The NHR Regime - Non-Habitual Residents, provides exceptional tax treatment for qualifying income received from a Portuguese source by NHR and can also benefit from tax exemptions on income of foreign origin.
Taxation for a period of 10 years at a flat IRS rate of 20% on labour income earned in Portugal and the absence of double taxation in the case of pensions and dependent and independent work earned abroad are some of the advantages.
Anyone who becomes a tax resident in Portugal and who has not been taxed as such in the last 5 years (before classifying as a Portuguese tax resident) will be considered a "Non-Habitual Resident". Individuals who meet the requirements listed below will therefore be eligible to register as NHRs, and will have the right to be taxed as such, for a period of 10 consecutive years, which may also be renewed.
For the purposes of acquiring the status of "Non-Habitual Resident", the Portuguese Tax Authority recognises the presentation of additional documentation (certificate of tax residence in another country for the previous 5 years), which will only be necessary if there are well-founded doubts about the veracity of the information provided by the expatriate.
To obtain this status, you must fulfil the following requirements:
In the case of dependent or self-employed work, the applicable tax rate is 20% (plus a 3.5% surcharge since 2013). Taxation is levied on income from high value-added activities of a scientific, artistic or technical nature, including:
In the case of Pensioners and Retired Persons, when the income is taxed in the State of origin, in accordance with the convention to eliminate double taxation signed by Portugal with that State (according to the criteria set out in the IRS Code), and provided that the income is not considered to have been obtained from a Portuguese source.
In the case of income from dependent work, when such income is taxed in the state of origin, in accordance with the convention to eliminate double taxation signed by Portugal with that state. Provided that this income is taxed in another state with which Portugal has not signed a convention to eliminate double taxation, and provided that the income is not considered to be obtained in Portuguese territory by the criteria of article 18 of the IRS Code.
In the case of income from self-employment (from the provision of high value-added services of a scientific, artistic or technical nature, or from intellectual or industrial property, income from capital, income from property or income from capital gains and other increases in assets), when the income can be taxed in the country, territory or region of origin, in accordance with a convention to eliminate double taxation signed by Portugal with that State. Or when there is no double taxation treaty, the OECD Model Convention may apply (taking into account the comments and reservations made by Portugal) and provided that the country, territory or region of origin does not have a privileged taxation regime, and provided that the income is not considered to have been obtained in Portuguese territory by the criteria of article 18 of the IRS Code.
Let us help you find your dream property in Portugal.
If you need more information, do not hesitate to contact us.
Choose to live in Portugal! Choose with VAP Real Estate.