It was greatly anticipated and there was much speculation that the Portuguese Socialist Government would introduce an Inheritance Tax. Although this did not materialise, we still believe that this could be introduced in the future. What they did introduce was a Wealth Tax which we believe will be extended in coming years.
A new tax year in the UK has started and we thought that it would be prudent to outline some of the major changes introduced to the tax regime for this tax year which you should be aware of.
If you own property in Portugal, or are thinking about buying a home here, you could be affected by new tax rules for 2017.
This year has seen the introduction of a ‘wealth tax’ in the form of an additional tax on higher-value properties. The government has also revised how it determines whether residents should be penalised for using ‘tax havens’.
The Spring Budget caused controversy and an unexpected U-turn by the UK government, all due to the National Insurance Contributions (NIC) increase for the self-employed.
Under the Budget proposals, Class 4 NIC would have increased from 9% to 10% in April 2018, and from 10% to 11% in April 2019. The changes were intended to redress the imbalance between employees and the self-employed. However, the change was heavily criticised for breaking the Conservative Party's 2015 manifesto pledge not to increase NIC.
It was almost a single-issue week for the euro, that issue being the possibility that Geert Wilders' anti-everything nationalist party could do well in Wednesday's Dutch general election. Were he to do so it would, supposedly, pave the way for an even bigger anti-EU upset in next month's French presidential election. It didn't, and the status quo was preserved. The euro enjoyed a relief rally as soon as the exit polls were revealed.
There has been much misreporting in the press recently concerning the removal of certain tax havens from Portugal's Offshore Blacklist.
The only tax haven jurisdictions that have been removed are Jersey, the Isle of Man and Uruguay.
We have seen a number of recent press articles in national newspapers, written by a well known European financial services company based in Lisbon and the Algarve, stating that Portugal had removed 15 countries from their Tax Haven Blacklist. Put simply, this is factually incorrect.
A reversal of fortunes saw the euro move close to the front of the field, two thirds of a cent behind the US dollar, while the pound lost two euro cents and only narrowly avoided last place. Sterling continued with its recent habit of vacillating between success and failure: on five of the last ten working days it came top among the major currencies and on four it took the wooden spoon.
If you live in Portugal or have Portuguese assets, make sure your estate planning is in order. While the local equivalent of inheritance tax is relatively straightforward, succession law here is very different to the UK. If you do not understand how the rules work, your estate may not be distributed in line with your wishes or could attract more taxation than it needs to.
