Portugal will cut tax exemption for foreign retirees – 10/03/2023 – Market

Portugal will stop granting tax exemptions to foreign retirees from 2024, as this would be contributing to the increase in prices in the real estate sector in the midst of the housing crisis, announced Prime Minister António Costa.

“Maintaining such a measure in the future would be to prolong a measure of unjustifiable fiscal injustice and would be an indirect way for real estate market prices to continue rising”, said the head of the socialist government in an interview with CNN Portugal on Monday night (2), adding that exemptions already granted will remain in force.

Created in 2009 for foreigners who live at least half the year in Portugal, this exemption granted for ten years was total until 2020. Since then, newcomers have been able to benefit from a reduced tax rate of 10%.

The measure, which was actually effective after simplifying the procedure in 2012, sought to attract foreign capital to the country, which was then completely immersed in the debt crisis.

Around 10 thousand people benefited from it, most of them French, British and Italian retirees, who settled, above all, in the Lisbon region, or in the seaside resorts of the Algarve (south) and who contributed enormously to the relaunch of the real estate market.

The device was regularly cited as one of the factors behind rising housing prices, as well as the so-called Golden Visa Portugal (or Visa Gold) – residence permits granted to wealthy investors -, or tax advantages for “digital nomads”.

Between 2012 and 2021, housing prices increased by 78% in Portugal, compared to 35% in the EU (European Union) as a whole, according to a study by the Portuguese foundation Francisco Manuel dos Santos.

In the second quarter of 2023, average income increased by 11% over the 12-month period, according to official data published last week. In this context, thousands of Portuguese took to the streets of Lisbon and 20 other cities in the country, last Saturday, to demand stronger action from the government.

Among the recent measures to contain real estate prices adopted by the government are the end of “golden visas” and the mandatory rental of apartments that have been empty for more than two years in the most populated regions.