Portugal has long been renowned for its favorable tax policies, attracting individuals from around the world seeking financial benefits and opportunities. While the recent announcement of the impending end of the Non-Habitual Resident (NHR) program has garnered attention, it's important to emphasize that Portugal still offers an efficient tax system, thanks to its bilateral agreements to avoid double taxation, says Patricia Casaburi, from Global Citizen Solutions.
If the goal is succession planning, there is even a stronger reason to explore the advantages of Portugal's traditional tax regime, emphasizing its strengths for no gift, inheritance tax and efficient taxation in private equity funds.
Despite the upcoming changes to the NHR program, announced on 10th October, Portugal's tax system offers several key advantages that remain intact.
Firstly, the country's fiscal system is known for not imposing inheritance or wealth taxes. Several years ago, inheritance tax was done away with by the Portuguese government, replacing it with a flat 10% stamp duty.
This tax solely pertains to Portuguese assets, sparing those inherited by legitimate heirs, such as spouses, children, grandchildren, parents, and grandparents, from its application, as opposed to assets held in foreign countries. What does this mean in terms of benefits? This means that individuals can pass on their assets to their heirs without significant financial burdens, making it an attractive destination for succession planning.
Another highlight in Portugal fiscal ecosystem is the double taxation agreements, the country has a wide network of bilateral agreements to avoid double taxation, with 70 countries and the UK included. In fact, the double taxation treaty agreement between Portugal and the United Kingdom dates from 17th January 1969, being in effect for 53 years. These agreements ensure that taxpayers do not pay taxes twice on the same income, making it an ideal location for international investors and individuals with income from abroad.
This goes without mentioning the tax efficiency on private equity funds investment, the absence of taxes on wealth and remittances, combined with Portugal's favorable tax rates, makes it a suitable choice for investment in funds. Individuals can enjoy a tax-efficient environment for managing their investments and assets.
In conclusion, while the NHR program's end has raised concerns, it's essential to recognize that Portugal maintains an advantageous traditional tax system with substantial benefits. The absence of inheritance and wealth taxes, an extensive network of double taxation agreements, and opportunities for tax-efficient investment all make Portugal a compelling choice for individuals seeking financial stability and planning. With the impending changes in mind, now is the time for potential beneficiaries to explore the available options and make informed decisions about their financial future in Portugal.
By Patricia Casaburi, from Global Citizen Solutions.
