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Navigating the benefits of Non-Habitual Residency in Portugal: We are able to help you establish your tax residency in Portugal under the non-habitual residency – NHR – regime.

NHR Portugal

The Non-Habitual Residency (NHR) is an attractive scheme in Portugal that allows those who qualify to benefit from a decade of generous tax breaks. One of the attractions of NHR is that (most) income from foreign sources is exempt from Portuguese taxation for ten consecutive years. This means that you could potentially receive rental income, capital gains on real estate, dividends and non-Portuguese employment income exempt of taxation in Portugal and a possible double exemption, both in Portugal as well as the country where the income is paid. Does it sound too good to be true?

Migrate To Portugal?

You may have considered moving to Portugal for a lifestyle change; excellent climate, great food and a lower cost of living. Besides a better quality of life did you know that Portugal also offers a very attractive NHR Portugal regime to newly resident individuals?

Retire In Portugal?

What about pension income? If you are in receipt of pension income from a foreign source, it will be exempt from Portuguese income tax, if the pensions are subject to tax under an existing double tax treaty or if the pension income is not considered as obtained in Portugal and the contributions to the scheme did not give rise to a tax deduction. Since most double tax treaties give exclusive taxation rights to the country of residence in effect your pension income could theoretically end up being tax exempt.

Key Benefits

  • Flat rate of 20% on Portuguese earned income from qualifying activities and exemption from almost all foreign sourced income.
  • Tax exemptions on gifts and inheritance tax to spouse, children or family with non-related benefactors being either tax exempt or subject to a flat stamp duty tax rate of 10%.
  • No wealth tax and free remittance of funds either to or from Portugal.
  • Beneficial treatment for pensions and life contracts including unit linked investments which further reduces the effective tax burden.

The NHR Portugal regime also allows for the accrual of wealth in a tax friendly environment save for blacklisted tax havens and to dispose of assets with tax exemptions as well as to transfer wealth to the next generation without being subject to either inheritance or gift tax.

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Frequently Asked Questions About Non-Habitual Residency In Portugal For British Expats Looking To Retire In Portugal

Welcome to our FAQ for NHR Portugal for British expats! If you're a British citizen considering moving to Portugal and exploring the benefits of Non-Habitual Residency, this guide is here to provide you with valuable insights and answers to common questions regarding this special tax regime.

NHR Portugal is a tax regime designed to attract foreign residents, including British expats, to Portugal by offering favourable tax benefits. If you're considering taking advantage of this program, you may have questions about eligibility requirements, tax implications, and the application process. This FAQ is designed to address those queries and provide guidance tailored to your specific circumstances.

While we strive to provide accurate and up-to-date information, it's important to note that tax regulations can change over time. Therefore, we highly recommend consulting with a qualified tax advisor or specialist who is experienced in Non-Habitual Residency in Portugal. They can provide personalized advice based on your unique situation and help you navigate the process effectively.

Let's dive into our FAQ and provide you with the knowledge and resources you need to understand and benefit from Non-Habitual Residency in Portugal as a British expat.

The Non-Habitual Residency (NHR) Program in Portugal is a special tax regime aimed at attracting foreign residents to establish their tax residency in Portugal. Under this program, eligible individuals can benefit from significant tax advantages and exemptions for a period of 10 years. The NHR Program offers a flat income tax rate of 20% for qualifying employment and self-employment income derived from certain professions or high-value-added activities. Pensions are taxed at 10% although through the use of annuities can be reduced further. Additionally, certain types of foreign income may be exempt from taxation in Portugal. The NHR Program is designed to encourage individuals to reside in Portugal and enjoy favourable tax treatment, making it an attractive option for those seeking tax optimization and financial planning opportunities.

The NHR Portugal Program is available to individuals who become tax residents in Portugal and meet certain eligibility criteria. To be eligible for the NHR Program, you must meet the following requirements:

Not have been a tax resident in Portugal in the previous five years.

Establish tax residency in Portugal by spending at least 183 days in the country or having a home in Portugal that is intended to be your habitual residence.

Register as a tax resident with the Portuguese tax authorities.

Need to establish residency by 31st March of the following year from the year you became tax resident.

It's important to note that eligibility requirements may vary, and it's advisable to consult with a qualified tax advisor or professional to ensure your specific circumstances align with the program's criteria. By meeting the eligibility criteria, individuals can take advantage of the tax benefits and exemptions offered by the NHR Program in Portugal.

The Non-Habitual Residency (NHR) Program in Portugal offers several tax benefits to eligible individuals. Some of the key tax advantages of the NHR Program include:

Tax exemption on foreign income: Under the NHR Program, certain categories of foreign income, such as dividends, interest, and royalties, may be eligible for tax exemption in Portugal for a period of 10 years.

Reduced tax rates on employment income: If you work in a qualifying profession, such as high-value-added activities or professions of high cultural or artistic value, you may benefit from a flat tax rate of 20% on employment income obtained in Portugal.

Tax exemptions on certain Portuguese income: Income from high-value-added activities or intellectual property obtained in Portugal may be eligible for a reduced or exempt tax rate, providing additional tax advantages.

Double tax treaties: Portugal has a vast network of double tax treaties with numerous countries, which can help prevent double taxation and provide further tax planning opportunities.

By taking advantage of the tax benefits offered by the NHR Program, individuals can significantly reduce their tax liabilities and optimize their overall tax situation in Portugal. It's important to consult with a professional tax advisor or specialist who is knowledgeable about the NHR Portugal Program to ensure you fully understand and comply with the program's requirements and benefits.

To qualify for the Non-Habitual Residency (NHR) in Portugal, individuals must meet certain criteria. Here are the key requirements to become eligible for the NHR Program:

Residency status: You must become a tax resident in Portugal and fulfill the criteria for tax residency, which typically involves spending more than 183 days in Portugal within a tax year or having a residence that suggests an intention to establish permanent residence.

Non-Habitual Resident status: You must apply for Non-Habitual Resident status with the Portuguese tax authorities. This status allows you to benefit from the tax advantages offered by the NHR Program.

Not having been a Portuguese tax resident in the previous five years: To qualify for NHR, you must not have been a tax resident in Portugal in any of the previous five tax years before applying for the program.

Proof of qualifying occupation or activity: To benefit from the reduced tax rates on employment income, you must engage in a qualifying profession or activity, such as high-value-added activities, scientific or artistic professions, or certain professions of high cultural value.

Compliance with Portuguese tax obligations: You must ensure compliance with all Portuguese tax obligations and provide accurate and complete information to the tax authorities.

It's important to note that the eligibility criteria for NHR may vary or be subject to change. Therefore, it is advisable to consult with a professional tax advisor or specialist who can provide up-to-date information and guide you through the qualification process.

By meeting the necessary requirements and obtaining Non-Habitual Resident status, individuals can take advantage of the attractive tax benefits provided by NHR in Portugal.

Under the Non-Habitual Residency (NHR) in Portugal Program, certain types of income may qualify for the special tax regime. Here are the key income sources that are typically eligible for favourable tax treatment under NHR:

Employment income: Income derived from employment or self-employment in high-value-added activities, scientific or artistic professions, or certain professions of high cultural value may be eligible for reduced tax rates.

Pension income: Retirement pension income, including private pensions and social security pensions, may benefit from tax exemptions or reduced rates under NHR.

Business and professional income: Income derived from business activities or professional services rendered outside of Portugal to non-Portuguese residents may be eligible for favourable tax treatment.

Rental income: Rental income from properties located abroad may qualify for tax exemptions or reduced rates under NHR.

UK dividend income is potentially exempt.

It's important to note that the exact tax treatment of these income sources under NHR may vary based on specific criteria and limitations set by Portuguese tax laws. Therefore, it is advisable to consult with a professional tax advisor or specialist who can provide accurate and up-to-date information tailored to your individual circumstances.

By taking advantage of the special tax regime offered by NHR for eligible income sources, individuals can benefit from reduced tax rates, exemptions, or other favourable tax treatment, contributing to their overall tax efficiency and financial planning in Portugal.

To apply for the Non-Habitual Residency (NHR) in Portugal, you need to follow these steps:

Eligibility assessment: Determine if you meet the eligibility criteria for the NHR Program. Typically, this includes being a tax resident in Portugal and not having been a tax resident in the country for the previous five years.

Obtain tax residency: Establish tax residency in Portugal by spending at least 183 days in the country within a 12-month period or by having a residence in Portugal that suggests an intention to establish a permanent home.

Register with tax authorities: Register as a taxpayer with the Portuguese tax authorities (Autoridade Tributária e Aduaneira) and obtain a taxpayer identification number (Número de Identificação Fiscal or NIF).

Gather required documentation: Prepare the necessary documentation for your application, which may include proof of identity, proof of residence, employment or business documentation, and any other supporting documents required by the tax authorities.

Submit the application: Submit your application for NHR to the tax authorities. Ensure that all forms are completed accurately and that all required documents are included.

Application review: The tax authorities will review your application and supporting documents. The processing time may vary, but it is important to ensure that your application is complete and meets all the requirements.

Await approval: Once your application is reviewed, you will receive a decision from the tax authorities regarding your eligibility for NHR Portugal. If approved, you will be granted NHR status in Portugal.

Tax planning and compliance: After obtaining NHR Portugal status, it is important to engage in tax planning and ensure compliance with Portuguese tax regulations. Seek professional advice to optimize your tax situation and fulfill your tax obligations.

By following these steps and seeking professional guidance, you can navigate the application process for the Non-Habitual Residency Program in Portugal and take advantage of the tax benefits it offers. Remember to consult with tax experts who are well-versed in Portuguese tax law and can provide personalized advice based on your individual circumstances and objectives.

To maintain your non-habitual resident (NHR) status in Portugal and continue enjoying the associated tax benefits, there are certain requirements and conditions you need to fulfill. These include:

Tax residency: You must maintain tax residency in Portugal by spending at least 183 days in the country within a 12-month period or by having a residence in Portugal that suggests an intention to establish a permanent home.

Compliance with tax obligations: As an NHR, you need to comply with Portuguese tax regulations and fulfill your tax obligations. This includes filing annual tax returns and reporting your worldwide income, as well as any eligible income under the special tax regime, to the Portuguese tax authorities.

Exemption periods: The NHR status provides certain tax exemptions for a specific period. It is important to understand the duration of these exemptions and plan your tax affairs accordingly. As of the current regulations, the NHR status is granted for a period of 10 years from the year of registration as a tax resident in Portugal.

Documentation and record-keeping: Maintain proper documentation and records related to your income, expenses, and tax affairs. This will help ensure accurate reporting and facilitate any future audits or inquiries by the tax authorities.

Changes in personal circumstances: Inform the tax authorities of any significant changes in your personal circumstances that may affect your NHR status, such as changes in residency, employment, or income sources.

Professional advice: It is highly recommended to seek professional advice from tax experts who are knowledgeable about Portuguese tax law and regulations. They can provide guidance on maintaining your NHR Portugal status, optimizing your tax situation, and ensuring compliance with all requirements.

By fulfilling these requirements and staying up-to-date with your tax obligations, you can maintain your non-habitual resident status in Portugal and continue benefiting from the tax advantages offered by the NHR Portugal program. Remember to consult with experts who can provide personalized advice based on your specific situation and objectives.

The Non-Habitual Residency (NHR) in Portugal can have a significant impact on your overall tax planning and financial situation. Here's how it can benefit you:

Tax advantages: Under NHR, you may qualify for a special tax regime that offers attractive tax benefits. This includes a flat tax rate of 20% for certain types of income derived from eligible professions and a tax exemption for certain foreign income for a period of 10 years.

Reduction in tax liability: By taking advantage of NHR, you can potentially reduce your overall tax liability, especially if you have substantial foreign income or pension income from abroad. The favourable tax rates and exemptions can result in significant tax savings.

Retirement planning: The NHR program can be particularly advantageous for retirees or individuals planning for their retirement. Portugal's tax-friendly environment and the tax exemptions on certain types of retirement income can enhance your retirement planning and increase your disposable income.

Wealth preservation: The NHR Portugal program can contribute to wealth preservation by minimizing tax burdens on your income and assets. By optimizing your tax planning strategies through the program, you can protect and grow your wealth more efficiently.

International mobility: The NHR Portugal program facilitates international mobility by allowing you to maintain tax residency in Portugal while enjoying tax benefits. This can be beneficial if you have a global lifestyle, international business interests, or investments in multiple countries.

Financial flexibility: With reduced tax obligations and increased disposable income, the NHR Portugal program provides financial flexibility. You can allocate your resources more strategically, invest in opportunities, or pursue other financial goals that align with your long-term objectives.

Summary

It's important to note that the impact of the NHR Portugal program on your tax planning and financial situation will depend on various factors, including your specific income sources, assets, and personal circumstances. Consulting with tax and financial advisors who specialize in international tax planning can provide valuable insights and guidance tailored to your individual needs.

Talk to Us

Speak directly to an expert in NHR Portugal about how to get residency in Portugal under the NHR regime. To take full advantage of the current tax planning opportunities it would be sensible to receive professional advice from cross border specialists.

For further information about NHR Portugal please contact us on Tel: +44 207 998 0570 or email connect@fwm.gi