Retiring abroad: Portugal

If you dream of retiring abroad like many UK pensioners. It's a big decision that can affect your pensions. In a poll carried out in 2006. The majority of Britons, 53%, would consider emigrating. Indeed, more than 300,000 individuals leave the UK each year to start a new life overseas.

Estimates suggest that up to 5.5 million British nationals now live abroad. Portugal is among the most prominent expat destinations for Britons. According to the Portuguese Chamber of Commerce in the UK. There are 46,238 British expats in Portugal. The highest figure ever recorded and only second to Brazil. As the largest expat population.

Retiring abroad Portugal: post-Brexit

You have two options:

Firstly, living in both the UK and Portugal. This is what many retirees who can afford the upkeep of two properties are doing at present. However, you are restricted to a maximum of 90 days at a time.

Secondly, the temporary resident permit in Portugal is the easiest way to retire to Portugal. But, you have to fulfil some requirements. The permit lasts 5 years, after which you can apply for a permanent residency. 

• A valid passport
• Proof of income
• Proof of health insurance
• Clean criminal record
  
  

The temporary resident permit is non-lucrative.  This means that you will not be permitted to engage in any economic activity in Portugal. Thus, ideal for a UK pensioner who does not want to purchase a property in Portugal.

Retiring abroad Portugal: Golden visa

A second but more expensive option is the golden visa, which was launched in 2012.

As of 7 October 2023, new legislation came into effect. Investing in real estate became no longer possible. The Golden Visa allowed an investment of between €280,000 and €500,000 in property to gain family residency. A capital transfer of £1,500,000 is also no longer acceptable.

Retiring abroad Portugal, the options are now as follows:

• Invest in a qualified investment fund of at least €500,000
• Reconstruction of national heritage. Minimum investment €250,000
• Scientific research contribution of at least €500,000
• Create and maintain at least 10 jobs
  
  

Incorporating a company with an investment of €500,000.  In addition, creating at least five jobs or maintaining 10 jobs.

The golden visa provides the investor and their family with the right to live and work in Portugal. It is possible to apply for permanent residency in Portugal. The Golden Visa program requires investors to renew their permits every two years. After five years, you can apply for permanent residency.

Retiring abroad Portugal: Pension advice

The problem for most UK nationals. Is that, most UK advisers are not regulated to advise EU residents. These went with Brexit. 

Unless they are regulated in the EU, they should not be advising you.

Should the UK firm have taken the appropriate steps to advise EU residents. They may not be aware of the complexity of the Portuguese tax system.

Although Regulated Advice cannot help here. You must find an advisory firm regulated in Portugal that knows UK regulations. The firm would also require knowledge of UK and Portuguese taxation. Including their interaction.

Retiring abroad Portugal: taxation advice

If you move abroad, you don't have to transfer your UK pension pot. You can choose to leave it in the UK.  You can then take an income from it in the UK. 

As a Portuguese resident, your UK state pension is only taxed in the UK. But any income derived from any other pension will be subject to taxation in Portugal.

It is important to note that Portugal does not have a 'tax-free lump sum'. If you have not moved to Portugal yet and want a lump sum. Taking it while you are still a UK resident will save you tax.

Qualifying Recognised Overseas Pensions Scheme (QROPS)

The setting up of a foreign exchange account should address currency risk.

Alternatively, expats often consider transferring their pensions to a QROPS, avoiding currency transfer risks.

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