The programme was created in 2009 with the aim /purpose of attracting foreigners/overseas residents to Portugal and has since proven to be very successful with more-than 10,000 non-habitual residents taking advantage of the scheme.
WHAT DOES THE NHR SCHEME OFFER?
As of January 1, 2024, the Portuguese government has introduced a new version of the NHR program, called the Fiscal Incentive for Scientific Research and Innovation (IFICI) Program.
This update aims to focus more specifically on attracting highly qualified professionals to Portugal.
The NHR Program in Portugal provides successful applicants with the following advantages:
- Special individual tax treatment on incomes for a period of 10 years (non Renewable)
- Tax Exemption on most foreign source of income
- 50% Exemption (effective 20% rate), capped at €250,000
- Opportunity to obtain tax residency within the EU, in a white-listed country
- Pension Income is subject to normal progressive rates (14.5% to 53%)
- Rental Income – Exempt (If taxable abroad under DTA or OECD Tax Model)
- Dividends & Interest – Exempt (If taxable abroad under DTA or OECD Tax Model)
- Capital Gains – Exempt (with exceptions for gains from movable assets)
- No wealth tax
- Free cash remittance to Portugal
To establish a tax resident status in Portugal, you are required to hold a place of abode until the 31st of December of that year to prove your intention that Portugal will be your habitual home.
Buying a Portuguese property is beneficial, as you can show your purchase deed as proof of residency. After holding a place of abode, you should apply for the Non-Habitual Resident program in Portugal until the 31st of March of the following year.
PROFESSIONS
CONSIDERED "High value and cultural value"
Certain professionals are given generous tax exemptions due to the high economic
and cultural value they add to Portugal.
These professions include:
1. Researchers with PhDs or those engaged in R&D projects.
2. Directors or employees of Portuguese-based organisations producing knowledge.
3. Highly qualified professionals in strategic sectors.
4. R&D personnel eligible for Portugal’s R&D tax incentive program (SIFIDE).
5. Directors or employees of accredited Portuguese startups.
FOREIGN INCOME
Under the NHR regime, most of the beneficiaries’ income that originates from a foreign source is exempt from taxation in Portugal for ten consecutive years.
This 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):
A treaty between two or more countries, created to avoid double taxation of income and property. It aims to properly divide the taxation between the contracting countries, to avoid tax evasion and differences and to secure the taxpayers’ rights.
Contact Sardo Luxury Real Estate
for the full list of 78 countries
that currently have DTA with Portugal
Under the NHR regime, it is either exempt from tax, or it is taxed at a flat rate of 20% (pending it is not from one ofthe eligible professions).
SELF-EMPLOYMENT INCOME
Providing it is from an eligible profession and a country with a DTA (Double Taxation Agreement), it is tax-exempt.
In the absence of a treaty under the OECD model tax convention it can also be tax-exempt (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 and subject to social security contributions.
This type of income can also be taxed at a flat rate of 20%, however, the usual progressive tax can be paid if it is less than the flat rate.
PENSION INCOME
Pension Income is subject to normal progressive rates (14.5% to 53%).
An income originating from a country with a DTA, is tax-exempt.
If it comes from a country without a DTA that isn’t a blacklisted tax haven it is also tax-exempt. 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
Capital gains from the disposal of securities (shares, bonds, etc.) and real estate incomes from a country with a DTA or a country without a DTA that isn't a blacklisted tax haven, are tax-exempt.
If they are from a blacklisted tax haven, they will be taxed at an optional rate of 28%, 35%.
PROCESS
HOW TO APPLY
FOR A NON-HABITUAL RESIDENTS REGIME?
PROOF OF RESIDENCY
The first step is to prove that you have the legal right to reside in Portugal.
If you are a citizen of EU/EEA/Switzerland, you can register without a visa, in your region’s city hall. Here you will be asked to present your passport, EHIC Card and current address.
If you are a non-EU citizen, you will need to receive a residence permit before you are allowed to settle in Portugal.
The most common methods used to obtain a permit are via the Golden Visa Program or Passive Income, which you can do online (https://www.sef.pt) or in your country’s Portuguese embassy.
PORTUGUESE TAX IDENTITY NUMBER
It is essential you acquire a NIF number (nine-digit, tax identity number), if you intend to do business or other official/legal activities in Portugal.
Non-residents can obtain it through their representative/lawyer in Portugal, while residents in Portugal can get it directly from the local tax offices (“finanças”).
You will have to present your ID card/ passport and proof of residency.
REGISTERING AS A TAX RESIDENT IN PORTUGAL
After you obtain your NIF, you must register as a tax resident in the local tax office (“finanças”).
APPLICATION FOR NHR STATUS
First you must register at the corresponding government website. This will require your NIF number, email address, phone number, and fiscal address. Once you have registered, you will then receive a password in the post (this will take around 2 weeks). You can then complete the application on the site by submitting the documents listed below:
- A document that states you were not a tax resident in Portugal in the preceding five years
- Your tax returns from the previous 5 years
- A rental agreement or a deed of a property in Portugal
PORTUGAL?
In addition to these aspects, it is also one of the safest countries in the world (consistently ranking in the top 10 of the Global Peace Index).
Portugal has grown into one of the most attractive European entrepreneurial eco-systems, with a thriving property market that has resulted from investments made in infrastructure and technology over the last 15 years.
