Top tips for retiring to Portugal
By International Adviser, 23 Jul 18
What are the big questions that need to be answered before people retire to Portugal? Blevins Franks’ business development director Jason Porter offers a case study highlighting key questions to consider.
What should they do with the investments outside of the pensions?
The Isa should be encashed before they leave the UK, so no tax would be payable, and as Isas have no benefit in Portugal.
They could utilise an offshore life assurance policy, as a tax efficient portfolio wrapper. A Portuguese-compliant variation would enable them to defer any tax on interest, dividends and gains to the point they decided to make a withdrawal.
Even then, the taxable element is not the whole ‘profit’ accrued to date, but a proportion of it.
As an example, a policy started with £100 has increased in value to £110. If a withdrawal of £11 is made, it will include a profit element of 10 to 110 (1/11th), so only £1 of the £11 is taxable.
Furthermore, the tax rate drops after five years, so only 60% of tax is payable, and only 20% after eight years.
This case study highlights the potential pitfalls that can be avoided with the help of a skilled adviser who is knowledgeable about the tax regimes in both the countries of departure and arrival.
Tags: Blevins Franks | Jason Porter | Portugal
