How did Portugal become a tax haven for stars and companies?

How did Portugal become a tax haven for stars and companies?

Many retirees, artists and even professionals have settled in Portugal in recent years. And for good reason: the country, which was severely affected by the economic crisis of 2008 and with its large real estate stock, has taken very interesting measures to attract foreign capital. Radio France He explained that the country's growth rate jumped to 6.8% in 2022 and 2.2% in 2023, while the European average is about 0.6%.

Tax exemptions

Isabelle Adjani, Florent Bagny and even designer Philippe Starck have resided in Portugal. The advantage for them? Tax exemption on royalties and income resulting from the use and distribution of its production. In the example of musical rights paid by SACEM (editor's note, Societies of Authors, Composers and Music Publishers): The tax treaty between France and Portugal stipulates that copyrights are taxed in the beneficiary's country of residence to the extent that “they are not taxed in Portugal, and we We apply a tax rate of 0,” explains a tax law specialist. ParisianThis important feature did not escape the heirs of Claude François who also settled there.

Many retirees were also lured by this Mediterranean country. In addition to the cheap standard of living, the non-habitual resident (NHR) status allowed them to be tax-free for 10 years. But this special tax regime for European retirees has come under question and is due to end in 2024.

Added to this initial wave was the category of “high value-added” workers eligible for NHR status, such as researchers. Advantage? They can benefit from a maximum income tax rate of 20% for 10 years. But for them, a new situation is in the making. They will be allowed to tax only half of their income, up to a maximum of 250,000 euros per year, if they settle or return to Portugal.

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Suspended laws?

All these measures bore fruit and allowed the Portuguese's coffers to be replenished, at the expense of their countries of origin. For example, Rita de la Feria, a specialist in tax law at the University of Leeds in the UK, estimated that 140,000 departures through the Channel would cause the country to lose billions of euros. The economic consequences are also clear when taking into account the departure of people with the highest incomes who pay the most taxes.

However, this tax arsenal, to which Prime Minister Antonio Costa has announced major changes, is on hold until the next elections, which will be held in March 2024.

Video – Tax fraud: Isabelle Adjani sentenced to two years in prison and a fine of 250,000 euros

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About the Author: Irene Alves

"Bacon ninja. Guru do álcool. Explorador orgulhoso. Ávido entusiasta da cultura pop."

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