Portugal has emerged as a favored destination for affluent South Africans, diverging from traditional emigration routes like the UK, Australia, and the US. The trend is driven by attractive tax incentives, residency schemes, and a high quality of life.
Rising Popularity of Portugal
Portugal has become an increasingly popular destination for wealthy South Africans, marking a shift from traditional emigration routes to the UK, Australia, and the US. According to Overseas Trust and Pension (OTAP), about 12,500 South Africans have now settled in Portugal.
Emigration Statistics by Country
- New Zealand: 71,000 South Africans
- United States: 140,000 South Africans
- Australia: 206,000 South Africans
- United Kingdom: 217,000 South Africans
- Canada: 51,000 South Africans
Attractive Tax Incentives
OTAP director and co-founder Rex Cowley notes that affluent South Africans are drawn to Portugal due to its attractive tax incentives. These include exemptions on income and capital gains, no wealth or inheritance taxes, and appealing residency and pension schemes. Foreign pensions are 85% exempt from tax.
Residency and Visa Programs
Portugal offers several residency and visa programs that appeal to wealthy expatriates:
- D7 Passive Income Visa: Designed for individuals with a steady passive income from external sources, requiring a minimum income of €820 a month. Applicants must secure a tax identification number, a local bank account, and accommodation in Portugal.
- Golden Visa: Offers residency through investments, with options starting at €250,000 for cultural heritage restoration or €500,000 in investment funds or business ventures. Property investment is no longer a qualifying option due to recent legal changes.
Quality of Life
Portugal’s appeal is further enhanced by its pleasant climate, rich cultural heritage, and friendly atmosphere. These factors contribute to its growing popularity among South Africans seeking a more tranquil and secure environment.
Broader Emigration Trends
While traditional destinations like the UK, Australia, and the US still attract large numbers of South Africans, Portugal’s rising prominence reflects a broader trend of exploring more diverse destinations. According to Stats SA, the number of South Africans living abroad has grown from about 1.5 million in 2001 to more than 2 million in 2021.
Implications for Financial Planners
Financial planners are now tasked with adapting to these shifting trends, providing comprehensive advice tailored to the diverse needs of expatriates moving to less conventional destinations. Rex Cowley emphasizes that this global phenomenon places financial planners at risk of losing their wealthier clients if they cannot provide relevant cross-border solutions.
