Portugal's Non-habitual Resident Tax Regime

The Non-habitual Residence (NHR) regime essentially grants qualifying individuals the possibility of becoming tax residents of a white-listed jurisdiction whilst legally avoiding or minimising income tax on certain categories of income and capital gains for a period of 10 years.

The NHR tax regime came into force in Portugal in 2009 and is proving very successful at attracting individuals of independent means, pensioners and certain skilled professionals to establish residency in Portugal for tax purposes, while not being subject to minimum or maximum stay requirements.

The Portuguese tax regime for non-habitual residents is nearing termination, with the deadline for benefiting from it set at the end of 2023. Discover how you can take advantage of this unique opportunity.

What you need to know

In order to qualify as a “non-habitual resident”, a Portuguese national or a foreign individual having the right to live in Portugal must register as a tax resident of Portugal after not having been resident in this country during at least the previous 5 years. It should be noted that under the law an unregistered individual will be deemed resident for tax purposes if he/she either spends more than 183 days in the country during a 12-month period, or has a place of abode in the country, "in a way that may lead to the supposition of an intention to keep and occupy it as a habitual home". However, there is no minimum stay requirement for a Portugal-registered tax resident.

EU, EEA and Swiss citizens have an automatic right to live in Portugal, having the legal obligation of registering accordingly, and individuals of other nationalities must obtain a residence permit.

Recognition of non-habitual resident status is not automatic and is granted for a period of 10 years upon successful application to the Portuguese tax authorities up until March 31st of the year following that in which Portuguese residence was taken up. With the announced conclusion of the program at the end of 2023, it will only be possible to submit an application until the 31st of December.

In order to apply, all that is required is the filing of a request and of a statement to the effect that the applicant was not resident for tax purposes in Portugal during the 5 years preceding the arrival in Portugal. Only in the event the tax authorities have doubts concerning the truth of what is stated will they request additional documentation, which may include a tax residence certificate from the previous country and/or a document proving that the vital and economic interests of the applicant were centred in another country during the previous 5 years.

PORTUGAL

Non Habitual Resident Tax Regime (NHR)

10 years

5 years

15 years

15 years

Become tax resident in

Portugal

Not have been tax resident in Portugal for the past 5 years

No minimum contribution

Income obtained abroad:

Employment Income are tax exempt if effectively taxed abroad

Real Estate Income, dividends, interests, royalties, capital gains and self-employment (from high added value activities) income are exempt in Portugal provided that under a Double Tax Agreement rules of OECD Model Convention rules can be potentially taxed in the country of source

Pension Income is subject to a 10% fixed tax rate

Income obtained in Portugal:

Employment and Self-employment income considered obtained from high added value activities are taxed at a reduced fixed tax rate of 20%

Flat tax rate of 24% on salary income

(45% on salary income above € 600,000.01)

Dividends, Interests and Capital Gains, obtained in Spain:

19% - 23%

Taxed as a non-tax resident on foreign sourced income

Flat substitute tax at the fixed amount of € 100,000.00 per year excluding foreign income from the scope of the regular income tax (does not cover capital gains from the sale of “qualified participations”)

Italy approved an Additional separate Special regime for those qualifying as Pensioners: under specific conditions, for 10 years, 7% tax on all income obtained abroad, when becoming tax residents in certain Municipality of Southern Italy

Flat substitute tax at the fixed amount of € 100,000.00 per year excluding foreign income from the scope of the regular income tax



Greece approved an additional separate Special regime for those qualifying as Pensioners: under specific conditions, for 10 years, 7% tax on all income obtained abroad

The Portuguese Non-Habitual Resident status eligibility depends exclusively on the non-tax residency in Portugal during the previous 5 years prior to becoming tax resident in Portugal, without any investment or additional requirements.

Becoming tax resident in Portugal does not mean necessarily that the person has to be in the country for at least 183 days per year, provided the latter has a permanent habitation in conditions to be considered a place of abode as condition to be deemed as tax resident in Portugal and eligible to the NHR tax regime.

There is also no requirement related to any professional activity in Portugal, so the person does not have to work in Portugal to be eligible to the regime.

Under the Portuguese regime it is possible to reach full tax exemption in both country of residence and country of source of the income, namely on passive income as dividends, interests and royalties.

This regime is in force since 2009 and the tax benefits have been amended (in the sense of making the regime more solid and robust) only twice (but solely applicable to newcomers protecting acquired rights), making it stable and trustworthy. In addition to this special regime, there is no Wealth Tax or Inheritance Tax in Portugal.