Portugal will introduce a flat tax rate on the income of foreign pensioners, rolling back a generous tax break which drew thousands of Belgians to settle in the country.
Foreign pensioners living in Portugal have benefitted from a scheme introduced in 2013 under which they were exempted from paying income taxes for a period of ten years.
The tax scheme was introduced by the government in the fallout of the 2008 financial crisis and was meant to support the country’s weakening real estate sector.
The scheme applied solely to foreign pensioners, and particularly boosted the purchasing power of former private-sector employees, since public servants’ pensions were still subject to tax in their countries of origin.
But the new Portuguese government has decided to move away from the exonerating scheme and introduce a flat-rate tax of 10%, which is currently set to apply to pensioners arrived in Portugal from December 2019, L’Echo reports.
Thousands of foreign pensioners could benefit from the now-scrapped regime, named the Non-Habitual Resident scheme, including an estimated 3,200 Belgians and up to 50,000 French and British emigrants.