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September 6, 2021

Portuguese Non-Habitual Resident (NHR) Tax Program

The Portuguese Non-Habitual Resident Program, also known as NHR is a tax regime for non-habitual residents, that was created to improve the international competitiveness of Portugal and attract more foreigners. The NHR regime targets non-resident individuals, who are likely to establish a permanent or a temporary residence in Portugal.

Mann’s Solutions team has prepared an overview of the NHR Tax regime to make the application process clearer.

What do you need to know?

The NHR Program is a tax regime that offers reduced tax rates and exemptions on some taxes to foreign residents and investors.

The main advantages of the NHR Program:

  • Income tax – special individual tax treatment for a period of 10 years.
  • Tax Exemption on foreign income – possibility to earn income on your overseas wealth – tax-free, or at a preferential rate of tax.
  • Opportunity to pass on your wealth without inheritance or gift taxes (including to the family members like children and/or spouse).
  • The program offers a 20% flat rate on certain Portuguese-source incomes. (Compared to other income tax rates that are up to 48%)
  • Opportunity to have tax residency within the EU
  • Exemption of tax on gifts or inheritance to family members
  • No foreign pension tax
  • No wealth tax

Who can be a Non-Habitual Resident:

  • A person that has the right to be a Portuguese resident. For example, EU/EEA/Swiss citizen or via the Portugal Residency Program.
  • In the preceding 5 years, the person hasn’t been a Portuguese tax resident.

Types of Foreign Source Income and Taxation

Employment Income

Under the NHR regime, employment income is either exempt from tax, or is taxed at a flat rate of 20%.

Income from financial assets

If income comes from a country with a DTA or a country without a DTA but which isn’t a blacklisted tax haven, the income is tax-exempt. In case, when the country is a blacklisted tax haven, income will be taxed at the rate of 28%-35%.

Real estate income and capital gains

If real estate or capital gains income comes from a country with a DTA or a country without a DTA but which isn’t a blacklisted tax haven, the income is tax-exempt. In the income that comes from the country that is a blacklisted tax haven, income will be taxed at the rate of 28%-35%.

Pension Income

Will be tax-exempt if it comes from a country with a DTA.

Tax on Portuguese Source Income:

Real estate income and capital gains

Rental income in Portugal will be taxed at the rate of 28% or at normal progressive rates. Talking about Capital Gains, net capital gains are taxed at a rate of 50% (which is a normal progressive rate).

Pension Income

Regular Pension tax will be applied.

Frequently Asked Questions

Who can apply for the Portuguese NHR regime?

Individuals who become residents in Portugal for tax purposes, without having been so in the previous five years.

What are the main reasons to consider taking personal residence in Portugal?

The Non-Habitual Tax Resident regime grants an exemption on foreign source income. Besides, the regime grants limited taxation on income deriving from high value-added activities. The Portugal Golden visa also allows non-EU investors and their families to travel to the entire Schengen area.

What is considered a Qualifying Income?

Qualifying income includes pension, dividends, royalties, and interest income. As well as any professional income from high value-added activities, which benefit from a special flat tax rate of 20%.

What are the requirements?

To benefit from the tax regime, the person has to become a Portuguese tax resident, not having been a tax resident in Portugal in the previous five years.

For how long is the Status granted?

This status is granted for 10 years.

Portugal Golden Visa Program Overview

The Portuguese Residence Permit Program grants the right to live, work and study in Portugal, with visa-free access within the EU countries. The program investment options include the creation of at least 10 jobs via investing into business; investment of €1,000,000 or purchase of real estate within a range of €280,000 – €500,000, depending on where it was built.

Program benefits

Portugal residency by investment program grants the applicant a 5-year residency permit and let’s apply for permanent residence and citizenship after this period. The Program requires only 7 days a year visit to Portugal in a 1 year and 14 days visit during each subsequent 2 years to keep the permit. Portugal residency allows the whole family to travel without a visa to all Schengen Zone countries and gives access to high-standard education.

Qualifying Investment Options

  1. Property investment from €280,000

  •  €500,000 – purchase residential or commercial real estate (€400,000 – the reduced rate of 20% applied when purchasing a real estate located in low GDP or low populated density areas).
  •  €350,000 – purchase residential or commercial real estate over 30 years old requiring renovation. (€280,000 – a reduced rate of 20% applied when purchasing a real estate located in low GDP or low populated density)
  1. Creation of 10 Jobs or Business Investment

  •  Create a minimum of 10 new jobs OR
  •  Invest a minimum of €350,000 in business and create a minimum of 5 permanent jobs
  1. Capital Transfer From €1,000,000
  •  Applicants are required to make a capital investment into specifically approved investment options or Portuguese bank account.

LONDON BASED SOLUTIONS ADVISERS – Portugal Golden Visa

Full Support with our Immigration Advisers & Property Consultants:

Property search based on your requirements (from residential properties to high-value luxury developments)

  • Property virtual tours, 3-D tours, and in-person tours available.
  • Due diligence checks and additional property checks completed by our experts.
  • Residency & Citizenship document preparation and submission.
  • Full support until you receive your second passport & residency.

Mann’s Solutions is an international immigration law firm with offices in London, Hong Kong, and Moscow and has expertise in offering UK Visas and Immigration by Investment services to high net worth individuals. Our immigration advisers are regulated by OISC and IMC (Investment Migration Council).

For further information or to discuss your circumstances in a private consultation with our immigration lawyers in London Office, please contact us at enquiries@manns-solutions.com or call +44 207 993 63 46.

Photo by Julian Dik on Unsplash