The Portugal Move

Hi there,

This is my first post, so apologies of I am posting in the wrong section here.

I’m hearing of more and more people moving to Portugal from Ireland for 2 reasons:

1. Lower income tax (especially if you have a tech business)
2. Zero CGT if you exit and are in Portugal for a number of years

I’m also hearing such mixed opinions on what is required timeframe to avail of the above CGT avoidance… some people say it is 5 years in Portugal, others say 3 years… and as of today, I have heard it is now 1 year?
I’m not sure if I would ever really consider this, but I would like to know the facts.

Any advice would be greatly appreciated, thank you.

You can get general ideas and information on askaboutmoney but for any such major tax-driven decisions, you need to take professional advice.

Brendan

Paul1G said:

Hi there,

This is my first post, so apologies of I am posting in the wrong section here.

I’m hearing of more and more people moving to Portugal from Ireland for 2 reasons:

1. Lower income tax (especially if you have a tech business)
2. Zero CGT if you exit and are in Portugal for a number of years

I’m also hearing such mixed opinions on what is required timeframe to avail of the above CGT avoidance… some people say it is 5 years in Portugal, others say 3 years… and as of today, I have heard it is now 1 year?
I’m not sure if I would ever really consider this, but I would like to know the facts.

Any advice would be greatly appreciated, thank you.

Click to expand...

There is an article from 2019
And I'm not sure it still applies in 2024


It mentions zero income tax on pension for 10 years
But that might only apply to annuity income it says
Not arf income it says which is a real pain and source of doubt

So after you read up on the details, confirm with a professional.

And make sure that the professional is not one of the outfits which transfer your pension to Portugal only to take about half of it in charges.

Thank you for the replies.

Sorry, just to be clear, it’s not the pension route… it’s a case of losing your residency in Ireland, and when you do, you can essentially fold the company where the proceeds of your business sits (i.e - hold Co), and personally extract the funds in Portugal with zero capital gains.

This seems to be a very common option. I thought the info and knowledge would be easier to find, but not sure where to look exactly.

Thanks again for the help.

Paul1G said:

it’s a case of losing your residency in Ireland, and when you do, you can essentially fold the company where the proceeds of your business sits (i.e - hold Co), and personally extract the funds in Portugal with zero capital gains.

This seems to be a very common option. I thought the info and knowledge would be easier to find, but not sure where to look exactly.

Click to expand...

I'm assuming you are considering a temporary period of non residence, with a view to returning to Ireland and are an Irish domiciled individual.

If you are looking to dispose of a shareholding in a holdco, you may have to spend six years of residence outside Ireland to ensure you are not affected by the CGT exit charge.

Have a read of this to see if it is relevant to whatever you are considering:

Thank you, yes that is what I was referring to, but I keep hearing 3 different timeframes (5 years, 3 years, 1 year)… and now 6 years

Any insight into the timeframes? Thanks again for your help.

Denis O'Brien moved to Portugal when he sold esat and it was very advantageous from a tax point of view.

Currently it is retirees that Portugal are attracting with no income tax on pension for 10 years.

The downside is property is not cheap. If you are looking for a decent quality property expect to pay similar prices to here. Eg 1500 sqft in vau (near golf and 80km from Lisbon) - €400k

Paul1G said:

Any insight into the timeframes?

Click to expand...

General Info:
- A disposal of Irish specified assets (e.g. property) will always be liable to CGT in Ireland.

- Tax residence requires a presence in Ireland of 183 days or more in a tax year OR 280 days taking the current and preceding calendar years together.

The differing time frames you have mentioned could arise in the following situations:

5 years:
- This is in relation to Section 29A above - a minimum of more than 5 yrs of non residence is required if disposing of a relevant asset, hence my reference to six (and in practice it may require more than six years absence from Ireland depending on the date of departure and date of return).

3 years:
- A non-resident, ordinarily resident, Irish domiciled individual is liable to CGT on worldwide gains.

- It takes 3 consecutive years of non residence to lose the ordinary residence status.

1 year:
- A non-resident, non ordinarily resident, Irish domiciled individual is only liable to CGT on Irish specified assets.

- A person who for instance may only have spent 260 days in Ireland in 2023 could move abroad on or before 30 January 2024 (these 30 days are not counted for the 280 day test and so this individual is not caught for tax residence in 2024), lose their tax residence, sell a non specified asset in 2024 and not be liable to CGT.

These are just examples. There may be others. It's a complex area.

There’s no such exemption from CGT in Portugal. It’s 0% on dividends and 10% on pension income.