Portugal offers many advantages to French investors

<p class&equals;"p1"><span class&equals;"s1">Dirk Andreae-Nehlsen&amp;comma; member of the Paris Bar and founder of the Paris law firm <span class&equals;"s2">ANDREAE ASSOCIATES <&sol;span>discusses the tax advantages of investing in Portugal&amp;period; He is developing a wealth tax consultancy business&amp;comma; in an international context&amp;period; He works in French&amp;comma; in German and English&amp;period;<&sol;span><&sol;p>&amp;NewLine;<h5 class&equals;"p2"><span class&equals;"s1">A fiscally attractive investment for retirees wishing to settle in Portugal<&sol;span><&sol;h5>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">With the decree of September 23, 2009&amp;comma; the Portuguese government introduced the<b>advantageous "non-habitual resident" status<&sol;b> "&amp;period; The advantages of this system&amp;comma; which the beneficiary can enjoy for 10 years&amp;comma; are multiple&amp;period;<&sol;span><&sol;p>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">The Portuguese scheme is aimed at anyone who has not been taxed as a Portuguese tax resident in the previous five years&amp;period; Also&amp;comma; it is necessary to have resided for more than 183 days during the year in question in Portugal&amp;period; Alternatively&amp;comma; it is sufficient to have a habitual residence in this country on December 31 of the tax year, which however risks being criticized by the French tax authorities&amp;period; The scheme is applicable on specific application to the Portuguese authorities&amp;period;<&sol;span><&sol;p>&amp;NewLine;<h5 class&equals;"p3"><span class&equals;"s1">Benefits for French-source income, particularly retirement pensions<&sol;span><&sol;h5>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">Professional income from non-Portuguese sources is exempt in Portugal, provided that it is taxed in France&amp;period;<&sol;span><&sol;p>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">As for retirement pensions paid by a debtor domiciled in France to a Portuguese tax resident&amp;comma; they are not taxable in France under article 19 of the CFI&amp;period; At the same time&amp;comma; these pensions may be exempt from taxation in Portugal insofar as they are not received on Portuguese territory&amp;period; Passive income received by a Portuguese resident&amp;comma; in particular dividends and interest from financial investments in France&amp;comma; are exempt from Portuguese tax if they are taxed in France by means of a withholding tax&amp;period; Article 11 of the CFI provides for a reduced withholding tax of 15&amp;percnt;&amp;period; As for French-source interest&amp;comma; the usual withholding tax of 25&amp;percnt; is reduced to 10&amp;percnt; or 12&amp;percnt; according to article 12 of the CFI&amp;period;<&sol;span><&sol;p>&amp;NewLine;<h5 class&equals;"p3"><span class&equals;"s1">Advantages in terms of wealth tax<&sol;span><&sol;h5>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">The tax treaty between France and Portugal makes no provision for the taxation of wealth&amp;period; domestic legislation is therefore fully applicable&amp;period; France only taxes the wealth of a non-French tax resident for the amount of his French real estate&amp;period; Portugal has no wealth tax&amp;period;<&sol;span><&sol;p>&amp;NewLine;<h5 class&equals;"p3"><span class&equals;"s1">Benefits when passing on assets to heirs<&sol;span><&sol;h5>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">In Portugal, gifts and inheritances between spouses, life partners, ascendants and descendants are exempt from stamp duty. It should be noted, however, that there is no tax treaty between France and Portugal on inheritance and gifts;<&sol;span><&sol;p>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">Depending on the situation of the taxpayer and his heirs&amp;comma; there may be a risk of double taxation of the real estate inheritance&amp;comma; which should be analyzed and optimized beforehand&amp;period;<&sol;span><&sol;p>&amp;NewLine;<h5 class&equals;"p2"><span class&equals;"s1">A tax-efficient investment for investors who remain French residents<&sol;span><&sol;h5>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">According to article 6 of the CFI&amp;comma; income derived from real estate located in Portugal is taxable only in that State&amp;period; the same applies to capital gains realized on the sale of real estate&amp;period;<&sol;span><&sol;p>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">In accordance with article 24 § 1 a of the CFI&amp;comma; this income must be kept outside the French tax base&amp;period; If this income can be taken into account when calculating the tax rate in France&amp;comma; they are excluded from the French income tax base and taxed by means of a withholding tax at a rate of 25% in Portugal&amp;period; Consequently&amp;comma; a property investment in Portugal may be attractive for French tax residents taxed at the marginal rate in France&amp;period;<&sol;span><&sol;p>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">Portugal, on the other hand, has just announced changes to its real estate taxes&amp;period;<&sol;span><&sol;p>&amp;NewLine;<p class&equals;"p1"><span class&equals;"s1">If the tax value of an owner's total real estate assets exceeds 600&amp;period;000 euros&amp;comma; a rate of 0&amp;comma;3&amp;percnt; will be levied on the portion above this threshold&amp;comma; according to the draft budget&amp;period; The Portuguese socialist government in fact wishes to cover its deficit and appease Bruxelle...&amp;period;<&sol;span><&sol;p>&amp;NewLine;