Portugese Tax Benefits: The Non-Habitual Residents Status

As a non-habitual resident of Portugal you can enjoy the many tax benefits the country has to offer. Not only retirees but also others who moves to the country might be eligible for Portugese tax exemptions and low flat rate. Read on to learn which facts and conditions may apply to the non habitual residents regime.

What is the non-habitual residents regime?

The Portugese non-habitual residents regime was introduced in 2009 as a way to make Portugal a more attractive place to live for people with "high-value" professions. This includes architects, managers, doctors, engineers, professors, investors and others. Those who are eligible can enjoy various tax benefits or exemptions in the first 10 years of Portugese residency.

Who is eligible for the NHR status?

Basically, anyone living in Portugal who is a tax resident according to the Portuguese law, or individuals who spend more than 183 days in the country within a tax year (Jan 1 - Dec 31). You would also be eligible if you have a house in Portugal on December 31 of the tax year and are planning to keep it as habitual residence. However, you are only eligible if you haven't been paying taxes in Portugal in the last 5 years.

How much do I pay for taxes?

  1. Salaries
  2. Pensions
  3. Dividends

In case of employment or self-employment, the applicable tax on salary is 20% flat rate (with added 3.5% surcharge in 2015) for the first 10 years of residency. In case of retirement, no double taxation applies if the income is taxed in a country with which Portugal has a signed convention to eliminate double taxation. Also dividends of a non-Portugese source are eligible for personal tax exemption if all other conditions are met. Here you can find more detailed information on Portuguese law and tax system.

How do I apply?

Indeed you will not be assigned the NHR status automatically but will need to apply for a Portugese taxpayer number and also a separate application for the NHR status. You will need to state that you were not a tax paying resident in Portugal in the last 5 years prior to becoming a Portuguese resident. Please note that the application needs to be done before March 31 in the year after taking up residency in the country.

Reasons you may not be eligible for the NHR*

  • Failure to register for the NHR tax regime within the first year
  • Failure to provide proof of previous country of residence
  • Dual tax residency on the year of arrival
  • The processing of liquidations or tax refund delays for NHR

*...see the full list here

Please note: THIS INFORMATION IS NOT INTENDED TO BE A SUBSTITUTE FOR CONSULTING THE APPLICABLE LEGISLATION.

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