Certain foreign countries can be attractive tax destinations for French retirees. However, we must never forget that taxation is only "the icing on the cake".
According to figures published in March 2016 by the Dinheiro newspaper, which itself cites sources from the Portuguese Ministry of Finance, between 2009 and 2015 there were 7,921 applications for non-habitual resident status in Portugal, many of them from pensioners.
The breakdown by nationality is not known, but the main countries concerned are likely to be France, Sweden and Finland. Climate, culture... and tax advantages are just some of the reasons why some French people choose to spend their retirement in this European country.
Taxation of retirement pensions: a temporary income tax exemption
In 2009, the Portuguese government created the non-habitual resident concerning personal income tax, with a view to attracting non-resident professional experts as well as beneficiaries of pensions received abroad such as French pensioners.
To qualify for the non-habitual resident regime, you must first be resident in Portugal for tax purposes.
The interested party must meet the following conditions:
- reside in Portugal for more than 183 days a year (continuous or not) during the year of application for this scheme;
- not to have been a Portuguese tax resident for the five years preceding the application for habitual resident status;
Only after you have registered as a resident for tax purposes to apply for non-habitual resident status (the granting of such status is not automatic).
This status will enable the beneficiary to be exempt from income tax in Portugal for 10 years (with an obligation to reside in Portugal for 183 days / year each of these 10 years) under circular n°9/2012 of August 3, 2012.
This period is not renewable. At the end of the 10-year period, the beneficiary may pay income tax in Portugal if he or she chooses to continue residing there (the IRS in Portugal has a bracket higher than 48%), or return to France.
It's because the RNH status is valid for each applicant for a limited, non-renewable period of 10 years that the tax authorities have used the term "non-habitual".
Social protection for French pensioners in Portugal: As with all French pensioners, French social security will continue to deduct from basic and supplementary pensions. As a result, retirees will continue to benefit from health insurance in France, whether for temporary stays (no more than 3 months) than when you return to France permanently.
Portugal has both a public and a private healthcare system. Registering with the Portuguese social security system as a resident allows you to benefit from the public system, unlike the private system where prices are much more expensive if you don't have a private mutual.
French pensioners can also take out private insurance in Portugal or abroad. In addition, the Caisse des Français à l'Etranger (CFE) provides coverage for care in private facilities.
Accommodation in Portugal: Even if they don't live in Portugal, Europeans are investing in real estate here in droves due to its affordable cost: an average of just over 2,000 euros per square meter. However, prices vary from region to region. The procedure seems safe and similar to that in France.
While buying may be worthwhile, renting can be less competitive. A studio in Lisbon costs an average of 760 euros/month, while in Porto it's just 580 euros/month, and for a 3-room apartment, you can expect to pay 1,500 euros/month in Lisbon and 1,000 euros/month in Porto. Villas are much more expensive, especially by the sea, where it's easy to rent on a seasonal basis.