Loopholes allow some pensioners in the EU to retire tax-free

Tax-free? I don’t believe it!

WHEN the financial crisis hammered Portugal’s economy, hundreds of thousands of its people left, taking advantage of the European Union’s rules on free movement to find work in countries that were hit less hard. Now Portugal is welcoming older people going in the other direction, not for jobs but for a warm, cheap retirement. Well-off baby-boomers are flocking to Lisbon, Sintra and the Algarve, drawn in part by Portugal’s tax exemptions on foreign income. Under its non-habitual-residency scheme, pensions from abroad can be drawn tax-free for a decade.

Bilateral double-taxation agreements are intended to ensure that income does not end up being taxed twice. But some countries, seeking to boost domestic demand by luring wealthy immigrants, have arranged matters so that they can avoid paying any tax on income earned outside their country of residence, such as pensions, capital gains and rent. To qualify, foreign pensioners who move to...



via The Economist: Finance and economics Business Feeds

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