Why is Portugal so popular with wealthy pensioners?


Portugal is becoming increasingly popular with wealthy pensioners. Largely driven by the introduction of a flat income tax rate of 20%. Not to mention 10 years of tax-free pension payments. Which resultantly doubles retirement income for some elderly residents residing there.

The aim of the scheme was to bring highly skilled workers into the country. However, the influx of wealthy pensioners has caused strain within the European Union.

What factors draw wealthy pensioners to the country?

There are a number of factors which have drawn elderly residents into Portugal. These include fantastic golf resorts, impressive ocean views and 300 days of sunshine per year. And subsequently, 10,684 foreigners have relocated to Portugal as a result. Interestingly, Portugal is particularly popular with Swedish nationals. Because in 2016, a total of 777 Swedish nationals relocated to the country. And reasons why this may have happened include a booming economy, impressive real estate market and a safe place to live. According to the 2017 Global Peace Index.


Is Portugal treating its residents equally?

As previously mentioned, Portugal is particularly popular with wealthy pensioners. However, the way that permanent residents vs thoes that have moved to the country after retirement is quite different. In Portugal, tax deductions are only normally available for the few that have private pensions. In contrast, in Nordic nations, individuals can deduct pension contributions while they work. But after retirement, income becomes taxed.

So is the treatment of all retired residents in Portugal equal?

The answer to this question may be no. Because a non-habitual residents program exists. Which provides tax breaks to foreigners. Whilst sometimes, citizens of permanent residence are struggling along financially. Due to rising housing prices. Ricardo Cabrel is a professor of Economics at the University of Madeira in Portugal. He rightly states that the current situation in Portugal is unfair. Because taxation amongst groups is not equal.

During the next budget, these inconsistencies will be rectified.



Portugal is hugely popular with wealthy pensioners who are coming into the country. Factors for this include:

  • Flat 20% income tax rate and 10 years of tax free pension payments
  • Golf resorts
  • Lifestyle
  • Housing and impressive ocean views
  • 300 days of sunshine a year

It is clear that there is an element of unfairness between how tax is dealt with between permanent residents & those that have moved into Portugal. Individuals are taxed during retirement in Nordic nations. Explaining why Portugal is so popular for retirees. Contrastingly, permanent residents of Portugal only receive tax breaks for private pensions. Undoubtedly, this system is unfair. Because as one group experiences relief, the burden is placed elsewhere. Thankfully, it is expected that inconsistences will be addressed during the next budget.

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