Most expats reaching out to us wonder how to move to Portugal effectively and what steps one must take from an immigration and taxation standpoint. Our team of professionals (lawyers, accountants and economists) have come up with four steps that one needs to go through to ensure a smooth relocation.
How to move to Portugal?
Step 1: Tax Orientation Meeting
Exit Tax Orientation Meeting
Your first step is to meet the tax advisor assisting you and inform them that you intend to relocate to Portugal or the “Pearl of the Atlantic” (Madeira Island). Relocation to Portugal, or its Autonomous Region of Madeira, implies that you are leaving the current jurisdiction you are living in and where most likely you are its resident for tax purposes. Furthermore, different countries and territories have different rules and reporting obligations applicable to those leaving (emigrating).
Consequently, you must be aware of what tax reporting obligations will apply to you as a non-resident, for tax purposes, in the territory that you are leaving; if there are any exit taxes, you must pay before the relocation or even if maintaining real-estate property might jeopardize the tax benefits you aim to obtain in Portugal as an expat.
Entry Tax Orientation Meeting
Once one has met with their current local tax advisor, one must seek professional tax advisory services in Portugal. Our lawyers, economists and accountants are ready to advise on the tax implications of relocation to Portuguese territory based on your current income structure and how it may be restructured so that it becomes efficient from a Portuguese personal or corporate income taxation standpoint.
Step 2: Immigration
In addition to meeting with your tax advisor, as suggested above, relocation to Portugal (or Madeira Island, as the rules are the same) implies initiating an immigration process regardless of whether or not one is an EU/EEA/Swiss citizen.
Consequently, the immigration process can be summarized in the following steps:
- Obtain a Portuguese Taxpayer Identification Number (locally known as NIF – Número de Identificação Fiscal)
- Finding accommodation – either bought or rented (short-touristic rentals, aka Airbnb, do not qualify);
- Opening a bank account – most banks will require your physical presence to open the bank account; one exception is Banco Atlântico Europa.
- Apply for a visa (most of those relocating to Madeira or Portugal can either apply for a D7 visa or the Golden Visa).
- Obtain a residence permit from the Immigration Authority (SEF) based on the visa issued.
Our team of professionals is ready to assist those looking into relocating to Madeira Island with the abovementioned steps.
EU/EEA/Swiss citizens
Portugal is visa-free for citizens of the European Union, the European Economic Area (EEA), and nations with which the European Community has a freedom of movement agreement. Citizens of non-EU countries whose family members hold Portuguese or EU citizenship may also enter Portugal visa-free and without restriction. All such candidates must possess a Schengen visa when entering Portugal, if applicable, and they must register with the local SEF branch.
To remain in Portugal for more than three months, nationals of the European Union, Iceland, Liechtenstein, Norway, and Switzerland must get a certificate of registration from the City Hall of their area of residence, which formalizes their right to dwell in Portugal.
After five years of holding the Registration Certificate, the Immigration and Borders Control Service will issue the Permanent Residence Certificate.
Step 3: Tax relocation
Upon obtaining the appropriate residence permit, as abovementioned, as a resident in Portuguese territory, you will be required to update your tax residency status. This implies that your worldwide income will be subject to Portuguese Personal Income Tax (locally known as IRS – Imposto sobre o Rendimento das Pessoas Singulares). For more information on this matter, please click here.
Further to the above, one of the essential steps on “how to move to Portugal” when it comes to tax relocation is ensuring one applies for the Non-Habitual Resident (NHR) status. The NHR status is a 10-year tax holiday available to those qualifying as residents in Portuguese territory for tax purposes. Under this unique scheme, one enjoys the following tax benefits for ten consecutive years (provided conditions are met):
- Net employment income and self-employment (freelancer/contractor) derived from highly valued-added activities of scientific, artistic or technical nature, from Portuguese source, is taxed at a flat rate of 20%;
- Net employment income and self-employment (the latter if derived from highly valued-added activities) obtained abroad may be exempt from taxation;
- Passive income (dividends, interests, rents, royalties and capital gains) obtained abroad may be exempt from taxation;
- Foreign pension income obtained abroad and originating from contributions that have not been considered a tax deduction in Portugal shall are taxed at a flat tax of 10%.
The deadline to apply for NHR status is a tight one. Confirm the exact dates applicable to you in your entry tax orientation meeting and consider your estimated date of residence for immigration purposes.
Step 4: Ongoing assistance
How to move to Portugal is an ongoing process, mainly due to tax residency triggered by your visa/residence status. Taking this into account, you must engage:
- A certified accountant who will look over personal income tax reporting obligations and compliance obligations (if you decide to be self-employed in Portuguese territory);
- A lawyer can assist you from time to time with matters such as property acquisition or sale, imported car registration, testament and even company incorporation.
Our team at MCS can provide you with the abovementioned ongoing assistance.
This article is provided for general information purposes only and is not intended to be, nor should it be construed as, legal or professional advice of any kind.
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more
