Those qualifying for the Non-Habitual Resident (NHR) regime qualify as residents for tax purposes in Portugal and are taxed at a reduced rate.
NHR status is valid for a period of 10 consecutive and non-renewable years unless the taxpayer becomes non-resident for tax purposes for a period of 5 years before reapplying to the scheme.
Non-Habitual Resident (NHR) Regime
Learn more about all the benefits, requirements, obligations and more of the NHR Regime.
NHR Status Requirements
- Not have been deemed tax resident in Portugal in the previous 5 years (a tax residence certificate and proof of tax paid abroad may be required).
- Acquiring Portuguese tax residence. Either by having lived for more than 183 days (consecutive or not) in Portugal in any period of 12 months starting or ending in the relevant year; or having a house, at any time throughout the 12-month period, in such conditions that allow to presume the intention to hold and occupy it as the habitual place of residence.
- Non-EU/EEA citizens will need to obtain a valid visa from the Portuguese Embassy/Consulate of their country of residency that entitles them to have a residency permit in Portuguese territory. (e.g.: a Golden Visa, a Passive Income Visa or other type of visa).
- EU/EEA citizens will need to obtain a EU/EEA Citizen Residency Certificate from the City/Town Hall with jurisdiction over their tax address.
- Apply for the registration as Non-Habitual Tax Resident until 31 March of the year following that of registration as resident (e.g. 2017– registration until 31 March 2018).
Recognition of the NHR status is not automatic and requires a formal application to be lodge with the Portuguese Tax and Customs Authority. In addition, and in case of random audit to the application, documents proving tax residency in last previous years (e.g.: Tax Residency Certificates and/or proof of tax settlement abroad) can be requested. Having such documents with you at the time of application is crucial.
All residents, for tax purposes, in Portugal are required to to report annually their worldwide income and foreign bank accounts held to the Portuguese Tax and Customs Authorities. Those qualifying as NHR are not exempt from such reporting obligations.
Failure to comply with the annual tax reporting obligations may incur in criminal liability.
Tax Exemption on Income of Foreign source
- Taxation exemption on employment income is granted if the income is subject to taxation in the source country, in accordance with the applicable Double Taxation Agreement, or are considered not to be derived from a Portuguese source.
- Pensions are subject to a flat tax rate of 10%. In case they are subject to tax in the source country, in accordance with the applicable Double Taxation Agreement, a tax credit may apply.
- Freelancer income / Independent Contractor derived from high value-added service activities, with a scientific, artistic or technical character, are also exempt if these can be taxed in the country of source, with which Portugal has Double Taxation Agreement or, in the absence of such agreement, when the income is not to be considered obtained in Portuguese territory.
- Taxation exemption on other types of foreign sourced income (interests, dividends, capital gains, income from immovable property (rents), royalties, intellectual property income and business income) if: these can be taxed in the country of origin under a Double Taxation Agreement concluded between Portugal and the respective State or; if these types income may be taxed in the State of origin in accordance with the OECD model of tax convention (excluding tax havens) in cases where there is no Double Taxation Agreement.
Tax Exemption on Income of Portuguese Source
- Employment income and business or professional income derived from high added value activities are taxed at a flat rate of 20%.
- Remaining employment and business or professional income (not considered of high added value) and other types of income, shall be aggregated and taxed according to the taxation general rules.
Other Types of Income
Any other type of income obtained abroad, as business or professional income, not covered by this tax regime for non-habitual residents, will be taxed on Portuguese territory according to the rules set in the Portuguese Tax Code, i.e.: according to the convention to eliminate double taxation held by Portugal and the source State, in case there is one; or in case there is no Convention, apply the unilateral standard to eliminate international juridical double taxation.
High Added Value Jobs
- General Manager and Executive Manager of Companies
- Directors of Administrative and Commercial Services
- Production and Specialty Services Directors
- Hotel, restaurant, trade and other service directors
- Experts in the physical sciences, mathematics, engineering and related techniques
- Dentists and stomatologists
- University and Higher Education Teacher
- Information and Communication Technology (ICT) Experts
- Authors, journalists and linguists
- Creative and performing arts artists
- Intermediate science and engineering technicians and professions
- Information and Communication Technology Technicians
- Market-oriented farmers and skilled agricultural and livestock workers
- Skilled, market-oriented forest, fishing and hunting workers
- Skilled workers in industry, construction and craftsmen, including in particular skilled workers in metallurgy, metalworking, food processing, woodworking, clothing, crafts, printing, precision instrument manufacturing, jewelers, craftsmen, electrical workers and in electronics.
- Plant and machine operators and assembly workers, namely stationary and machine operators
Please note that the above list is updated through Ministerial Order issued by the Minister of Finance.
Donations, Inheritance and Gifts Tax
- There is no wealth tax.
- There is no inheritance tax for spouses, descendants or ascendants. Otherwise a 10% rate applies.
- There is no gift tax for spouses, descendants or ascendants. Otherwise a 10% or 10,8% (in case of real estate) applies.
If you are planning to move to Madeira or Portugal and need help applying for the NHR program, do not hesitate to contact our team. Learn more about it in our brochure.