As professional investment managers, we don’t offer specific advice on legal and taxation matters. So, we’ve teamed up with Teresa Patrício & Associados, a trusted firm of highly experienced Portuguese lawyers.
It’s not something any of us wants to think about. But if you’re retiring to Portugal, you need to consider the implications if the worst should happen to you, or a loved one, while you’re there.
Dealing with an unfamiliar system – and if you don’t speak Portuguese, doing so in a foreign language – can only add to what’s already the most stressful experience we ever have to face.
Recent changes in European law have made important changes
- For deaths occurring before 17 August 2015, the law of the deceased’s nationality applies.
- For deaths occurring after 17 August 2015, the law of the deceased’s habitual residence applies.
Can I choose the law that applies to my succession?
The new regulations allow for a testator (the person making a will) to choose the law of their nationality to apply (if you hold more than one nationality, you can choose any of them!)
Is there Inheritance Tax in Portugal?
Portugal currently does not have inheritance tax: instead, there’s stamp duty at a fixed rate of 10%. There are exemptions available for spouses, children and parents.
What is the risk of not having a Portuguese will drawn up?
If you are deemed habitually resident in Portugal, you run the risk of Portuguese law applying to your succession in Portugal. In particular, you’ll be subject to the rules of forced heirship, under which certain groups of heirs must inherit a determined portion of your estate. If your UK will doesn’t follow these rules, it may be it won’t be enforceable in Portugal. Drawing up a will and choosing which law you wish to apply will help ensure your wishes are met.
Will your estate be subject UK Inheritance Tax?
Even If you have your permanent home abroad and you are non resident in the UK for income tax purposes your entire estate will still be subject to UK inheritance tax if you are considered to be ‘deemed domicile’.
have had your permanent home in the UK at any time in the 3 years before your death
have been tax resident in the UK for at least 17 of the 20 years up to your death
If you are not ‘deemed domicile’ your estate will only be subject to UK inheritance tax on those assets that are in the UK, although there are certain exemptions.
However, beware the UK tax authorities only recognise a change of domicile if there’s strong evidence that someone has permanently left the UK and intends to live abroad indefinitely.
If you haven’t already made a will, we recommend that you do so – and if you have a will, you need to make sure it’s kept up to date.
If you need more information or advice, please use the link below
The UK government website has guides for bereaved families that you can download to help you manage the process, including who you need to notify.