Greece or Portugal: Foreign retirees looking for their Eldorado
Is Portugal or Greece Eldorado for retirees from EU countries and abroad in general? In other words, which of the two countries represents the “tax haven” that offers them the most? The question was raised by a report published in the French newspaper “Le Figaro” on Monday, April 4 – which attempted a “crash test” between two of the most attractive destinations in Europe and for this category of citizens.
The truth is that Portugal is one of the top educators in terms of attracting them, aiming to take advantage of everything and its advantages in order to entice them to spend their money there. For the sake of truth, in 2009 – just a year before the financial crisis hit the smaller of Iberia’s two neighbors – the then government worked out and presented its plan: Those foreigners who chose to settle in the country that enjoyed tax-free for ten years . for their income derived from pensions and dividends. With only two conditions: Not to have had Portugal as their permanent residence for the previous five years and to stay there from now on, as owners or tenants, for at least 183 days a year (continuous or not), ie for half a year.
Greek opposition
Today, however, as the report notes, the data have changed, for two reasons: On the one hand, because Portugal changed the terms two years ago, with the result that the tax rate is no longer zero, but does not come to 10%, horizontally . And on the other hand, because Greece adopted its own system for foreign retirees in September 2020, offering – at first glance at least – a competitive advantage: 7% tax regardless of the amount of the pension and duration of 15 years.
In fact, it is worth noting that the terms are more favorable compared to those offered by another country in the south of Europe, Italy. This is because while there the tax rate is the same (7%), there are data that limit the options. Such as, for example, the requirement to settle in a village or town with a population of less than 20,000 inhabitants, which must be located in one of 8 specific regions – Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Puglia and Molise.
But are these enough to change the balance in favor of Greece? As a lawyer for tax issues, based in Athens and Paris, notes in “le Figaro”, “For the last 2-3 years we have noticed a growing interest in the ranks of young French retirees, especially in the Cyclades, mainly for the climate . and quality of life. “White architecture reminds many of Corsica.” Nevertheless, as the point of the Monassier group underlines, “the French do not yet know the advantageous tax regime of Greece”.
The critical factors
The same point adds another factor to the equation that retirees are called upon to solve before deciding if and where to settle: “Greece and especially its islands seem much farther away than Portugal.” Geography, therefore, plays an important – if not decisive – role, if the choice is between the islands of Greece and Portugal, as the possibilities of travel to and from it are clearly more and the cost is much lower, since the participants are Central European.
There are, however, other elements that seem to weaken the advantage of lower pension taxation and the longer duration of Greece. One of them, for example, is the security offered by Portugal, which has one of the best indicators in the world at this level. Also, those young retirees who have some kind of professional activity in the country, taking advantage of the high added value of their skills (doctors, researchers, technologists-programmers, fashion designers, journalists, etc.), can benefit from the low – and also a horizontal – tax burden on income earned in Portugal, which is set at 20%.
Finally – but not the last in importance – those interested should keep in mind after the lapse of 10 years and 15 years respectively, they will be taxed with the pensioners of the country in which they have settled: With 15% in Portugal and 22% in Greece for its earnings of 1,530 euros, which is the average pension in France, or 29% and 37% respectively if the amount exceeds 3,000 euros. Here is the problem that will arise, as stated in the report of the French newspaper: “Then, no doubt, they will ask themselves the question of whether they will return to France to build a new life. The answer is not easy for those who are going through the seventh or ounce decade of their life “.