true that prices have started to rise since the introduction of this tax measure and the arrival of new residents. However, prices are still measured, as Portugal did not experience a speculative bubble in the 2000s like France. For example, for properties sold on our site (i.e. new or renovated properties), the price per square meter ranges from 4 to 9,000 euros in central Lisbon. In the Algarve, in the south of the country, the square meter starts at 2,500 euros.