The non habitual resident in Portugal fiscal regime was created for the benefit of expatriates who choose to live in the country for a long period of time.
Pensioners, entrepreneurs, as well as investors or high net worth individuals can benefit from this tax regime, based on tax residency in Portugal.
The Portugal non habitual resident tax offers a lower tax rate or a total tax exemption on the personal income derived by foreign nationals.
Our Portugal immigration specialists answer some of the most common questions about this preferential tax regime below.
If you are a foreign national and wish to receive personalized information about how you will be taxed as a non habitual resident in Portugal, our team can help you with tailored services.
When you relocate to the country based on a Portuguese nomad visa which has been recently announced, you will enjoy the benefits of the NHR regime. However, in order to qualify, you will need to show proof of sufficient monthly income (calculated compared to the current Portuguese minimum wage). Our team can give you more details about the visa for digital nomads, compared to the other visa types.
What is the NHR Portugal regime?
A special tax regime implemented by the Government is available for foreign nationals for a period of 10 years.
The regime for non habitual residents, or the NHR Portugal regime, is available to certain categories of foreign nationals who are relocating to the country or to Portuguese nationals who are returning to their home country after a long period of living abroad.
The individual can start benefiting from this regime starting with the year when he or she registers for tax residency in Portugal (is considered a tax resident in the country).
Who qualifies for the status of non habitual resident in Portugal?
The regime is available to an individual who:
- Becomes a tax resident in Portugal under the laws in force;
- Was not considered a resident for taxation purposes in the 5 years prior to taking up the status of resident.
For the purpose of the NHR in Portugal, the following considerations are important:
- The individual has a residential accommodation in the country on any given day of the 12-month period; this is used as the habitual abode;
- An individual is a tax resident in Portugal if he spends more than 183 days in the country during a 12-month period;
- The days spent in the country can be continuous or not;
- Any day counts as a day spent in the country if the individual remains in Portugal overnight.
Portugal also allows the possibility of partial tax residence. This means that the individual can be considered a tax resident only during a certain part of the year.
What is the value of the Portugal non habitual resident tax?
The preferential tax regime for qualifying foreign nationals living in the country is taxed at a special 20% flat rate when it is derived from high-value activities, artistic activities, and scientific or technical activities.
Examples of high-value activities that fall under the NHR Portugal regime include the following:
- Director/executive of a company involved in production, industry, services, or business;
- IT, engineering, communication, science specialists, and technicians;
- University teachers;
- Artists and journalists.
Our Portugal immigration team can give you more details if you work in any of these fields.
In addition to this, foreign-source income can be exempted from personal income tax when:
- It is liable to tax in its country of origin, according to the applicable OECD tax treaties;
- It is not derived from Portugal;
- It is not derived from a tax haven.
This means that the NHR status can also be beneficial for those who retire to Portugal and derive income from pension received from their country of origin.
Employment income can be exempt from personal income tax under this special regime, provided that it is taxed in the state from which it is sourced according to an applicable tax treaty or according to the local state rules if no treaty is in place.
Portugal has signed double taxation agreements with 78 countries and two more are awaiting their entry into force.
How do you register for the NHR status in Portugal?
Foreign nationals should know that registration as a non habitual resident and the application of the preferential income tax rate is not automatic.
An individual receives the status of a non habitual resident in Portugal when:
- He applies for a Portuguese taxpayer number;
- Registers as a tax resident;
- Applies specifically for the NHR status Portugal.
The tax authorities have the right to request additional documents in order to approve this status and confirm one’s application for tax residency in Portugal.
One applies for NHR Portugal until March 31st the year after taking up residency in Portugal.
What are other taxes for foreigners apart from the NHR tax in Portugal?
While the personal income tax rate can be capped at a preferential rate for a 10-year period in the case of expatriates living in the country, other taxes are also worth taking into account:
- a municipal tax of 7.5% applies for the acquisition of property;
- a non habitual resident of Portugal acquiring property is also subject to stamp duty at 0.8%;
- an annual property tax with values between 0.3% and 0.45% applies.
Our team also lists the following aspects concerning tax compliance for individuals:
- the tax year is the same as the calendar year;
- married couples can file a joint tax return although they are taxed separately (however, this does not apply if one of the spouses is a non-resident);
- the personal income tax return is filed between April 1st and June 30th following the end of the tax year;
- the final tax payment must be made by August 31st the year following the one for which the payment is made;
- an optional filing extension to the end of December can apply in some cases (when the taxpayer requests foreign tax credits, for example; subject to conditions);
- individuals who fail to observe the tax filing deadline are subject to penalties.
Our team also offers services for investors who apply for a golden visa in Portugal.
Reasons to relocate to Portugal
The non-habitual resident regime can be considered one of the main aspects that make Portugal an attractive option for foreign nationals from a taxation standpoint.
Nonetheless, the 10-year NHR regime is not the only beneficial provision in terms of taxation for individuals:
- a tax exemption can be applied for in case of gifts or inheritance (to the spouse, and other family members); when these are subject to tax, a flat 10% tax applies in their case;
- there is no wealth tax;
- individuals who engage in self-employment can be subject to a beneficial tax regime;
- one can also access a special tax treatment for pensions and life insurance products (subject to conditions).
All of the beneficial tax aspects for individuals can be further discussed with one of our immigration experts with competencies in taxation matters.
In addition to these tax advantages, Portugal can be a suitable choice in Europe due to the fact that it is part of the European Union and the Euro Zone, and it is part of the Schengen area.
English is widely spoken, making it easy for foreign nationals and investors to take up residence here.
Overall, Portugal is a country that offers a high quality of life to expatriates and a welcoming regime for foreign nationals.
It is also a city break and tourism destination, and it is well connected to the rest of Europe through numerous airports and railways.
Moving to Portugal for investment or employment purposes is subject to a set of other conditions, apart from the ones concerning taxation described herein.
Digital nomads, as well as other freelancers and self-employed individuals who are not EU/EEA citizens, will need to follow a set of steps that will allow them to remain in the country longer than permitted by their tourist or short-term business visa.
Foreign nationals who wish to make sure that they comply with the requirements for long-term stays in Portugal can reach out to our team of immigration experts at any point during their relocation process.
If you are already in the country and are looking to apply for tax residency in Portugal, our team can assist you.
For more information about residency in Portugal, the types of residence permits and their renewal, as well as other relevant aspects of living in the country as a migrant, please reach out to our team. We provide complete solutions to individuals and families who relocate to Portugal and are able to assist them throughout the process with personalized recommendations.
If you are interested in other matters, such as how and when you can apply for Portuguese citizenship after a number of years lawfully spent in the country, our team can answer your questions. Portugal is a country that allows dual citizenship and gaining this status can be to the applicant’s advantage, given the fact that once the process is complete, he or she will be able to have a Portuguese passport.
Contact us for more details about the NHR tax in Portugal, as well as other information about the tax implications of moving to the country.