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The Portuguese Bond is a unit-linked single premium life insurance contract that is invested in a portfolio of assets. It is a form of long-term investment that can secure significant tax benefits in Portugal.

The Portuguese offshore investment bond is designed for individuals who require a tax efficient investment vehicle which meets their changing needs with the potential to secure capital growth and realise those benefits at a time of their choosing.

The policy is not taxable until the bond is surrendered or a withdrawal is made. Surrenders and withdrawals are extremely tax-efficient, as just the capital gains element is subject to tax. The tax rate which is applied to a total or partial surrender depends on how long you have held the policy for.

 

Offshore Bond Taxation in Portugal

Up yo Year 4  28% tax on gains only
Between 5 & 8 Years  22.4% tax on gains only
After 8 years  11.2% tax on gains only

 

Please see an example of how a withdrawal works:

Withdrawal Example Image

The Benefits of investing in Portuguese Bonds for Expats are as follows:

  • Able to benefit from a favourable tax treatment of life policies in Portugal. No tax is payable until the policy is surrendered or a withdrawal is made. When this happens, tax is only due on capital gains in the value of the policy.
  • Ease of Succession Planning. The ability to transfer your wealth in a tax efficient manner to your nominated beneficiaries.
  • Life insurance premiums are excluded from stamp duty and VAT in Portugal.
  • There is no VAT to pay on fees and charges applied to the policy either as the insurance company is based in Ireland.
  • Death payments to beneficiaries also fall out of the scope of Portuguese stamp tax (Imposto do Selo.)
  • The policy can be pledged as security for a loan should you require liquidity.
  • The policy is portable so you can convert to a UK compliant bond should you return to the UK. There is a life cover optionality to ensure it becomes portable without the need for an endorsement to comply with UK tax law.
  • You are able to use segmentation as an effective way of mitigating tax if you were to return to the UK.
  • Policyholder can change the nominated beneficiaries at any point in time provided they are not appointed on an irrevocable basis.
  • Insurance is easy to set up compared to other more complex cross-border vehicles such as SIFs, SICAVs, SPFs or trusts.
  • Detailed tax reports covering capital gains, dividends or interest is not required as the entirety of the investment portfolio benefits from ross roll-up of gains for tax purposes.

 

Whether you are living in Portugal already or moving to Portugal from the UK, we strongly recommend you download and read our Portuguese Bond guide which tells you everything you need to know about tax on compliant offshore bonds in Portugal.

 

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PORTUGUESE BOND GUIDE TODAY
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Frequently Asked Questions about offshore bonds in Portugal for British Expats

Welcome to our FAQ on the Portuguese Bond! If you're considering investment opportunities in Portugal or looking for a tax-efficient investment vehicle, this guide is here to provide you with important information and answers to common questions regarding Portuguese Bonds.

Please keep in mind that while we strive to provide accurate and up-to-date information, it's important to consult with a qualified financial advisor or tax specialist who is well-versed in the regulations and requirements of Portuguese Bonds.

They can provide personalized advice based on your specific financial goals and circumstances.

Let's dive into our FAQ on Portuguese Bonds and discover the possibilities that this investment avenue can offer for your long-term financial planning.

What is a Portuguese compliant investment bond?

A Portuguese bond is a specialized investment product that offers significant benefits for expatriates residing in Portugal. Designed as a single premium investment-linked life assurance policy, it adheres to specific technical specifications to ensure tax compliance within the Portuguese jurisdiction.

As an expat, using a Portuguese bond can be advantageous for several reasons. Firstly, it provides a tax-efficient vehicle for accumulating capital and generating a regular income. The bond's unique structure and tax treatment make it an attractive option for individuals seeking to optimize their financial situation in Portugal.

By utilizing a Portuguese bond, you can take advantage of the country's favourable tax regime and potentially reduce your tax liabilities. The bond offers opportunities for tax deferral, allowing any growth in the policy value to remain untaxed until you make a withdrawal or surrender the bond.

Additionally, a Portuguese bond provides flexibility and control over your investments. You have the freedom to choose from a wide range of investment options tailored to your risk tolerance and return expectations. This ensures that your portfolio aligns with your financial goals and helps you make the most of your investment strategy.

In summary, utilizing a Portuguese bond presents a valuable opportunity to optimize your financial position in Portugal. Its tax efficiency, investment flexibility, and asset protection features make it a compelling choice for expats seeking to enhance their wealth management strategy.

If you're considering a Portuguese bond or have further questions, our team of experienced financial advisers is ready to provide personalized guidance and support. Reach out to us today to explore how a Portuguese compliant bond can benefit your financial future.

How is my money invested?

Our investment approach ensures that your money is strategically allocated across a diverse range of external funds, leveraging an open architecture framework. This allows us to provide you with access to an extensive selection of investment options. Your portfolio is carefully tailored to match your risk tolerance and return objectives, ensuring it aligns with your unique investment preferences.

We continuously monitor and analyse your portfolio's performance to ensure it remains optimized and in line with your financial goals. Whenever necessary, adjustments are made with your agreement to capitalize on market opportunities or mitigate potential risks. The performance of your investment portfolio is directly influenced by the underlying investment choices made.

Rest assured that our expert team diligently manages your investments, aiming to maximize returns while maintaining a strong focus on risk management and long-term growth. We are committed to keeping your money working hard for you and delivering the financial outcomes you seek.

Do I have a choice of currencies to choose from?

We are able to offer you a range of currency options to choose from, ensuring that your investment bond aligns with your personal requirements. You have the flexibility to select among popular currencies such as euros, sterling, us dollars, or Swiss franc.

It's important to note that once your life insurance policy has been established, the currency cannot be changed. Therefore, we encourage you to carefully consider your currency preference when setting up your policy to ensure it suits your long-term financial goals.

By providing a variety of currency choices, we aim to accommodate your specific needs and preferences. Whether you have a preference for a particular currency or seek to diversify your investment across multiple currencies, our team is here to guide you through the process and help you make informed decisions.

Please reach out to our dedicated team for further assistance and to explore the available currency options for your Portuguese bond. We are committed to providing you with a seamless and personalized experience, tailored to your unique requirements.

Can I withdraw regular income from my Portuguese compliant investment bond?

Absolutely! With our Portuguese compliant investment bond, you have the flexibility to withdraw regular income based on your desired frequency. At Fiduciary Wealth Management, we offer you the convenience of choosing between monthly, quarterly, semi-annual, or annual withdrawal intervals.

To ensure the smooth operation of your investment bond, it is necessary to maintain a minimum balance of €15,000 or its equivalent in the chosen currency. This minimum balance requirement allows you to continue enjoying regular income withdrawals.

The minimum amount you can withdraw on a regular basis is as follows: €300, £200, $400, or Chf 400, depending on your preferred currency.

We understand the importance of providing you with a reliable income stream while safeguarding the value of your investment. Our team is here to guide you through the process, assist you in determining the ideal withdrawal frequency, and ensure that your income needs are met effectively.

Feel free to contact us to discuss your specific requirements and explore the options available to you for withdrawing regular income from your Portuguese compliant investment bond. We are dedicated to providing you with a seamless and tailored investment experience.

What is the maximum age limit to establish a Portuguese bond?

At Fiduciary Wealth Management, we are able to offer you the opportunity to establish a Portuguese compliant investment bond until the age of 80, provided you meet the requirement of being of sound mind. This age limit applies to all the lives assured under the bond.

We understand the importance of ensuring that individuals have the flexibility to establish investment bonds that align with their financial goals, even as they approach their retirement years. By setting the age limit at 80, we aim to provide a reasonable timeframe for individuals to benefit from the advantages of our investment solutions.

If you are considering establishing a Portuguese compliant investment bond, it is important to act within this age limit to take advantage of the benefits and potential growth opportunities it offers.

For more detailed information or assistance regarding the establishment of a Portuguese compliant investment bond within the maximum age limit, please reach out to our dedicated team. We are committed to providing you with the guidance and support needed to make informed decisions about your investment journey.

What is the minimum investment in a Portuguese bond?

You are able to invest in a Portuguese compliant investment bond with a minimum investment amount of €100,000 or its equivalent in the chosen currency. This initial investment allows you to enter the market and start building your investment portfolio.

In addition to the minimum investment, we also provide the flexibility for additional lump sum investments. You can make additional contributions of a minimum of €20,000 or its equivalent in the chosen currency, enabling you to further grow your investment and potentially capitalize on market opportunities.

We understand that each investor has unique financial goals and circumstances. By offering a range of investment options, we aim to accommodate varying investment capacities and provide the potential for increased returns.

If you are considering investing in a Portuguese compliant investment bond and would like to discuss your investment requirements or explore the available options, please don't hesitate to contact our dedicated team. We are here to assist you in making informed investment decisions tailored to your needs.

What is the maximum number of lives assured?

We are able to provide you with the flexibility to establish a Portuguese compliant investment bond with up to six individuals as lives assured. This means that you can include multiple individuals who will benefit from the policy's coverage and potential returns.

It's important to note that the appointment of lives assured must be made at the time of establishing the policy. This ensures that the coverage and benefits are properly allocated to the designated individuals from the start.

Whether you are looking to include family members or loved ones in your investment journey, our Portuguese compliant investment bond allows you to extend the policy's advantages to a maximum of six lives assured.

If you have any further questions or need assistance in understanding how the inclusion of lives assured works and how it can benefit you, our dedicated team is here to help. Feel free to reach out to us for personalized guidance and support.

How do I go about nominating beneficiaries?

When it comes to nominating beneficiaries for your Portuguese compliant investment bond, fiduciary wealth management provides you with the flexibility to choose between revocable and irrevocable nominations. These nominations determine who will receive the death benefit in the event of the passing of the relevant life assured.

With a revocable nomination, you have the option to change or update the beneficiaries at any time during the policy term. This allows you to adapt the nomination according to your changing circumstances or preferences.

Alternatively, an irrevocable nomination provides a more permanent designation of beneficiaries. Once the nomination is made, it cannot be altered without the consent of the nominated beneficiaries.

It's important to consider whether you prefer the flexibility of revocable nominations or the permanence of irrevocable nominations when deciding how to go about nominating beneficiaries for your investment bond.

If you have further questions or require assistance in understanding the process of nominating beneficiaries or the implications of revocable and irrevocable nominations, our dedicated team is here to support you. Feel free to contact us for personalized guidance and advice.

How safe and secure is my Portuguese bond?

We prioritize the safety and security of your investment in a Portuguese compliant bond. We understand the importance of protecting your assets and providing you with peace of mind.

When you establish a Portuguese compliant investment bond with us, your assets are held in your name by the bond provider in a segregated account. This means that your funds are separate and distinct from the assets of the bond provider. They are solely allocated to pay you benefits and cannot be used for any other purpose.

In the unlikely event that the bond provider were to become insolvent, you can have confidence in our robust protection measures. Once the costs of liquidation have been covered, policyholders have first priority over the remaining fund assets. This ensures that you have a higher claim on the remaining assets of the bond provider.

Furthermore, as a life company based in Ireland, we are subject to stringent regulatory requirements outlined in the solvency ii directive of 2016. This directive sets capital requirements to ensure the financial stability of insurance companies. It's worth noting that Ireland has an excellent track record with no insolvencies of authorized life insurers.

Rest assured that when you choose utmost wealth for your Portuguese compliant bond, you are placing your trust in a company that prioritizes the security and protection of your investments.

If you have any further questions or need additional information about the safety and security measures we have in place, our dedicated team is here to provide you with the guidance and reassurance you need. Feel free to reach out to us for personalized support.

Can you arrange everything for me?

We understand that managing your financial affairs can be complex and time-consuming. That's why we're here to provide comprehensive support and expertise every step of the way.

When it comes to arranging a Portuguese compliant bond, our team of experienced tax and investment experts will guide you through the process, ensuring that we fully understand your unique requirements and personal circumstances.

During a detailed consultation, we will assess your financial goals and objectives to determine if a Portuguese bond is the most suitable product for you. Our experts will explain the benefits, address any concerns, and provide tailored recommendations based on your individual needs.

By working with us, you can rest assured that you'll receive personalized attention and professional assistance throughout the entire process. We are committed to simplifying the complexities of financial management and arranging everything necessary to meet your investment objectives.

Summary

To get started, we encourage you to connect with one of our trusted financial advisers who will serve as your dedicated point of contact. They will ensure that all your questions are answered, and they will assist you in arranging everything seamlessly.

Take the first step towards achieving your financial goals by reaching out to our team of experts today. We're here to make the process as smooth and hassle-free as possible.

Talk to Us

Speak directly to a locally based, professionally qualified, independent financial advisor about offshore bonds and your expat tax planning requirements in Portugal by contacting us on Tel: +44 207 998 0570 or email connect@fwm.gi