Recently, the government of Portugal said it was looking at introducing a tax on foreigners residing in the country on special tax holidays, according to the magazine Bilan.
Currently, foreigners moving to Portugal who spend at least 180 days a year in the country pay no income tax for a period of 10 years under a scheme that was launched 11 years ago.
Not all income is tax free under the scheme. PWC, a tax consultancy, which describes Portugal as Europe’s best kept tax secret, explains what is and is not taxable under the scheme here.
According to Portuguese media there are almost 30,000 residents benefiting from the arrangement, most of them retirees, many from Switzerland.
Some in Portugal grumble about the upward pressure new arrivals have exerted on property prices in Lisbon and Porto.
European governments, such as Sweden’s and Finland’s dislike the arrangement so much they have withdrawn from tax treaties with Portugal. In addition, there are rumours some in Brussels are unhappy with such tax competition within the EU bloc.
Portugal’s government is now looking at the possibility of taxing this group. The socialist party has proposed a tax of 10%. However, any changes are likely to take several years to materialise, according to local newspapers.