The Portuguese government has relaxed the tax laws governing expatriates who live in Portugal in order to encourage wealthy individuals to maintain their cash reserves in the country.
Expatriates living in Portugal are celebrating news that the special tax rate that was introduced for non-residents three years ago will now be open to more people living in the region. The tax system, which offers expatriates a reduced tax rate of 20 per cent on income generated in the country and an exemption of foreign-generated income was previously only on offer to expatriates who could provide documentation that proved that they had previously been resident overseas before relocating to Portugal and that their foreign-sourced income was taxed overseas. However, many expatriates were unable to do this as they had more complicated personal circumstances, such as multiple moves to different countries. These individuals were instead entered into the resident’s tax system and paid tiered income tax that ranged between 11.5 and 46.5 percent.
Now, in a bid to lure more high net worth individuals to the country, the government in Portugal has announced that the documentation requirements will be relaxed and expatriates will simply be asked to sign a declaration form that confirms that they lived and worked elsewhere previously. This means that more expatriates will benefit from the flat tax rate of 20 percent.