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Marriage vs cohabiting couples: Portuguese Tax Implications
Updated: 24-Aug-2012
Dennis Swing Greene is Senior Partner and International Fiscal Consultant for euroFINESCO s.a.
Part 3: Succession problems
10. Banking
UK: In banking, if a cohabiting partner dies, any money held in the deceased person’s account will become the property of the estate and cannot be used until the estate is settled. In marriage, a bank may allow the remaining partner to withdraw the balance.
PT: Bank accounts are frozen upon the death of one of the partners and cannot be accessed until the estate is settled.
PT Tax Implications: Any inheritance is subject to 10% Stamp Duty.
11. Intestacy
UK: A surviving spouse automatically inherits the estate. Without a will, the surviving partner in a cohabiting partnership will not inherit anything unless the couple owned property jointly.
PT: Only family members have rights to intestate succession. Cohabiting partners can only be looked after in a Will.
PT Tax Implications - Succession of a cohabiting partner is subject to Stamp Duty of 10% on any transfer to the survivor.
12. Survivor’s Pension
UK: National Insurance Pension - A widow’s or widower’s pension cannot be claimed by a cohabiting partner. You will not get any state bereavement benefit or a state pension based on a percentage of your ex’s national insurance contributions, even if you had given up work to look after the kids and depended on your partner’s income.
PT: “Pensão de Sobrevivência” - The survivor of a Cohabiting Couple is entitled to a Social Security survivor’s pension upon the death of the partner.
PT Tax Implications: If one of the partners receives alimony, death benefits or similar financial support related to a prior marriage, subsequent entering into a cohabiting bond does not impact any preexisting rights. However, if the partners were to marry, the benefits cease.
13. Inheritance Tax
UK: If the testator has made a will and the estate that you inherit is worth more than £325,000 (for 2011-2012), you will have to pay inheritance tax.
PT: In 2004, Portugal abolished Inheritance Tax. Next-of-kin are tax-exempt on gifts and bequests. Stamp Duty of 10% is assessed on all other heirs.
PT Tax Implications: Unmarried individuals pay 10% Stamp Duty on the inheritance based on patrimonial value.
This is the final article of a 3-part series
Private consultations can be scheduled at in Guia (Albufeira) 289561333, Lisbon (Chiado) 213424210 and in Funchal (Sé), Madeira 291221095, by email info@eurofinesco.com or by visiting www.eurofinesco.com
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