The “escape” to the Portuguese side of the border also follows the retreat regarding the elimination of the special IRS regime for non-habitual residents (RNH), which the Socialist Party wants to extend for another year.
It was on November 7th that the Spanish Constitutional Court gave the “green light” to the tax on large fortunes, which is levied on assets exceeding three million euros, with exemption for the first 700 thousand euros.
The Spanish newspaper reports that this measure, along with the recent inauguration of Pedro Sánchez as president of the Government of Spain with the support of nationalist and independence parties, immediately led to an increase in calls to law firms — not just from Spaniards, as well as foreigners residing in the country –, to accelerate a change of tax residence to Portugal
Concerned about the current political situation and the tax burden in Spain, which they consider disproportionate compared to other countries, the clients of Héctor Pérez Tapia, partner and director of the tax area at Selier Abogados, have “a stronger intention of changing their effective residence and not [having] just exploratory consultations.” “The majority of interested parties set the first quarter of 2024 as the deadline for a firm decision,” he explained.
Pérez Tapia indicates that, although he has cases from Spaniards, it is foreigners, mainly from Latin America, who represent the majority of requests for information in his office. This is because, explained the partner at Selier Abogados, as these clients “have already undergone at least one change of residence, they are not afraid to do it again, especially to neighbouring countries, such as Portugal, Italy or Switzerland”.
This search for information coincides with the change proposed by the PS to the State Budget for 2024, which retreats from the initial intention and launches a transitional regime for non-habitual residents in Portugal. Anyone who has already started steps to live in Portugal next year will still be able to register as an NHR and gain the right to pay a lower IRS for a decade.
For Pérez Tapia, this measure — which will be approved by the socialist parliamentary majority — and, in particular, the moment it is advancing in Portugal, was a “brilliant move” to attract many taxpayers with high net worth, currently residing in Spain, to a neighbouring country with a similar culture, climate and cuisine.
The lawyer draws attention, however, to the application of the so-called exit tax, which can force these taxpayers to pay taxes on the unrealized capital gains on their financial assets, depending on the country they choose as their destination. “It is necessary to analyse case by case to correctly plan the change of residence”, he highlighted.
The special IRS regime for non-habitual residents (NHR) provides for the payment, for a period of ten years, of a lower tax (in relation to the general maximum rate of 48%) compared to that paid by most citizens. The proposal to change the PS to the Government's original design also provides for the application of the regime to anyone who declares, for the purposes of registering as a non-habitual resident, that they have a certain element that binds them to that commitment.
The number of residents in Spain with assets exceeding two million euros increased by 33% in the last decade, to 231,367, according to Treasury data. The average wealth of these taxpayers is 3.66 million euros, although Madrid stands out compared to the other autonomous regions: 11.6 million. Catalonia is the region with the most wealthy residents, with a total of 85,800 and an average fortune of 2.8 million euros.