Portugal, stop tax exemption for foreign pensioners from 2024

The announcement by Portuguese Prime Minister Antonio Costa speaking of an “unjustified fiscal injustice measure that increases property prices”

Portugal will no longer be the El Dorado of foreign pensioners, who decided to move to the westernmost country in Europe to avoid paying taxes on their pension or pay very little. As Portuguese Prime Minister Antonio Costa announced in an interview with CNN, Portugal will no longer grant tax exemption to foreign pensioners starting next year. “Maintaining it in the future would be tantamount to prolonging a measure of unjustified fiscal injustice and would be an indirect way to continue increasing prices in the real estate market,” the head of the socialist government said. However, the exemption regime remains in force for those pensioners who have already obtained ithe precised.

Introduced in 2009 for pensioners who spent at least six months of the year in Portugal, the exemption was total until 2020. After that, the tax rate was set at ten percent. The aim was to attract foreign capital to Portugal. Around 10 thousand people benefited, mostly Italian, British and French pensioners, who settled mainly in the Lisbon area or in the Algarve in the south.

As a result, there has been a notable increase in property prices in the country. According to a study by the Portuguese Francisco Manuel dos Santos Foundation, between 2012 and 2021 the cost of housing grew by 78% in Portugal, compared to 35% for the entire European Union. Additionally, in the second quarter of 2023, the average home rent increased by another 11 percent year-on-year, according to official data released last week.

In this context, thousands of Portuguese took to the streets of Lisbon and around twenty other cities in the country on Saturday to demand more decisive intervention from the government. In response, Costa’s executive has adopted a series of measures aimed at containing property prices which include in particular the end of the ”golden visas” and the compulsory rent of apartments that have been vacant for more than two years in most populated regions. To help almost a million families, the Portuguese government has decided to grant a reduced rate for two years to those who are paying a mortgage.