The Non Habitual Resident regime was introduced in Portugal in 2009. One of the principal objectives of this regime was to attract individuals and their families to Portugal by making it beneficial from a tax perspective to become tax resident in Portugal.
As a result, Portuguese NHRs have the ability to: grow their wealth in a white listed jurisdiction; earn income in a tax friendly environment; dispose of their assets and benefit from tax exemptions; pass on their wealth without inheritance or gift taxes, namely for children or spouse; and to enjoy their retirement without tax on their pensions.
WHAT ARE THE BENEFITS?
A Non-Habitual Resident (“NHR”) will be exempt from personal income tax on certain types of qualifying income if this income is subject to tax in the country of source under an existing Double Tax Treaty that allows for this or, if no Tax Treaty exists, were subject to tax in another jurisdiction and are not considered as Portuguese source income under domestic rules. Certain types of qualifying income under the regime will also benefit from a double tax exemption i.e. an exemption in Portugal and in the source jurisdiction. A special flat rate of 20% is also applicable for certain types of income arising from a number of highly qualified activities.
WHAT TYPES OF INCOME ARE ELIGIBLE FOR EXEMPTION UNDER NHR STATUS?
Pensions, dividends, royalties and interest from non-Portuguese sourced income are exempt from personal income tax in Portugal. Certain types of salaries, provided they are paid from a non-Portuguese source, can also be exempt from tax.
WHO IS ELIGIBLE?
Any individual who becomes Portuguese tax resident in accordance with Portuguese Law i.e. who has his habitual residence in Portugal or who spends more than 183 days in Portugal in the tax year, which runs from 1st January to 31st December or has a dwelling in Portugal at 31 December of that year with the intention to hold it as his habitual residence, and has not been taxed in Portugal, as tax resident, in the previous five years.
HOW DO YOU APPLY?
You may apply when you have become a Portuguese tax resident or before 31st March of the following tax year.
ARE THERE ANY OTHER BENEFITS?
Successful NHRs will have access to all the benefits of an ordinary Portuguese tax resident including healthcare.