We've been telling you about it since December, and now in late January 2020, things have come to fruition. The socialist government has made a proposal to 2020 budget lawThis will definitively reform the non-habitual resident status of foreign pensioners, of course if it is passed.
The tax regime for "non-habitual residents" is set out in the IRS Code. It was introduced by Decree-Law no. 249/2009, dated September 23, and supplemented by Ordinance no. 12/2010, dated January 7, with the aim of attracting qualified foreign professionals, investors and retirees to Portugal.
It has been 10 years since the RNH was introduced, now it is time to reform the regime. This regime was created with the intention of attracting to Portugal, people with high added value activities, investors and foreign retirees.
By implementing this very attractive tax regime for 10 years, Portugal intended to compete with some of the favorable regimes offered by other countries (e.g., Italy and the UK).
In addition, most income earned abroad by "non-habitual residents" can be exempt from tax in Portugal, provided certain rules are respected. For example, income earned abroad by "non-habitual residents" may be totally or partially tax-exempt, subject to certain conditions:
At the end of 2019The government has reformed the list of high value-added activities, the old list included several branches of activity, such as architects, engineers, artists, actors and musicians, auditors and tax consultants, doctors and dentists, university professors, investors.
The new list, applicable as of 1/1/2020In order to avoid any confusion, the Portuguese government has eliminated several of these activities and introduced a new list of activities, now based on the Portuguese Professional Classification (CPP). Note, in any case, that the above list remains applicable to "Non-Habitual Residents" previously registered as such.
Many will say that foreign retirees have boosted the country's economy, buying houses, consuming, etc. This in itself is not entirely untrue, but the reality is quite different. For the vast majority of them, foreign retirees have not invested en masse in Portuguese real estate On the contrary, they were content to rent their accommodation.
On the other hand, 100 % of foreign pensioners, whatever their nationality, benefit from and use 100 % of Portugal's infrastructure (public hospitals, road network, etc.), but in return they don't contribute to the collective effort.
The tax rate chosen by the government is very low, as a comparison the 1st tax bracket is 14,5 %As you can see, the government is still giving a very nice gift to foreign pensioners.
Another positive point is that this reform of the RNH will allow you to avoid any risk of requalification of your expatriation for tax purposes by your former country of residence.
Normally, the 2020 budget should be voted on February 7, 2020, if the government obtains the majority of votes and Europe does not reject the budget. By the time this reform is implemented, we believe that foreign pensioners who will be making the request for RNH in 2020 will be eligible for the tax exemption.
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