UK Expats in Portugal beware

More often than not UK expats in Portugal (Madeira Island included) are faced with warnings from our tax advisors pertaining the compliance of their income structure towards the Portuguese Personal Income Tax Code in general, and the Non-Habitual Resident scheme in particular.

The above-mentioned warnings are related to the economic links that said expats maintain with the Crown Dependencies and British Overseas Territories (BOTs), from which they derive part of their income. Under Portuguese Personal Incomer Tax law capital income (dividends, interests) and capital-gains from real-estate derived from Crown Dependencies and BOTs, jurisdictions classified in Portugal as tax havens, are taxed at a flat tax rate of 35%.

The classification of Crown Dependencies and BOTs as blacklisted tax havens is unlikely to change, specially given the launch of the European Tax Observatory, a new research laboratory funded by the European Commission with the aim of assisting the EU’s fight against tax abuse. Further to this the The Organisation for Economic Co-operation and Development (OECD) is currently undertaking work to reach a deal on overhauling the international tax system – with the objective of reaching a deal by mid-2021, which may jeopardize the treatment of these territories.

Taking into account the above situation, British expats moving to Madeira Island are advised to seek specialized international tax advisory concerning their personal income structure, its compliance with the existing taxation rules and benefits and conduct re-structuring of their income sources, prior to relocation. This will deter unwanted and avoidable tax exposure.

auctor Miguel Pinto-Correia

Our team of lawyers and accountants is ready to assist you in assuring relocation to Madeira Island that meets your expectations. Feel free to contact us.


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