5 Kore Rules on Pre-Immigration Planning
Mobility is feature of our modern times and Portugal has positioned itself as an attractive jurisdiction for those seeking to relocate. So, the question we raise is what are the most crucial aspects for a person preparing the move to Portugal.
Although each case will be different, to be fully prepared for your move and to take advantage of all the benefits Portugal has to offer it would be best to consider immigration, tax and legal issues. With this in mind, below are set out what we could consider the 5 Kore rules on pre-immigration planning (see also our inforgraphic):
1. Secure a good interaction between exit country and Portugal
Do not underestimate the need for tailored advice well in advance of the move so that all personal and financial circumstances are considered. Practice has demonstrated that cross-border mobility of families is an area with significant pitfalls and having a well-versed team in the relevant jurisdictions providing coordinated advice helps to ensure that important points are not missed in the planning process and set-up is timely achieved.
For example, specific guidance on breaking the ties with the former country of residence and securing strong ties with Portugal, impacts of any exit taxes or trailing taxes or any disposal of assets post-arrival are examples of areas that require coordinated tax advice. The timing of your actual move to Portugal may be driven by many factors and also needs to be positioned in the interaction of the jurisdictions involved.
Our experience shows that a pre-planned coordinated analysis of personal, business, and financial factors improves the position.
2. Make sure immigration and tax issues are analysed from holistic perspective
You may be an EU passport holder and have the immigration side simplified, but for non-EU passport holders you may need a Visa to enter and ultimately reside in Portugal. If so, the analysis of which is the visa route best suited to your needs, the requirements and most importantly the timeline of the process is crucial.
The interaction of the immigration and the tax law also here should not be underestimated. Some investment visas (such as the Golden Visa) require actual investments to be undertaken (such as property or units of funds) and the tax impact and issues of securing of residence may also become relevant in that decision. Other visa options (such as the D7 Visa) establish minimum stay requirements that also need to be considered as they may impact actual mobility, place of residence and/or foreign employment situations.
Since most of the visa routes can lead to permanent residence or even end in citizenship, it is also important to consider your long-term goals.
Our experience indicates the need for immigration advice including planning around spouse and dependents could play an important role.
3. Review carefully holdings in foreign entities and trusts
Before immigrating to Portugal, it is important to seriously consider reviewing your asset structure and investments to streamline those holdings with the Portuguese non-habitual tax regime.
Unfortunately, there are some structures held offshore that are not often suitable as they may either attract potential application of Portuguese controlled foreign corporation rules on undistributed income or higher tax rates on future distributed income.
This includes reviewing carefully any positions as both settlor or beneficiary of foreign trusts, since fiduciary structures already in place should be looked at to take into account the nuances of Portuguese tax law.
Another attention area would be the portfolio financial positions which, depending on the underlying asset class invested, will likely require consideration and sometimes adjustment with the non-habitual tax regime rules. Assets standing at a significant gain pre-immigration are a critical area of concern.
Our experience reveals that pre-immigration planning solutions would vary depending on several factors and, in some cases, may involve the use of life insurance policies.
4. Pre-arrival planning in Portugal goes well beyond tax issues
Naturally, getting right the tax implications of your move to Portugal is key but other legal issues play also an important role during the pre-immigration planning.
Are you considering renting or buying a property and, in the latter case, funding and what are the best options available in the Portuguese market come to stake. The format of acquisition and the timing of securing tax residence need to be in co-ordination.
Another area that is sometimes underestimated is the need to review your business and employment arrangements, especially when foreign entities are involved, which may sometimes prevent unpleasant surprises.
Other issues linked with the relocation deserve monitoring and include procedures for importing personal goods, setting-up local bank accounts or personal companies, setting private health insurance and national healthcare registration and arranging schools for the children.
Our experience suggests that a thorough pre-planning helps to a safe landing
5. Estate planning should not be ignored even if there is no inheritance tax in Portugal
Modern mobility also means that families are more often multi-jurisdictional and even if Portugal does not tax inheritances or donations (with some limited exceptions) this does not mean that inter-spousal or family gift transfers should not be analyzed and considered in advance.
For example, a gifting program within the family is something that may be incentivized by the foreign jurisdictions (where the beneficiaries may be resident) to take advantages of certain exemptions or reliefs but coordination with Portuguese rules remains important.
Further example is the reverse situation of inherited foreign assets for a beneficiary resident in Portugal raising further tax issues on future disposals.
Finally, when Portuguese assets exist or when succession law becomes Portuguese Law, a Portuguese will covering the local or worldwide assets should be carefully drafted in line with any non-Portuguese wills to ensure they work together.
Our experience indicates that having a plan to secure next generations is also a key pre-planning point.
About Us
Kore Partners is a boutique law firm centered on the private wealth sector. With almost 40 nationalities within our client pool, we are involved in high value and complex multijurisdictional issues touching all the cornerstones of the private client business.
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This briefing provides for general information and is not intended to be an exhaustive statement of the law. Although we have taken care over the information, this should not replace legal advice tailored to your specific circumstances. This briefing is intended for the use of clients and selected recipients. Queries or comments regarding this including joining our mailing list can be directed to kore@korepartners.com