Portugal

Portugal, officially, the Portuguese Republic is a sovereign state located on the Iberian Peninsula in south-western Europe. It is the most western country of continental Europe. To the west and south, it is bordered by the Atlantic Ocean and to the east and north by Spain. The Portuguese-Spanish border is 1,214 kilometers (754 miles) long and considered to be the longest uninterrupted border within the European Union. The republic also includes the Atlantic archipelagos of the Azores and Madeira, two autonomous regions with their own regional governments.

Portugal is a developed country with an advanced economy with high income and a high standard of living. It is the 5th most peaceful country in the world, maintaining a form of semi-presidential republican unitary government. It has the 18th highest Social Progress in the world, advancing other western European countries like France, Spain and Italy. As a founding member of NATO and the Community of Portuguese-Speaking Countries, he is also a member of many other international organizations, including the United Nations, the European Union, the euro area and the OECD.

Portugal is a pioneer in drug decriminalization because the nation decriminalized possession of all medicines for personal use in 2001.

Portugal is defined as a Mediterranean climate and is one of the hottest European countries :: the average annual temperature varies from 8-12 to 35 ° C depending on the area.

Portugal is a high-income, developed country, with its per capita GDP in 2014 being 78% of the EU27 average, rising from 76% in 2012. The Portuguese currency is the euro (€) which replaced ‘Escudo Portuguese and The country was one of the original Member States of the euro area.

source:wikipedia

The Algarve

Unlike other regions, the Algarve has not really been hit by the crisis. The fact that tourism is very developed there and that many Europeans (northern countries) have lived there for a while now, the region has maintained a level of sustained development. Nevertheless, as elsewhere in Portugal, as real estate is more important than demand, real estate and transaction prices remain low.
Investors are not mistaken, in the first six months of 2014, 43% of the country’s real estate transactions were made in Algarve, for more than 6 billion euros! To take stock of the state of the market, let’s take an example. It is usual to see villas whose equivalent in the south of France would sell 1,000,000 euros, start at 400,000 euros and even sometimes less.

The Algarve for a rental investment

As the region is very touristy, it is important for an investor who wishes to obtain a high return to choose the city, the sector in which he will buy.
In the Algarve many real estate programs of the “resorts” [1] type have been launched in recent years but have had to be urgently put on sale because of the crisis. Good deals are legions, most of the goods are new and of high standing. According to the Portuguese Ministry of Tourism, the capacity of these residences should be multiplied by 10 in the next 10 years.
Before the crisis, the Portuguese rental market was very rigid. It has been reformed recently which results in a rise in the price of rents on the old real estate.
According to experts the rental yields in Portugal are 6 to 8%, while having paid the charges dedicated to the rental management agency. Moreover, thanks to low prices, it is highly feasible to generate a gain on resale in the future. The only reason that would prevent it would be an exit from Portugal of the Eurozone, but that is absolutely not current.
The Algarve to live there

Many retired Europeans have already chosen the Algarve to live there. The reform of non-habitual resident status, comfort of life, air links (Faro) and low prices, push even more to increase the influx of these new residents in the years to come.
When it comes to the Algarve it is true that one tends to think of the sumptuous ensembles that are highly prized by a luxury clientele from all over the world, but the Algarve is finally much simpler. You will find a whole lot of houses and apartments more modest at very cheap. In the fashionable cities the prices will obviously be a little higher, but the Algarve is also full of small, very dynamic towns and very well equipped with shops, administrative premises, Internet connection etc … around which you can easily find Pavilions at very cheap. It is not uncommon in the Algarve to see villas, located 20 minutes from a highly rated area, sell at half the price of a similar villa on the seaside area.

The Algarve is a paradise for both investors and retirees from all over Europe. Portugal has made tax provisions to welcome this new population, almost transforming the country into a tax haven. It is called more and more often the European Floride because its climate is more than pleasant, its beaches are magnificent, its crime rate is ridiculously low, its population is very multicultural largely … No doubt that in the decades To come the population of Algarve will have changed. Let us hope only that the average Portuguese will be able to continue to go there, or to consider his retirement as well.

Olhão

Olhão (Portuguese pronunciation: [oˈʎɐ̃w]), or Olhão da Restauração, is a municipality and urban community in the Algarve region of southern Portugal. The population in 2011 was 45,396, in an area of 130.86 km².Located near the regional capital Faro, it is a fishing port, home of the Bela brand sardines and Conserveira do Sul’s Manná range of processed fish products. Along with Faro, Loulé, and Tavira, Olhão forms a conurbation with the city of Faro, from the eastern and central Algarve.

The Algarve is an area that presents a climate typically Mediterranean, characterized by warm and dry seasons during five months of the year, with median daily temperatures around 22.5°C and gentle winters, with scarce precipitation and daily median temperatures around 12.4°C.

In a general way, the municipality presents a temperate humid Mediterranean climate, with warm, dry summers and mild winters. The precipitation is distributed in an irregular fashion throughout the year, while concentrating in the months between autumn and spring. The climate is not homogeneously distributed throughout the region; the maritime influence gives way from the littoral area to the interior, turning the climate warmer and dryer, and simultaneously more rainy.

The municipality of Olhão has an area of approximately 130.9 square kilometres, with a resident population that includes 42,272 inhabitants (approximately 31,100 within the city of Olhão). Olhão is divided into an interior territory and the island of Armona.

source:wikipedia

Tax regime for non-habitual resident

Competitive advantages:

  • For a period of 10 years, taxation related to IRS (personal income tax) on labour income in Portugal is at a fixed rate of 20%
  • No double taxation for pension incomes or for employment and self-employment income obtained abroad

How can you acquire Non-Habitual Resident Status?

  1. Having not been a resident in Portugal for the last 5 years;
  2. Register at the local tax office as a tax resident in Portugal (to do so you must have remained in Portugal for more than 183 consecutive or non-consecutive days, or having remained for less time, having, at 31st December of that year, a home in such conditions that would lead to the assumption that it is intended to be kept and occupied as your habitual residence);
  3. The request for enrolment as a non-habitual resident must be made, electronically, on the Treasury Portal, after registering as a resident in Portuguese territory and until the 31st of March of the year following the year you became a resident in this territory.

Once Non-Habitual Resident Status has been obtained, what is the taxation rate and incidence applicable to domestic source income?

In the case of dependent or independent work, the applicable tax rate is 20%.

Taxation applies to income derived from high added value activities of a scientific, artistic or technical nature:

  • Architects, engineers and similar technicians
  • Fine artists, actors and musicians
  • Auditors
  • Doctors and dentists
  • Teachers
  • Psychologists
  • Liberal professions, technicians and similar
  • Senior managers
  • Investors, directors and managers
  1. March of the year following the year you became a resident in this territory.

Registration as a Non-Habitual Resident confers the right to be taxed as such for a period of 10 years as from the year of registering as a tax resident in Portuguese territory.

Once Non-Habitual Resident Status has been obtained, in which cases is foreign income obtained by Non-Habitual Residents in Portugal exempt from taxation?

In the case of pensioners and retired people when:

  • Income is taxed in the source State, in accordance with the convention to eliminate double taxation, signed by Portugal and that State; or
  • Income is not considered to have been obtained through a Portuguese source, according to the criteria provided for in the IRS Code (personal income tax).

In the case of income derived from employment, when:

  • Income is taxed in the State of origin, in accordance with the convention to eliminate double taxation, signed by Portugal and that State; or
  • That income is taxed in another State with which Portugal has not signed any convention to eliminate double taxation, as long as the income is not considered to have been obtained in Portuguese territory, in accordance with the criteria in article 18 of the IRS Code (personal income tax);

In the case of income from self-employment (through the provision of services of a high added value, of a scientific, artistic or technical nature, or through intellectual or industrial property, investment income, rental income, capital gains income or other increases in equity), when:

When no convention to eliminate double taxation has been signed, the OECD model convention may be applied (taking into consideration the observations and reservations made by Portugal) and as long as the source country, territory or region does not have a privileged tax regime, and as long as the income is not considered to have been obtained in Portuguese territory, in accordance with the criteria in article 18 of the IRS (personal income tax).

Source:livinginportugal.com

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