Some unaffected
“In addition, the new law only applies to payments made to residents of Portugal. Any payments to non-residents should not be affected.”
He added it was important for clients to look at the current valuation of the trust compared with the capital initially invested, as there may be no gain attributable, meaning the holder would not be subject to the new tax.
This could particularly be the case if Portuguese real estate was present.
Though these changes mean trusts are unlikely to be a viable option for any new UK expatriate arrivals in Portugal, a potential route to similar tax benefits Porter suggested for UK expatriates was an offshore bond.
Much like in the UK, these offer tax-free roll-up of income and gains, with capital redeemed free of tax.
Only the growth element of any distribution is subject to taxation.
Even then, additional benefits in Portugal include only 80% of the growth being taxable after five years, and 40% after eight years.
Furthermore, as a non-Portuguese asset, it is outside of Portuguese succession taxes (stamp duty).
