Portugal’s NHR Tax Regime: Everything That You Need To Know

Portugal’s NHR Tax Regime: Everything That You Need To Know

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Portugal's NHR Tax Regime: Everything That You Need To Know

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In order to strengthen the country’s worldwide competitiveness, the non-habitual resident tax is designed to attract investors and experts of high cultural and economic value. The program was first established in 2009 and provides people who qualify with large tax savings. Under certain conditions, NHR status allows for a 20% tax rate on income and, in some cases, a tax exemption for private-sector pensions. With more than 10,000 non-habitual tax regime inhabitants in Portugal, the program has been a tremendous success.

Foreigners who live in Portugal can benefit from preferential tax treatment under the country’s NHR (non-habitual resident) tax regime. Over 10,000 people from around the world applied and were approved, allowing them to pay less in taxes. The NHR plan, which was introduced in 2009 and will be amended in 2020, is an ideal program for foreigners who decide to make Portugal their permanent home and want to reduce their tax liability.

Who is eligible to apply for Portugal's non-habitual resident tax regime?

1. The applicant must have a residency permit, either as an EU/EEA/Swiss citizen or through programs such as the Golden Visa program.

The applicant must have a place of residence in Portugal on December 31st of that year. This home must be made available in a way that suggests a desire to preserve and occupy it as a habitual residence.

It may thus be advantageous for NHR tax residents to purchase property in Portugal. However, a 12-month rental contract is also acceptable as proof of residency. A deed of sale and a rental agreement should suffice as proof of residence.

2. The applicant must not have been a Portuguese tax resident in the five years preceding their move to Portugal.

Enjoy our Portugal Golden Visa Ultimate Guide

Why should you choose to be a Non-Habitual Tax Resident in Portugal?

1. Profits that are from a country with which Portugal has a double taxation treaty will not be taxed in Portugal.

a) Under the NHR tax system, Portugal won’t tax most foreign income earned by NHR people because that income may already be taxed in the country where it was earned. This means that people who live in NHR can get money from abroad without having to pay taxes on it.

There are currently 79 countries with which Portugal has signed a Double Taxation Agreement (DTA), and for those with which it has not, the OECD Model Tax Convention can be applied.

 

List of Countries that Have a Double Taxation Treaty with Portugal

Algeria

Czech Republic

Ireland

The Netherlands

Slovenia

Andorra

Denmark

Israel

Norway

South Africa

Austria

East-Timor

Italy

Oman

South Korea

Bahrain

Estonia

Ivory Coast

Pakistan

Spain

Barbados

Ethiopia

Japan

Panama

Sweden

Belgium

Finland

Kuwait

Peru

Switzerland

Brazil

France

Latvia

Poland

Tunisia

Bulgaria

Georgia

Lithuania

Qatar

Turkey

Canada

Germany

Luxembourg

Romania

Ukraine

Cape Verde

Greece

Macau

Russia

UAE

Chile

Guinea-Bissau

Malta

San Marino

UK

China

Hong Kong

Mexico

São Tomé and Principe

USA

Colombia

Hungary

Moldova

Saudi Arabia

Uruguay

Croatia

Iceland

Montenegro

Senegal

Venezuela

Cuba

India

Morroco

Singapore

Vietnam

Cyprus

Indonesia

Mozambique

Slovakia

 

2. Enjoy the twenty percent (20%) flat rate for certain Portuguese source incomes (from particular professions and from self-employment), compared to the standard Portuguese income tax rate of up to 48 percent.

 

The list of professions eligible for the 20% flat tax

Archaeologists

Dentists

Geologists

News agencies

Sculptors

Architects

Dentists

Higher management

Other information and service activities

Ship’s doctors

Auditors

Designers

Investors

Painters

Singers

Biologists and life science experts

Directors

Managers

Psychologists

Software consultant

Clinical surgeons

Doctors

Medical Analysts

Research and development in biotechnology

Tax consultants

Computer consultants and related services

Engineers

Medical physiatrists

Research and experimental development in the natural sciences and engineering.

Theater, ballet, cinema, radio, television artists

Computer programmers

General Practitioners

Musicians

Scientific research and development

University lecturers

3. Enjoy special tax treatment for ten (10) years. 

4. There is no wealth tax.

Portugal doesn’t have a wealth tax, but in 2017, the Imposto Municipal Sobre Imóveis (Imposto Municipal Sobre Imóveis) was made bigger (IMI). Only Portuguese properties have to pay this tax every year, no matter where the owner lives.

5. Free money transfers to Portugal.

6. Join the European Union’s white-listed tax environment.

7. A tax exemption for bequests and donations to direct relatives.

In Portugal, there is no tax on gifts given to spouses, direct descendants, or ascendants. All other assets in Portugal are subject to a stamp duty of 10%, and real estate has an extra rate of 0.8%.

8. There is no requirement for a minimum length of stay.

But you must have a permanent home in the country. You can do this by buying a home or renting a home.

What is the Application Process for the NHR Tax Regime?

1. Show your proof of Portuguese residency.

EU/EEA/Swiss citizens may proceed to their local town hall and register for residency. A visa may not be required. The applicant will need to pay around €16 and present their passport, EHIC card, and provide their address.

Non-EU citizens should obtain a proof of residence permit before one can apply for the NHR Tax Regime. The most popular way to obtain one is through Portugal’s Golden Visa Program. Not sure how to obtain one?

We’ll be happy to assist you in obtaining your Portugal Golden Visa.

2. Get to know the Portuguese Tax Law. 

Getting help from a specialist is the safest way to apply for NHR status in Portugal. This way, you can make sure you understand Portuguese tax law and, at the same time, find the best solution for your needs.

3. Get your Portuguese tax number (NIF): Numero de Identificaço Fiscal

a) Apply in Person at the Portuguese Tax Office Click here to find the nearest tax office to you.

    1) Present a proof of your residence

         a) Utility Bill

         b) Rental Agreement

    2) Residency Certificates/Visa

    3) Passport

b) Via e-mail. You have the option of sending an email (it must be written in Portuguese) with your attached requirements. You may check here to check the email address of the local tax office near you. 

c) Hire a tax representative. You will need to issue a Power of Attorney to your tax representative so they can be able to prepare and submit the documents on your behalf. 

4. Register as a Tax Resident. Once you have your NIF, you may proceed to the same tax office to process your registration. 

5. NHR Status Application 

a) Gather all the documents needed:

i. A statement in writing that you haven’t lived in Portugal for tax purposes in the last 5 years

ii. Proof of tax returns for the past five (5) years.

iii. Rental agreement or proof of ownership of a property in Portugal.

b) Register at Portugal’s Government Website. You will need the following information to complete the registration: Please note that all this information should have the same details when you initially register for your NIF. 

    i. NIF

    ii. Physical Address

    iii. Email address

    iv. Phone Number

    v. Prepare for a security question and answer.

Once you complete the registration process, the password will be sent out via mail within two (2) weeks. Once you have the password, proceed to the next step. 

c) Access your Financial Portal and register for the NHR regime. 

What is the Application Process for the NHR Tax Regime?

If income is sourced in a country which has a double taxation treaty with Portugal, this means the income will not be taxed in Portugal.

Beneficiaries of the NHR regime in Portugal with a foreign income are largely exempt from taxation in Portugal due to DTAs.

Employment income

Real estate income and capital gains.

Self-employment income

Pension income

2022 - Portugal’s Tax Rates for Individuals:

Band

Tax Rate

up to €7,116

14.50%

€7,117–€10,736

23%

€10,737-€15,216

26.50%

€15,217-€19,696

28.50%

€19,676-€25,076

35%

€25,076-€36,757

37%

€36,758-€48,033

43.50%

€48,034-€75,009

45%

€75,010+

48%

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