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Portugal is a tax haven for French fortunes

Portugal is a tax haven for French fortunes - portugal news
Portugal is a tax haven for French fortunes - Portugal Business News

Portugal billionaire news - Portugal is a tax haven for French fortunes according to an investigation by franceinfo.


The investigation unit of Radio France has published a report of French fortunes, mostly individuals, who are leveraging personal income tax incentives in Portugal.


Famous French individuals such as Florent Pagny, Isabelle Adjani, Philippe Starck or the heirs of Claude François have taken up residence in Portugal to benefit from an exemption from taxes on royalties. Other French high net worth individuals including artists, businessmen and retirees moved to Portugal to benefit from a favorable tax regime including personal income tax.


Attracted by tax benefits in Portugal, individual French fortunes have shifted to Portugal when they realized how pleasant life is in the sunny country. According to franceinfo, this created a mass exodus of French fortunes towards Portugal since the 2008 crisis, but especially in 2010 when Portuguese banks ended up with a stock of six billion euros of real estate, according to the President of the Portuguese-French Chamber of Commerce, Carlos Vinhas Pereira. Since Portugal had to find a way to sell the stock of real estate and the country was managed by a Troika with the IMF, the European Commission and the ECB, 130 drastic measures were implemented to revive the economy including attracting foreign capital, namely individuals.


French entrepreneurs receiving dividends chose Portugal to benefit from favorable taxation on royalties. The Golden Visa scheme resulted in revenues of 5.5 billion euros for the Portuguese State just within the first eight years.


The number of French residents in Portugal went from 15,000 in 2010, to over 80,000 in 2024. The last wave of French immigrants was due to the lockdown that led to remote workers moving to Portugal.  


According to franceinfo, the wave of high net-worth individuals moving from France to Portugal was such that the phenomenon alerted researchers who studied the impact of these departures on the budget of the French state. At the University of Leeds, Rita de la Feria was surprised by the results of the study she conducted with her colleague Giorgia Maffini:


'As emigrants are those with the highest incomes, their departure affects the resources of their country of origin. With important consequences, even if there is a small number of departures, because these people are among those who pay the most taxes."


The phenomenon is dubbed tax "dumping" and it could have devastating consequences for public finances in the country of origin.


While Portugal first attracted private fortunes, French CAC40 companies followed, and the impact was significant since 38 out of the 40 CAC40 companies are now established in Portugal. These include BNP Paribas that grew from 1,000 employees before 2010 to 9,000 today. The advantage of an establishment in Portugal is simply due to the minimum wage and low contributions compared to France.


Portugal provides an educated workforce, that is often trilingual with French and English, and all at a low cost. This is enough appeal for large corporations that practice 'near-shoring', that is a local relocation. This is why the majority of employees in Portugal do not work for the domestic market but for the European region with the resulting impact of jobs disappearing or dwindling in countries such as France or Germany, according to Laurent Marionnet of the Portuguese-French Chamber of Commerce.


However, this wave of foreign immigrants has led to real estate prices increasing twofold in Lisbon, Porto and the Algarve, while current salaries make it impossible to find a place to stay, according to an internal note from BNP Paribas, that the investigative unit of Radio France obtained. Since most employees in Portugal receive between 800 and 1,200 euros net on a monthly basis, it is only possible to rent a room in Lisbon with such wages. The internal note adds that even outside Lisbon, the rent for modest housing costs around 800 euros.   


Foreign investment in Portugal led to a kind of economic miracle, according to American economist Paul Krugman, winner of the Nobel Prize in 2008. This has recently led Portugal to cut back on tax benefits for foreigners, including the non-habitual resident scheme and the Golden Visa scheme. However, there are new types of tax benefits for foreigners who want to move to Portugal.  






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