Portugal offers an outstanding quality of life, characterised by a relaxed pace and a welcoming, hospitable culture. The country’s diverse landscapes, ranging from breathtaking beaches and rolling countryside to dynamic towns and cities, enhance its appeal. Additionally, Portugal’s rich culinary heritage – featuring fresh seafood, tasty pastries, and famous wines – adds to its allure.
While Portugal retains a deep sense of tradition, it seamlessly integrates modern conveniences, ensuring a comfortable and connected lifestyle.
Applying for your D7 visa
Portugal’s D7 Passive Income Visa and D7 Passive Income Residency Permit are particularly suitable for UK nationals and other non-EU citizens who wish to enjoy their retirement years in Portugal.
When applying for your visa, you should work with a Portuguese immigration specialist who can help with preparing your application. You will need to obtain a Portuguese NIF number and open a Portuguese bank account in advance of the visa.
Applying for a D7 visa for Portugal requires gathering and submitting several important documents to support your application. This includes a completed D7 visa application form, and a passport that is valid for at least six months beyond the visa’s expiry date. Proof of accommodation in Portugal is essential, whether through a property purchase or rental agreement
Importantly, you need to demonstrate a stable passive income from foreign sources, such as pensions, rental earnings, dividends, or bank interest. To do this, you must provide bank statements from the past six months. As of 2024, the minimum passive income requirement is €9,840 for a single applicant and €14,760 for a couple.
Beyond passive income, applicants must show proof of sufficient financial resources. The main applicant should maintain a balance of approximately €20,000 in a Portuguese bank account, or €30,000 if applying with a spouse. Additionally, securing a Form S1 or suitable medical health insurance from a qualifying insurer is mandatory.
Golden residence visa
The golden residence visa is designed to attract foreign investment to Portugal and is available to non-EU citizens (including UK nationals). You can no longer obtain a golden visa through buying property in Portugal, but it is still open for those who can make qualifying investments in Portugal for a minimum of five years – either directly or through a company. An immigration specialist or financial adviser will be able to guide you on qualifying criteria.
Establishing residency and managing taxes
Identifying where you are a tax resident may not be as clear as you would think. Portuguese tax is levied according to de facto (actual physical) residence, which has nothing to do with citizenship or what residence visa or work permit you have.
The simplest rule of thumb is how long you spend in the country. If you are in Portugal for more than 183 days of the year, the Portuguese tax authorities will consider you a resident. However, you may still be seen as a tax resident if you spend less than 183 days in Portugal, but your main home is located here. Finally, if you declare your intention to remain in Portugal permanently upon arrival, you could be deemed a tax resident immediately.
As a tax resident of Portugal, you will be liable for Portuguese taxes on worldwide income and some capital gains. While the Non-Habitual Residency (NHR) regime is no longer available for new applicants, those who currently have NHR status retain their previous benefits and exemptions until their 10-year NHR term comes to an end.
Portugal’s income tax rates vary between 13% and 48%, with investment income generally taxed at a flat rate of 28%. However, the country provides attractive tax-efficient options for capital investments, so explore your options to establish what works best for you. Residents are also subject to taxation on various financial activities, including rental income, real estate transactions and vehicle sales.
There is no ‘inheritance and gift tax’ as such, but a 10% stamp duty is applied when assets located in Portugal are passed on death or as a gift. Importantly, spouses and direct-line ascendants and descendants are exempt.
Additionally, a ‘wealth tax’ of sorts applies to Portuguese properties valued above €600,000 per individual owner (so over €1,200,000 for a jointly owned property). This applies to both residents and non-residents.
For non-residents, taxation is limited to income earned within Portugal and certain capital gains on Portuguese assets. You must still comply with tax requirements in your country of residence.
Taxation is complicated, and you should seek guidance from a specialist cross-border adviser who is familiar with Portuguese taxation and how it applies to non-EU nationals.
The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.
Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com.
By Adrian Hook
|| features@algarveresident.com
Adrian Hook is a Partner of Blevins Franks in Portugal and has been providing holistic financial planning advice to UK nationals in the Algarve since 2008. He holds the Diploma for Financial Advisers (DipFA) and is a member of the London Institute of Banking and Finance (LIBF). www.blevinsfranks.com
