Fiscal and Tax Lawyer
Oct 10, 2023
Non-Habitual Tax Regime: Everything You Need to Know About the NHR in Portugal
Starting in 2009, the Non-Habitual Tax Regime (NHR) in Portugal was established as a means of attracting higher-income individuals as tax residents, including retirees, freelancers, independent contractors, investors, skilled professionals, and even citizens of Portugal. The NHR allows them to minimize their tax payments and it’s valid for 10 years.
How to Qualify for NHR in Portugal
To obtain the NHR status one needs to qualify as a (i) tax resident in Portugal (see below) and (ii) should have not been a tax resident in Portugal in the five previous years.
How can you become a tax resident in Portugal?
An individual is, as a rule, considered resident for tax purposes in Portuguese territory if:
- one has remained herein for more than 183 days, consecutive or not, within a twelve-month period initiated or ended in the year to which the income relates to; or
- on any given day within that timeframe, if one had a residence here under circumstances suggesting it was their usual place of living, it would be presumed as such.
What are the benefits?
- As a rule, foreign income can be exempt from Portuguese taxes, provided income may be taxed abroad in accordance with a double tax treaty. Income from investments, such as dividends and interest, as well as royalties, rents from a foreign source are usually exempt from Portuguese taxes. In certain situations double non-taxation might occur.
2. Individuals engaged in activities recognized as relevant by the Portuguese Government's regulations, under the NHR status, may be eligible for a 20% flat tax rate on both employment and self-employment income earned within Portugal.
The government has a long list of high-value professions that qualify for the NHR, here are just a few of the many. For residents working in Portugal in the following professions:
- General Managers and Executive Managers of companies
- Administrative and Commercial Managers
- Hospitality, Restaurant, Retail and other Service Managers
- Specialists in Physics, Math, Engineering and other Technologies
- Medical Doctors
- University Teachers
- IT specialists
- Authors, Journalists and Linguists
- Agricultural skilled workers, Farmers
- Skilled Forestry workers
- People skilled in the Arts
And more. For a detailed list, feel free to contact us at moviinn.
3. Foreign pension income is only taxed at a flat 10% tax rate under this program.
Obtain your NIF (Tax) Number
Initially, you'll need a Portuguese tax identification number, known as Número de Identificação Fiscal (NIF), issued as a non-tax resident. Upon obtaining legal residency, you can shift your tax residency to Portugal. Consequently, your NIF transitions from non-resident to resident status, enabling you to apply for the NHR.
For individuals relocating from abroad, the entire process surrounding the NIF—including requirements like presenting proof of address in Portugal, having a local fiscal representative, and transferring tax residency at the tax authority—can be complex. Seeking legal assistance can significantly streamline this comprehensive procedure. Contact us for support throughout your NIF journey and the subsequent NHR application.
Conclusion on the NHR in Portugal
The Non-Habitual Resident (NHR) program in Portugal is expected to discontinue as of the 31st of December 2023. Individuals who have been approved for this program prior to this date will continue to reap its tax benefits.
As always, prospective participants and beneficiaries should stay updated, but we will take care of that and we will be closely monitoring and posting updates on this subject to keep you informed.
For detailed insights and guidance tailored to your personal situation, we highly recommend consulting with moviinn’s team of tax lawyers. They are well-equipped to provide clarity and expert advice on the NHR program and any impending changes. Stay connected with us for the latest news and announcements.