The Algarve Living Series Part 3 Recap

Part three of the four-part Algarve series went off without a hitch, thanks to moderator Sharon Farrell, the Chair of the IPBN Algarve Committee, and the three knowledgeable finance professionals who shared their tips on the financial hurdles associated with relocation to Portugal's southernmost region. Keynote speakers included Gavin Scott, Senior Partner at Blevins Franks, Justin Ryan, Property Lawyer at AllisLaw (both IPBN member companies), and Isabel Duarte, IPBN member and Senior Accountant at Terra CFO.

The webinar took a deep dive into what it would take to make the move to the Algarve financially, in particular, the benefits and incentives associated with being an ex-pat in Portugal, and how best to make your money work for you. 

Gavin Scott and Justin Ryan have been living in Portugal for about 20 years, while Isabel Duarte has just moved recently from Australia and is going through the residency process personally, so all have particular personal expertise in what happens before, during, and after their feet have hit the ground coupled with long professional financial histories. 

Scott began the webinar by addressing the favorable tax concessions, property purchase taxes, and IVA that stimulates the Portuguese economy. The tax scheme is open to anyone who has not been a resident in Portugal, regardless of nationality, for the past 5 years. If you have the right to be in Portugal through the EU or the visa process and your job fits into a high-value occupation (the regulations on which have recently loosened), then your income will have a capped tax rate at 20%. Pensions have a 10% tax rate, while dividends and interest will also have a capped tax rate, while double taxation rights (if applicable) can mean you won't pay extra taxes on income due to the exempt category. Scott says, "The devil is in the details" so you can enjoy these benefits for 10 years, if you tick all the right boxes, and the clock keeps ticking in the scheme,  so individual assets and securities can have different taxation applied to them, so taking advice on your particular situation is imperative to reap the maximum benefits. 

Duarte added to that point by delving into the expenditures necessary and exposure in liability one might need to consider before making the jump. Duarte began by recommending that anyone from outside the EU needs to register for their tax file number (NIF), which can be done by your accountant, and registering for your freelance license. Above 12K annually, you will need to pay IVA (tax) on your income, and you will also need to budget a minimum of 150 Euros monthly for Social Security (or 21.4%) which will kick in after your first fiscal year (as a freelancer). Engaging with a lawyer and an accountant is key to ensure you are addressing your finances and residency legalities properly to "protect yourself...and your assets." If you choose to set up a company, it's a requirement to employ a Portuguese accountant and recommended to get the aid of a lawyer who can help you to register your business and yourself with the Social Security system and the business registrations office. Duarte went on to introduce some incentives under the Portugal 2020 (2030) incentive grants in the R&D and small businesses areas (with 1-2 employees) are available for application, and in some cases, you only need the intention of creating a company to get your foot in the door early. 

Justin Ryan discussed the ins and outs of buying property here in Portugal. He mentioned that the timeframe varies in time from a week (if all the paperwork is in order) to two years depending on the project. The first step is finding a property. He advises renting for a while if you aren't sure what place will suit you best, and with a little research, you can come across every property in the area since many properties are listed by more than one agency. Surveying the structure is the next step, then moving on to the legal as you move to the contract with a non-refundable deposit. The balance is paid upon completion. Ryan says that at this stage, often the buyer wants to complete quickly while the buyer wants to complete at the beginning of the most desirable season. Purchasing through an off-shore company or in your own name is a personal issue. 20 years ago everyone bought from an offshore company, but as regulation and taxation changes, people should only consider buying property through an offshore company while it is appropriate, so looking at the figures is imperative, and getting the proper advice on your personal situation is paramount.  

Speakers went on to field questions about the benefits of registering a company in Portugal, the commercial property tax incentives, double taxation and pensions, visa requirements, NHR specifics, car and driver's license registrations, and more. Having the wrong forms, the lack of language skills, and the wrong help can be detrimental and costly, so the takeaway from this webinar is to enlist the help of trusted assistance in legal and accounting especially. From there, you can breathe easily that everything is progressing smoothly with a lot less stress. 

See the recap for part 2 of the series here

Algarve Series - Executive Partners

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