Property Investment: Is Tax-free Living in Portugal Possible?

Updated: 11 January 2022

As being one of many attempts of Portugal to get their economy on its feet again after the 2008 financial crisis, Portugal’s Non-Habitual Residency Program aims to lure High Net Worth Inverstors (HNWIs) from all over the world. By meeting several conditions, it is possible for people to enjoy ten years of retirement tax-free. Thanks to its contribution to Portugal’s economy, it is safe to say that the program is here to stay.

What Is Non-Habitual Residency?

Non-Habitual Residency is a financial residency program that is offered by Portugal. It looks and aims for foreigners with wealth above a certain degree. The program offers these High Net Worth Investors a financially advantageous tax residency. In that, applicants –provided they meet the conditions- might enjoy ten, maybe more, years of their retirement tax-free.

Non-Habitual Residency enables its tax residents to receive their income tax-free both in Portugal and in the source country. It also paves the way for obtaining a Golden Visa, and eventually citizenship and second passport. In addition, citizenship does not have a negative impact on program’s perks such as tax-free income, it only involves the right to the second passport.

What Are the Requirements for Non-Habitual Residency?

To start with, Non-Habitual Residency Program requires its members to be in Portugal for more than half of every year. In terms of property, purchase is not required. Renting is a viable option. However, 183 days of settled presence every year is a necessitation.

Financial aspects of the requirements for the program, naturally, attract more interest. It is crucial to know that the program does not convert every sort of income into tax-free income. In order for the income to be qualified, it has to be classified as pension, dividend, royalty, or interest income.

Also if the income is from outside of Portugal and it is taxed in the home country, it is qualified to be tax-free in Portugal. It is a good idea to check if the country of the applicant has an effective double taxation treaty that allows this qualification.

Although the process of becoming a Non-Habitual Resident may take several months, the outcome is definitely worth it. Just make sure that you transmute your income stream into a qualifying sort, meet the conditions, and enjoy the best weather in Europe!

Learn about retiring in Portugal.

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