Moving to a new country can change one's life in so many ways. It allows you to experience the world in a whole new light, enjoy warm weather all year round, and live out your retirement years in luxury. A great many expats choose Portugal as their destination, and for a variety of reasons.
Portugal is often referred to as “the Florida of Europe,” due its sunny climate, beautiful surroundings, and friendly people. It boasts delicious food, rich history, and a variety of attractions such as golf courses and water sports. But one of the most attractive benefits is the tax breaks available for foreign expats. Through careful planning, non-habitual Portugal residents can enjoy their regular earnings while paying little to no tax on it at all.
How is this possible? Through the Portuguese Investment Bond. The following article takes a closer look at this tax-advantaged savings option to outline how an expat can benefit from the Portuguese Investment Bond. Read on to learn more.
What is the Portuguese Investment Bond?
The Portuguese Investment Bond is a single premium life insurance contract that is invested in a portfolio of assets. It is designed for individuals living in Portugal who need a tax-efficient investment option that enables them to secure capital growth in the time frame of their choosing.
Portuguese bonds work in a similar manner to other bonds, in that investors put their money into a bond and leave it there for a number of years. When the money is withdrawn, the investor will only pay taxes on their earnings at a rate of 11.2%, which is significantly lower than the normal tax rate of 28%. It offers expats and investors the opportunity to save a huge sum of money on their taxes.
What are the Benefits of the Portuguese Investment Bond?
For foreign expats living in Portugal, the Portuguese Investment Bond has several advantages. Here are a few of the top benefits.
- It enables investors to legally reduce the amount of tax they pay to the government on their earnings, thereby enabling them to enjoy more liquid capital and greater wealth without fear of recompensation.
- No tax is payable under the Portuguese Bond until the policy is surrendered or a withdrawal is made, which not only reduces the amount of tax paid but also defers the payment. When this happens, tax is only payable on the capital gains in the value of the policy.
- The bond allows for easy succession planning, as investors can nominate beneficiaries to whom the wealth will be transferred in a tax-efficient manner. The policy holder can change their nominated beneficiaries at any given time, and any death payments are out of the scope of Portuguese stamp tax.
- There is no VAT to pay on the fees and charges applied to the policy.
- All life insurance premiums in Portugal are excluded from VAT and stamp duty.
- Insurance is easy to set up compared to other similar policies.
- The policy is able to be pledged as security for a loan if the policy holder is in need of liquidity.
- The Portuguese Investment Bond is a portable policy, meaning that investors will be able to convert it to a UK compliant bond should they wish to return to the UK at any point.
Conclusion
If you are living in Portugal, or are planning to retire there at a later date, it would be a good idea to consider your options when it comes to investment and planning for the future. The Portuguese Investment Bond offers huge advantages in terms of minimising tax on capital gains and enabling investors to accrue and retain more wealth, thereby setting them and their families up for a more comfortable life. As with any investment, it is always advisable to do your research and find out more about the application process and the particular benefits and disadvantages of the policy. Tax compliant offshore bonds are a great way to enjoy the benefits of living in an exotic location while ensuring your personal finances are taken care of in the long term. The bond is perfect for retirees or those looking to move their business and assets to a new part of the world. Hopefully the Portuguese Investment Bond will enable you to make a new start in life and take your finances to the next level.
Copyright 2024. Featured post made possible by The Wealth Genesis, a financial advice company for expats. Providing streamlined advice and clarity for investments and retirement planning.