Retiring in Portugal
Portugal is one of the most popular expat destinations in the world for Irish retirees.
Most expats who choose Portugal opt to retire somewhere in the Algarve region, which has been listed by both CNN and Forbes as one of the best places to retire in the world. Everyone’s list or requirements is a little different but most people find that Portugal delivers what they need in terms of retirement lifestyle.
Pros and cons of retiring in Portugal for Irish expats
- Tax breaks
- Reduced cost of living
- Quality healthcare
- Geared towards European/Irish retirees/communities
- Minor bureaucracy
- Language barrier
When do you start planning?
As with any sort of retirement planning, the earlier you begin the process, the better the outcome. When it comes to retiring in Portugal, we recommend 12-18 months before moving.
The first points of your action plan? Speaking with your spouse/close family and finding a knowledgeable, and experienced cross-border Financial Adviser.
There’s also a free ebook at the bottom of this page that covers the move in a lot more detail. We hope it is essential reading.
What is the NHR Regime?
The NHR (non-habitual resident) tax regime came into existence in Portugal in 2009 and is proving to be successful in attracting individuals of independent means, pensioners and certain skilled professionals to establish tax residency in Portugal, while the flexibility is attractive because an individual is not subject to minimum or maximum stay requirements.
Pensions will be liable to a 10% flat tax rate in Portugal provided they are not deemed sourced from Portugal. While other favourable factors include no wealth tax, or inheritance/gift tax, the NHR regime grants qualifying individuals the possibility of becoming tax resident of a white-listed jurisdiction whilst reducing income tax on certain categories of non-Portuguese sourced income for a period of 10 years.
Update Jan 2020: The Portuguese government is set to introduce a tax on foreign pension income at 10%. This will apply only for new NHR beneficiaries starting from 31/03/2020.
Double Tax Agreement between Ireland and Portugal
A major feature of the NHR regime lies in its interaction with the DTA with Ireland. This means that Irish sourced or foreign Incomes will not be taxed in Portugal.
It is possible to significantly reduce tax on Irish Employment and/or Pension income if you become resident in Portugal, which is comprehensively outlined within the Ireland/Portugal Double Tax Agreement.
10% tax rate on qualifying pension income Income on non-Portuguese employment taxed at 20% No wealth or inheritance tax
Income from non-Portugese employment is taxed at 20%. Please speak with Imperius Wealth to determine which pensions vehicles are taxable in Ireland and which are not.
Other financial considerations when thinking about retiring to Portugal
As mentioned, cost of living on the whole is cheaper than in Ireland, with recent findings from Numbeo suggesting it is around 37% less expensive.
What about healthcare? Healthcare becomes even more important as you head into your retirement years. Portugal does have a largely free National Health Service, known as the Servico Nacional de Saude (SNS), for all Portuguese citizens and foreign residents.
To qualify for free healthcare as an Irish retiree, you’ll need to complete an S1 form.
Get the guide to retiring in Portugal
Learn more about how you can benefit from residency in Portugal with our eBook ‘The Essential Guide to Non-Habitual Residency in Portugal’
What does this guide include?
- Getting Started for Non-habitual Residency in Portugal
- Ireland and Portugal Residency
- The tax benefits if you become a resident in Portugal
- Client examples
- Steps to take when retiring in Portugal
- And much more!