The announcement by the Government of Portugal to reform the Tax Regime of the Non-Habitual Resident (RNH) has caused a special interest among high income and Spanish patrimonies to explore what to do with their tax residence. Tax professionals who carry out their work in important law firms acknowledge that they have received during the last week inquiries and requests for information from clients of two types, essentially: some who have already moved fiscally to the other side of the border, concerned about the that may happen, and others who, affected by the tax on large fortunes implemented in Spain, were studying the option of transferring their taxation to Lisbon, Porto or the Algarve. Now the tax horizon is not at all clear. These tax experts claim that one of the countries benefiting from the decision of the Executive of António Costa could be Spain.
"There have been clients already established in Portugal who have contacted us to find out what the consequences will be" of the Portuguese Treasury's decision, explains José Luis López Hermida, director responsible for the private client and family business area of KPMG. The tax advice giant points out that the "taxpayers" who exercised the option [to move their tax residence to Portugal]" are "worried about what could happen". "The reflection that we have conveyed to them is that, while waiting for Lisbon to specify the scope of the announcement, we do not expect it to have retroactive effects".
The Portuguese RNH has been in force since 2009 and allows individuals with high incomes, essentially specialized professionals, not to be taxed on income generated outside the country for a decade. Remote work favored transfers. In addition, if the foreign taxpayer decides to settle in Portugal, his national income is currently taxed at 20%. In the case of retirees, their pensions are taxed at 10%. The beneficiaries of this favorable tax regime are, generally, remote workers who have contributed to raising the price of housing in Portugal. In recent days there have been social protests in several areas of the country.
A second type of taxpayer who has consulted tax experts is the one with a large estate who had explored the possibility of moving his residence to Portugal next year due to the new taxation in Spain. "We have also received inquiries from estates affected by the tax on large fortunes and worried about the possibility of it becoming a permanent tax", adds KPMG. Luis Manuel Alonso, professor of Financial and Tax Law at the University of Barcelona, also notes that these profiles interested in moving to Portugal have emerged since the announcement of the new tax on high net worth. Now with the aim of tax advantages and pending the concreteness of the decision, these movements have entered quarantine. Stella Raventós, president of the Spanish Association of Fiscal Advisors (AEDAF), recommends these taxpayers to "wait for the ruling of the Constitutional Court" on the tax on large fortunes, which could be made public at the end of the year.
It is, therefore, the end of the "luck that Portugal has left us" in the tax field and taxation experts are already pointing out that Spain could benefit from a transfer of taxpayers thanks to the so-called Beckham regime. The former English footballer of Real Madrid was one of the first to take advantage of a regulation still in force that allows taxpayers who have lived abroad for five years (previously it was ten) to be able to pay income tax of Non-Residents (IRNR) during the tax period in which the change of residence takes place and during the following five tax periods. The applicable rate is 24% at an income limit of 600,000 euros, so it does not affect the big sports stars. This modification, which entered into force in 2021, "could open the door to the return of certain incomes", points out López Hermida, from KPMG. The tax benefit does not affect pensioners.
Spain would increase its attractiveness, therefore, to attract taxpayers not only because of this favorable regime for certain expatriates. The "scenario of legal security it offers", explains professor Alonso, is also essential for a taxpayer to establish his tax residence. He gives the example of large Latin American fortunes that decide to move to Europe in search of security for their finances. The fellow partner of Fuster-Fabra Abogados disagrees, however, with the statement that Spain is an attractive country on a tax scale for taxpayers who decide to leave or not move to Portugal. "We pay a hard wealth tax in Catalonia, for example, and now a tax on large fortunes", he remarks.
The Tax Agency does not have statistics on how many taxpayers benefit from the special regime applicable to workers posted to Spanish territory. In the report on fiscal benefits that accompanied the 2023 budgets, there is indeed a cost of 105.78 million for the public treasury.
