2023-10-15 11:46:34
Sitting at a restaurant table in Graça, in the center of Lisbon, Sophie and Didier (1) are enjoying the beautiful autumn sun. During the four years they lived in the Portuguese capital in the mid-2010s, the couple were able to benefit from tax exemptions created in 2009 for foreigners living there at least half the year. A measure intended to attract capital to the country, then hit hard by the debt crisis.
Retired, Didier benefited from the status of “non-habitual resident” (RNH) and Sophie from that of “RNH profession with high added value”. The NHR offered ten years of exemption from income tax – and a total exemption in the country of origin – a measure since transformed into a tax rate limited to 10%. The “high value-added profession RNH” caps the tax rate at 20% for income from the professions concerned. “We discovered the status once we got there. The procedures were quick. And personally, I saved between €300 and €400 per month in taxes,” congratulates Didier.
A “ injustice fiscale » unjustified
But on October 3, Prime Minister Antonio Costa announced the end of the tax advantage, specifying that the exemptions already granted would remain in force. «Maintaining such a measure in the future would amount to prolonging a fiscal injustice that is not justified, and then it would be a roundabout way of continuing to drive up prices in the housing market. he said in an interview.
A cold shower for Sophie and Didier: “As I approach retirement, we were thinking of buying a property to resettle in Portugal, says Sophie. We will probably give it up. »
Gérard Gutman retired with his wife near Aveiro (a coastal town in the north-central part of the country). For him, the RNH is a blessing: “He was instrumental in our installation. On our tax statement, opposite the “taxes” line, we have a zero instead of €18,000! »
According to estimates, the measure benefited some 10,000 people, mostly French, British or Italian retirees, who mainly settled around Lisbon or in the seaside resorts of the Algarve (South), and 45,000 “ professionals with high added value.
Sharply rising prices
Because the incentives have acted like real magnets, thanks to rave advertising campaigns praising a country of sun, golf and security. This led to the explosion of tourism and targeted investments to the detriment of Portuguese housing. Between 2008 and 2022, the share of foreigners in real estate investment increased from 4% of the country’s gross domestic product to 13%. “Some customers pay cash after disposing of their goods in their country of origin,” says Terry Borges, real estate agent in Peniche (coastal town north of Lisbon). Prices are soaring. »
The latter grew by 78% in Portugal, compared to 35% on average in Europe, even if the RNH cannot be held solely responsible for this real estate inflation, any more than the other tax gifts given to “digital nomads” or “golden visas” (residence authorization against investment). “I fear that the end of tax advantages will put off future buyers. Some are starting to look towards Morocco or Rimini, in Italy,” admet Terry Borges.
Reduced housing supply
The fact remains that, with its 10.3 million inhabitants, Portugal today welcomes some 800,000 foreigners, and the housing supply is limited. The public housing stock is 2% when it is 12 to 15% on average in Europe. Construction times between project submission and completion can reach four years.
The situation has become unbearable for the Portuguese. “An equivalent F2 rental in Lisbon is €1,300 per month, when the median salary in the capital is €1,000. The account is quickly made, explains Rita Silva, from the Vida Justa (“Just Life”) association, co-organizer of the housing demonstration which took place on Saturday September 30, bringing together thousands of demonstrators.
The package of measures announced by the government to try to reverse the trend is considered insufficient. The end of the RNH is seen as an announcement effect to calm the anger of the street.
——
A growing economy
The Bank of Portugal (BdP) forecasts 2.1% growth for this year. For 2024 and 2025, the BdP expects growth of 1.5 and 2.1% respectively, driven by exports and investment.
Inflation is expected to reach 5.4% for the whole year, and continue its reduction to 3.6% in 2024 and 2.1% in 2025.
Unemployment rate is estimated this year at 6.5%, but it should rise again to reach 6.7% next year and 6.9% in 2025.
The government forecasts a budget surplus of 0.8% of GDP in 2023 and 0.2% in 2024.
#Portugal #tax #Eldorado #foreign #retirees