The Non-Habitual Resident (NHR) Portugal program is a tax regime that offers foreign residents and investors reduced tax rates and exemptions on some taxes. It was introduced in 2009 and updated in 2020.
The aim is to attract foreigners to Portugal. It proved to be very successful with more than 10.000 non-habitual residents enjoying benefıts in Portugal.
Below, you can find all the details of the Non-Habitual Residence (NHR) Program; what it is, how you can benefit from it, and more.
What is NHR Tax Regime Program?
The advantages of the NHR Program in Portugal include:
- Income tax: special individual tax treatment on incomes for a period of 10 years
- Tax Exemption on almost all foreign sources of income
- Compared to other Portuguese income tax rates up to 48%, this program offers a 20% flat rate on certain Portuguese-source incomes (from determined professions and from self-employment)
- Opportunity to have tax residency within the EU in a white-listed country
- Exemption of tax on gifts or inheritance to family members
- No wealth tax
- Free cash remittance to Portugal
Eligibility: Who can be a Non-Habitual Resident
- You must have the right to be a resident in Portugal by being an EU/EEA/Swiss citizen or via the Portugal Golden Visa Program, and
- You should not have been a Portuguese tax resident in the preceding five years
To establish a tax resident status in Portugal, you must hold a place of abode by the 31st of December of that year to show your intention that Portugal will be your habitual home.
It can be useful to buy a Portuguese property, but you don’t have to. A Portuguese rental contract of 12 months will be sufficient as a proof of residency. If you decide to buy a property, you can show your purchase deed as proof of being a resident.
After holding a place of abode, you should apply for the Non-Habitual Resident program in Portugal until the 31st of March of the next year.
A reminder: Individuals who have the right to be a resident in Portugal through the Golden Visa Program can apply for the Non-Habitual Resident program.
Professions Regarded as High Added Value
Some professions are considered as a high added value to Portugal. These professions mainly have economic and cultural worth. So, individuals who practice one of the professions listed below are given generous tax exemptions:
|Theater, ballet, cinema, radio, television artists||Singers||Sculptors|
|Tax consultants||Dentists||Medical Analysts|
|Clinical surgeons||Ship’s doctors||General Practitioners|
|Biologists and life science experts||Computer programmers||Software consultant|
|Computer consultants and related services||News agencies||Other information and service activities|
|Scientific research and development||Research and experimental development on natural sciences and engineering||Research and development in biotechnology|
Tax on Foreign Source Income
Under the NHR regime, most of the beneficiaries’ income from a foreign source is exempt from taxation in Portugal for ten consecutive years. It means that if the income is from an external source, that has a DTA (Double Taxation Agreement) with Portugal, then the income will not be subject to taxation in Portugal.
- DTA (Double Taxation Treatment): It is a treaty between two or more countries, mainly to avoid double taxation of income and property. It aims to divide the taxation between the contracting countries in the right way, to avoid tax evasion, to secure the taxpayers’ rights, and to avoid differences. You can find the list of countries that have DTA with Portugal:
|São Tomé and Principe||Saudi Arabia||Senegal|
|South Africa||South Korea||Spain|
|Tunisia||Turkey||United Arab Emirates|
|United States of America||United Kingdom||Ukraine|
Types of Foreign Source Income
Under the NHR regime, it is either exempt from tax, or it is taxed at a flat rate of 20% if it is not from one of the eligible professions.
If it is from an eligible profession and it is from a country with a DTA (Double Taxation Agreement), it is tax-exempt. It can also be tax-exempt if in the absence of a treaty under the OECD model tax convention (if the country is not a tax haven.) If it is not from one of the eligible professions, it is taxed at a standard progressive rate. It is also subject to social security contributions.
This type of income can also be taxed at a flat rate of 20%; however, the individual can pay the usual progressive tax if it is less than the flat rate.
Royalties and income from financial assets
If the income comes from a country with a DTA, it is tax-exempt. It is also tax-exempt if it is from a country without a DTA but which isn’t a blacklisted tax haven. If the country is a blacklisted tax haven, then it is taxed at the rate of 28% or 35%.
Real estate income and capital gains
They are tax-exempt if:
- they come from a country with a DTA; or
- they come from a country without a DTA but which isn’t a blacklisted tax haven.
Capital gains from the disposal of securities (shares, bonds, etc.)
If they are from a blacklisted tax haven, they will be taxed at an optional rate of 28%, 35%.
If it comes from a country with a DTA, it is tax-exempt.
Tax on Portuguese Source Income
If it is not from the list of eligible professions, it is taxed at the standard progressive rate. However, if the employment is from the list of eligible professions, a 20% rate can be applied, or if the usual progressive rate is less, then the progressive rate can be used.
If it is not from the list of eligible professions, it is taxed at the normal progressive rate. However, if the employment is from the list of eligible professions, a 20% rate can be applied, or if the usual progressive rate is less, then the progressive rate can be applied.
Real estate income and capital gains
- Rental income is taxed at the rate of 28% (optional rate) or otherwise at normal progressive rates.
- Net capital gains are taxed at a rate of 50%, at the normal progressive rates.
It is taxed at the usual rates.
How to Apply for the NHR Regime in Portugal
We will guide you in the application for the program step by step:
Step 1: Residency Proof
The first step is to prove that you have the legal right to reside in Portugal.
Citizens of EU/EEA/Switzerland can register without a visa. They can register for residency in their region’s city hall. They must bring their passport and EHIC Card for the procedure. They will be asked for their current address too, but they don’t need to prove that.
Non-EU citizens must first receive a residence permit so that they are allowed to settle in Portugal. They can obtain the permit in different ways, but the two most common methods are via the Golden Visa Program or Passive Income. They can do that either online (on the site “SEF”) or in their country’s Portuguese embassy.
Step 2: Getting a NIF Number (Portuguese Tax Identity Number)
A NIF number is a nine-digit, tax identity number necessary to obtain, especially if one intends to do business or other official or legal activities in Portugal. While non-residents can get it through their representative/lawyer in Portugal, residents in Portugal can directly do it in the finanças (local tax offices). To do it, you need an ID card/passport and proof of residency.
Step 3: Registering as a Tax Resident in Portugal
After you obtain your NIF, you must register as a tax resident in the finanças.
Step 4: Application for NHR Status
You must first register at the corresponding government website. To register, you will need a NIF number, email address, phone number, and fiscal address. Once registered, you will receive a password by post in around two weeks. You can then complete the application site. For that, you need to submit the below documents:
- A document that states you were not a tax resident in Portugal in the preceding five years
- The past five years’ tax returns
- A rental agreement or a deed of a property in Portugal
Although you may apply for the NHR program by yourself, it is a rather elaborate process. Many people choose to get help from a professional in their application. We can gladly provide you with professional help.
The Portuguese DTA and The UK
Now that Brexit is in full force, the rights of UK citizens with residency in Portugal, are still protected as is.
Get Golden Visa: Who We Are And What We Do
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We have a local office in Lisbon, Portugal with legal professionals and chartered real estate professionals in our team.
We work with clients from all around the world, interested in obtaining Portugal Golden Visas, applying for NHR in Portugal, or making real estate investments in Portugal.
Contact us and talk to one of our experienced team members to help you with any and all your questions.
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Frequently Asked Questions About the NHR Regime
How can I follow the update of my application status?
If you have done your registration online, you can follow your application status on https://www.portaldasfinancas.gov.pt/at/html/index.html > Aceda aos Serviços Tributários > Consultar Pedido > Inscrição Residente Não Habitual.
For how long should I wait for my application result?
You will learn the result of your application within a few weeks.
When should I apply for the NHR regime?
You must apply for it before the 31st of March of the tax year when you became a tax resident in Portugal.
Is there an inheritance tax?
In Portugal; spouses, direct descendants, and ascendants are exempt from inheritance tax of any kind. For the others, there is a 10% stamp duty on Portuguese assets.
How can I calculate my tax according to my income?
You can check it from the updated Portuguese tax list below:
|INCOME (€)||TAX RATES (%)||BAND (€)||TAX ON BAND (€)||CUMULATIVE TAX (€)|
|0 – 7,091||14.5||7,091||1,028||1,028|
|7,092 – 10,700||23||3,608||830||1,858|
|10,702 – 20,261||28.5||9,561||2,725||4,583|
|20,262 – 25,000||35||4,738||1,658||6,241|
|25,001 – 36,856||37||11,655||4,386||10,627|
|36,857 – 80,640||45||43,783||19,702||30,329|
Is there a wealth tax in Portugal?
There is, but it is quite low and only affects the individuals who have a property at a value of more than €600,000 (for married couples and civil partners, it is €1.2 million).
How long can I benefit from the NHR regime?
You can benefit from it for ten years; then you will be taxed in accordance with the standard IRS regime.
What will be my obligations as a non-habitual tax resident?
You have to file annual tax returns in Portugal, and the total worldwide income and expenses must be included in these returns.