Backlash against French moving to Portugal for tax reasons

The French public has cottoned on to the inequality demonstrated by Portugal’s Non Habitual Resident scheme as applied to many nationals who choose to live in Portugal and pay zero tax on their pension income.

Opinions and proposals shared on the “big debate” website – an initiative by French President Emmanuel Macron in response to “yellow vests” movement – call those French citizens who are enjoying a ten year tax exemption in Portugal “tax exiles”living in a “fiscal Eldorado.”

There are calls to end the tax exemption regime granted to French retired in Portugal and other countries where retirees pay little or no tax.

The tax regime for Non Habitual Residents was created in Portugal in 2009 with the aim of attracting high-income and high-value professionals to the country, offering income tax exemption to pensioners and a reduced tax rate of 20% on work income.

“Retired tax exiles who have been living in Portugal for six months continue to receive their pensions from public bodies. It is easy to identify them. However, they continue to come for treatment in France for free although they no longer contribute to our social security system. They should have to pay the actual prices for the medical treatments they receive,” wrote one citizen.

This and other suggestions were received between January and mid-March and will be analysed by the Macron Government.

Another proposal is to sanction those who move to Portugal or other countries that promote tax exemptions, with a 50% cut in their French pensions.

“They impoverish France. It is a real scandal and a proof of a great selfishness,” another user suggested on the official website.

“It is important to open a debate without taboo on this device, which leads to a double exemption of French pensioners who move to Portugal. This double exemption means that states are deprived of tax revenues and promote unfair competition between the member states of the European Union,” wrote another user.

The system adopted by Portugal, to attract pensioners, has been debated in France after controversial declarations by musicians and film stars who publicly stated that they were moving to Portugal because of the beneficial tax exemption scheme.

In 2017, Florent Pagny, singer and actor, said in an interview that he would live in Portugal “for tax reasons,” outlining the advantages given to foreigners who settled in the country.

This interview led the Minister of Economy and Finance, Bruno Le Maire, to invite the artist to stay in France, stating that the Government was preparing additional measures to keep those with significant fortunes, in France.