Portugal is approaching tax cuts for retirees and foreign workers, as Prime Minister Antonio Costa announced recently. The law currently provides for a flat tax of 20% for skilled professionals and digital nomads, and a lower tax of 10% for retirees. From 2024 this will no longer be the case. Portugal will not offer tax breaks to foreign retirees, including many Italians, starting next year. “Continuing this in the future would be tantamount to prolonging unjust financial injustice and would be an indirect way of continuing to increase prices in the real estate market,” the head of the socialist government said. The exemption, introduced in 2009 for retirees who spend at least six months of the year in Portugal, was fully valid until 2020.
Initially, the aim was to attract foreign capital. About 10 thousand people benefited, mostly Italian, British and French retirees who settled in the Lisbon region or the Algarve in the south. A few years later, the tax rate was set at 10%, because the measure had distorting effects in the long run: property prices more than doubled, causing serious harm to Portuguese citizens. Therefore, the decision was made to eliminate tax deductions for foreign residents.
Pensions abroad and “tax havens” for retirees
While for Italian workers moving to a foreign country is a move motivated by a variety of reasons, for retirees it is often a choice due to the quality of life and advantageous taxation of their chosen State. According to the latest INPS data, there are a total of 317 thousand Italians retired abroad (2.4% of the total). INPS pays out pensions totaling over €1.4 billion in approximately 165 countries.
To benefit from the relevant taxes, it is necessary to carefully check the Italian legislation and of course the rules required by the foreign state: it is necessary to prove that you actually live abroad for more than 183 days per year, be registered in the register of Italians resident abroad (Aire) and do not have a current account or property in Italy. In addition to Portugal, the most popular destinations for Italian retirees include Cyprus, Bulgaria, Romania, Slovakia, Greece and Tunisia.
Among the most favorable taxes applied to retirement income are those in Cyprus. A 5 percent rate is applied to all amounts coming from abroad on the island and exceeding 3,420 euros. But if the pension is lower, the income is not taxed at all. Greece is also trying to attract retirees from abroad by offering a 7 percent tax rate for 15 years. To benefit from this, you must be a tax resident in Greece and not have been so for five of the six years before the transfer.
However, the tax on pensions in Romania is 10%. The same rate is valid in Bulgaria. However, to be subject to Bulgarian taxation, it is not enough to have tax liability in the country: citizenship is also required. Pensions are tax-free in Slovakia. However, in Tunisia the law provides for a tax reduction regime of 80% on gross pensions received by citizens of a number of other states, including Italy. The remaining 20% of the pension is taxed at 20%. Thus, the total withdrawn amount corresponds to approximately 5% of the pension.
Letters are coming to thousands of retirees abroad: INPS checks
INPS has recently resumed checking pensions abroad. The checks carried out by the national social security institution aim to determine whether retirees residing and receiving pensions in other European countries such as Portugal, Greece, Spain, or Africa and Oceania are alive for 2023 and 2024. The goal is to avoid paying for social security treatment even after the beneficiary’s death. How do these controls work in detail?
According to INPS’s statement, Citibank started sending asset certificate requests to retirees residing in Europe, Africa and Oceania as of September 20, 2023, to be returned to the bank by January 18, 2024. If the certificate is not presented, the February 2024 installment will be made in cash, if possible, from Western Union agencies in the country of residence, and if the certificate of existence is not received or submitted in person by February 19, 2024, pension payments will be stopped as of February 19, 2024. From the March 2024 installment.
The bank will begin verifying the asset by sending an explanatory letter and a standard attestation form. The form documenting his or her living existence will be sent to the retiree and is prepared in both Italian and, depending on the country of destination, English, French, German, Spanish or Portuguese. The procedure will not concern certain groups of retirees, for example, those residing in countries where institutions operate where INPS envisages cooperation agreements for the electronic exchange of information on the death of ordinary pensioners. Retirees can provide proof of assets in the following ways:
- by sending the proof of existence form to PO Box 4873, Worthing BN99 3BG, United Kingdom;
- the form must be returned to “Citibank NA” signed by an “acceptable witness”, i.e. a representative of the Italian embassy or consulate or a local authority authorized to approve the signing of the certification;
- through patronage operators who are qualified as “acceptable witnesses” and have the authority to access the portal established by Citibank NA in order to document the existence of retirees electronically;
- The same electronic attestation function is also available for officials of diplomatic missions specified by the Ministry of Foreign Affairs and International Cooperation.
INPS reminds that to facilitate pensioners, the institute and the Ministry of Foreign Affairs and International Cooperation have shared a project that also provides the opportunity to communicate with diplomatic delegation officials via video call service and then collect the pension personally at Western Union counters. . In addition, the bank’s support service is also active for retirees, diplomatic missions, patronages, delegates and lawyers who need assistance with the procedure for documenting their assets.
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Source: Today IT

Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.