New Solidarity Tax in Spain may trigger new influx to Portugal
On September 29th, the Spanish Minister of Finance announced a new package of fiscal measures. Among these measures the Solidarity Tax on Fortunes stands out. It’s estimated this new tax will apply to more than 23,000 taxpayers in that Spain.
This wealth tax is characterized by its contingency, with expected application only for fiscal years 2023 and 2024.
The Solidarity Tax will apply to taxpayers with assets valued at more than three million euros, at a rate ranging from 1.7% to 3.5%. This will result in an expected tax revenue of 1.5 trillion euros.
Another novelty is the enforcement of a wealth tax regardless of the Autonomous Regions saying in this matter. The Governments direct enforcement of a wealth tax already raised constitutional law concerns.
Portugal does not have a wealth tax. Therefore, Portugal is an attractive jurisdiction to relocate to and lower one’s tax bill. Furthermore, its proximity to Spain, both territorial and cultural, is a plus.
For Spanish residents wishing to move to Portugal, the Non-Habitual Resident status will provide for extensive tax exemptions on income. The Non-habitual Residency regime applies to all Portuguese, European Union or third-country citizens who have not resided in Portugal in the previous five years, provided they request the status.
The NHR regime’s benefits are valid for ten years. Non habitual residents are entitled to several tax benefits such as full tax exemptions or tax lower rates.
For example, the following tax treatment shall apply to:
- Dividend, interest and royalties (foreign source): Tax exempt if a Treaty to avoid double taxation between Portugal and the Source State of that income allows source taxation.
- Capital gains from the disposal of real estate outside of Portugal: Tax exempt provided that the Treaty to avoid double taxation between Portugal and the source State allows for taxation at source.
- Foreign Pension Income: Flat tax of 10%.
- Rental income from foreign properties: Tax exempt provided that the Treaty to avoid double taxation between Portugal and the Source State for such income to be taxed at source.
For more information on the NHR regime, click here. Restrictions to tax benefits may apply to income derived from blacklisted jurisdictions.
Portugal has a wide network of Tax Treaties with more than 70 countries.
Please contact us should you require any assistance in relation to moving or investing in Portugal. Our Tax and Immigration / Citizenship teams are able to assist you.
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