The favorable regime on foreign pensions in Portugal has just ended with effect from FY2024.
From 2024 it will no longer be possible to benefit in Portugal from the favorable taxation for foreign retired people, equal to 10% of pension income.
This is the provision recently issued by the Portuguese government in order to deal with the incredible growth in real estate property prices following the introduction, in 2012, of this beneficial tax regime.
The approximately 3,500 Italian citizens who have already benefited from the tax discount will continue to receive their pension income at 10% rate, while those who intend to move to Portugal starting from 2024 will be subject to the ordinary regime.
Even foreigners who already benefit from the preferential tax regime will be able to continue to take advantage of the reduced rate of 10%, while those about to move to Portugal from 2024 onwards will have to choose a new Country in order to optimize the taxation of pension treatments .
For example, in Italy, the 2019 Financial Law introduced a law provision (article 24-ter of Tuir) governing the « Option for the flat tax on the income of individuals with pension income from foreign sources who transfer their tax residence to the South of Italy“.
These pensioners are subject to the flat tax rate of 7% on foreign pensions and other foreign income from any category as well as are exempt from the obligation to complete RW form and from the obligations to pay wealth taxes (IVIE on foreign properties and IVAFE on foreign financial products).
The residence of these subjects must be transferred in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia, specifically in municipalities with a population not exceeding 20,000 inhabitants.
The favorable tax regime has a total duration of 10 years, including the year when residence is transferred to Italy.
The favorable regime on foreign pensions in Portugal has just ended: this paves the way to new pensioners in Italy, who could benefit from the 7% tax regime.
For any further clarification, feel free to contact us.