Irish expats in Portugal and those eyeing retirement in the country are being urged to act quickly or risk steep tax bills as sweeping changes to Ireland’s pension framework edge closer.
Ireland is aligning its system with EU rules by implementing the IORP II Directive, which sets common standards for the security and regulation of pension schemes across member states. As a result, many existing single-member pensions and Personal Retirement Savings Accounts (PRSAs) will be phased out and replaced with new products.
Crucially, these new arrangements cannot be transferred abroad without triggering significant Irish tax liabilities.
The five-year transition period is nearing its conclusion, with around 90,000 affected accounts due to be closed by April 2026. Experts warn that leaving matters until the last minute could prove extremely costly. To help people understand their options, a free webinar is scheduled for October.
Wealth management specialist Chris Marson explains:
“Irish people with these pensions will be forced to move them in order for Ireland to come into line with what is known as the IORP II Directive.
“The IORP II (Institutions for Occupational Retirement Provision) Directive is designed to set common standards to ensure the soundness of pensions across the EU member states.
“Current pension providers will be asking those with these pensions to wind up their existing scheme and transfer to a new product.
“However, you may inadvertently get transferred to one that cannot transfer abroad without a high Irish tax charge on exit.”
For those already benefitting from Portugal’s now-closed Non-Habitual Resident (NHR) tax regime, pensions are currently taxed at a flat 10%. But if funds are shifted into more restrictive schemes, future withdrawals could face Irish tax rates of up to 50%.
Chris Marson adds:
“It is essential, to avoid falling into this trap, people in Ireland who have moved to Portugal or elsewhere, or are planning to, take steps now to mitigate the financial hit they could face.
“You need to be proactive in seeking expert advice and do so sooner rather than later. Leave it until April and it will be too late. We would recommend you take steps before 2025 is over.”
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Paul Stannard, chairman and founder of Portugal Pathways and the Portugal Investment Owners Club, underlined the urgency:
“This is a time-sensitive issue which those with Irish pensions need to be alert to and look to take immediate action – well in advance of the April 2026 deadline.
“At Portugal Pathways we can put you in touch with cross-border pension experts who can talk you through the options and what you need to do.
“There’s a real sting in the tail if you don’t act, so we urge anyone likely to be affected to seek professional advice.
“Join our Navigating the Upcoming Irish Pension Changes webinar to learn exactly how to protect your Irish pension from the new legislation - and discover how to make your Irish pension work harder for you in the most tax-efficient way possible.”
For Irish expat Joe Regan, who recently relocated to the Algarve, the warning proved invaluable:
“I was completely unaware this would potentially impact over 90,000 pensioners in Ireland and it wasn’t until I spoke to one of the wealth managers through Portugal Pathways that I had any idea I needed to act on it.
“Not only has it helped me solve that problem, it has allowed me, under my NHR, to make even more potential upsides after the initial 10 years thanks to their advice.”
About Portugal Pathways
Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on luxury property, wealth management, and tax optimisation, including post-NHR tax regime planning, as well as private healthcare, IFICI tax incentive applications, money transfers and bespoke relocation solutions to enhance life and investments in Portugal.
About Portugal Investment Owners Club
The Portugal Investment Owners Club, or P Club for short, is a unique investor membership community designed for discerning individuals, families, and organisations committed to exploring and capitalising on life in Portugal and enjoying money-can't-buy experiences and exclusive events.
Disclaimer: The information on the Portugal Pathways and Portugal Investment Owners Club (P Club for short) websites and in email communications is for general informational purposes only and should not be construed as legal, tax, or financial advice. You should consult and check with a qualified professional advisor before relying on any information provided on this website or in email communications. As it relates to investments in Golden Visas or other wealth management solutions offered by regulated and professional advisors, it is important to note that past performance is no guarantee of future returns. Private equities can be highly illiquid and come with risk and should always be under professional independent advice. Golden Visa investments need to be held for 6 to 7 years to allow for permanent citizenship/passport in the EU.
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