A financial plan: why is it so important in Portugal?

A solid financial plan should be created and implemented over time and reviewed regularly to ensure key areas such as taxation, investment performance, estate planning and lifestyle goals can be achieved .

Here we look at some key issues around financial planning in Portugal that we help our clients with.

Three key areas to consider in your financial planning

#1. Portuguese residency and taxation

Residence rules in Portugal and other countries like the UK are very different and deliberately complicated. The fact that you live in Portugal rather than the UK, for example, can have a major impact on your financial and tax planning. Therefore, if you are spending time in multiple countries, it is important to understand residency rules.

If you become resident in Portugal, it is important to review and possibly restructure your assets to take into account local tax rules in your new country of residence.

It is also important to review estate planning and possibly amend existing wills.

Tax-advantaged accounts and assets are generally subject to heavy taxation in Portugal. You should find out about the tax arrangements available in Portugal which will allow you to reduce the taxation of your investments, pensions and savings.

#2. Estate planning

Portuguese death tax rules differ significantly from UK inheritance tax rules, and it is important to understand the relevant rules and prepare appropriately.

Portugal is known for its “forced inheritance” laws. These usually impose strict criteria on who can inherit assets and in what proportion. For some families, this can have adverse and unintended consequences.

With careful planning, it is possible to use European inheritance laws to draw up an appropriate will and estate plan that allows you to ensure that your assets are distributed according to your wishes.

#3. General lifestyle

Perhaps the most important aspect of financial planning is that any plan should be tailored to your unique situation, including your current lifestyle, income needs, goals, time horizon, and risk tolerance. If you do not yet have a strategic financial strategy in place for Portugal, you may need to review your existing arrangement to ensure it is suitable and optimized for taxation.

Consideration should be given to the taxation of investment income and gains, as well as the tax efficiency of any investments and pensions you may hold.

Another question to consider is how will you pass on any intended inheritance to your heirs? Will they have to pay inheritance or inheritance tax? And, is it possible to pass on the funds without going through probate, or will your loved ones go through a long and stressful legal process?


Everyone has a unique situation, so your financial planning should be designed accordingly. Take advice from experienced professionals to ensure that you are fully aware of any issues that may affect you.

The content is for informational purposes only, you should not construe this information or other materials as legal, tax, investment, financial or other advice. Nothing contained in this report constitutes a solicitation, recommendation, endorsement or offer by HOLBORN or any third party service provider to buy or sell securities or other financial instruments in this jurisdiction or in any other jurisdiction.

Holborn Insurance Agents, Sub-Agents & Consultants (Cyprus) Ltd authorized by the Insurance Companies Control Services of Cyprus (ICCS) license number 5228. Passport to distribute insurance business and services in Cyprus, Spain , France, Malta, Belgium, Luxembourg, Sweden and Portugal.

For more information, please contact us at +351 289 126 911, [email protected]

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