Non Habitual Residency Tax Regime

Tax Attractions for UK Residents

What is the Non-Habitual Resident Tax Regime?

The Non-Habitual Resident Tax Regime in Portugal offers individuals the unique opportunity to enjoy very competitive tax rates in Portugal (that may range from full exemptions to discounted rates) for a period of 10 years. This advantageous program is designed to provide financial flexibility and incentives for those considering establishing tax residence in Portugal.

To become a tax resident in Portugal and benefit from the NHR regime, certain eligibility requirements must be met:

  • You should not have qualified as a tax resident in Portugal during the five years preceding your registration in the special NHR regime.
  • Ensure your registration in the NHR regime is completed by March 31st of the year following the one in which you became a tax resident in Portugal. These requirements are essential to enjoy the tax advantages offered by the NHR program.

Following on from the requirements necessary for eligibility to the NHR regime, there are certain criteria that must be followed in order to become a tax resident in Portugal. The following conditions are needed:

  • You must remain in Portugal for more than 183 days, consecutively or not, in any 12-month period commencing or ending in the year in question; or
  • You must have accommodation, on any day of the 12 month period, that demonstrates the intention to establish permanent residency in Portugal.

How to Acquire The NHR Status

Recognition of the Non-Habitual Resident status isn’t automatic and requires the implementation of the following procedures:

  • Step 1: Request a resident tax number in Portugal – see required documentation below
  • Step 2: Request a password to access the Portal das Finanças (Tax Authority Portal)
  • Step 3: Request the NHR regime through the Portal das Finanças

 

The best part? This whole process typically takes just 48 hours. Your path to NHR status is faster and smoother than you might think.

Required Documentation for EU citizens:

  • Copy of valid Passport or identity card
  • Utility bill to prove residence abroa
  • Lease or purchase and sale or loan agreement to prove residence in Portugal
  • Bank account opened in a bank within Portugal
  • EU citizenship certificate of residence obtained in the City Hall where the individual has their home

Tax Benefits of the NHR Regime

Portugal’s NHR regime offers a wealth of tax advantages, making it an attractive choice for those seeking a tax-efficient lifestyle.

  • Enjoy a special 20% tax rate on employment income and professional/businesses income earned within Portugal for high-value activities, according to the list of activities published by Government Ordinance – a few of these activities include architects and engineers
  • A reduced 10% tax rate on pensions
  • Exemption for foreign-source income, provided specific conditions are met:
  • Dividends, royalties, interest, or rental income are tax-exempt in Portugal when taxed at source according to international agreements.
  • Salary earned abroad is exempt if taxed in the source country
  • High-value professional and business income is exempt if taxed in the source country under double taxation agreements or OECD (Organisation for Economic Co-operation and Development) conventions and has no offshore origin.
  • Tax residents in Portugal are taxed on worldwide income (i.e. Portuguese and foreign income)