Tax Haven in Europe: Portugal and the Non-Habitual Resident Regime
What is the Non-Habitual Resident Regime?
The Portuguese Non-Resident Resident (NHR) regime is a special tax scheme for new residents with tax exemption for income not generated in Portugal.
Thus, individuals with large patrimony and their families who have not been tax resident in Portugal in the last five years and spend 183 days in this country can benefit from this regime.
What are the benefits?
The following revenues from a non-Portuguese source may be exempt from taxes in Portugal under the NHR regime:
- Revenue from rent, investment income, capital gains and royalties
- Business and professional income related to value-added services of an artistic or technical nature, as well as intellectual or industrial property or industrial, commercial or scientific information
- Pensions paid abroad
These benefits are only confirmed if the taxes are taxed under an existing double taxation treaty. Alternatively, it must be in another jurisdiction and always considering that the source of income is not Portuguese.
In addition to the above advantages, the non-habitual resident may enjoy a reduced rate of 20% Income Tax in some cases. This can be applied to salaries and professional income of a Portuguese source from activities of high added value or of an artistic or technical nature.
Who can benefit?
The new tax regime is available to all individuals who become tax residents in Portugal. As for the duration, the status is granted for a period of 10 consecutive years.
What are the requirements?
- To remain for more than 183 days in Portugal during the relevant fiscal year or to have housing in Portugal on December 31 of that year with the intention of maintaining it as his habitual residence.
- Not having had been tax residence in Portugal in the 5 years prior to the NHR application.
- Recognition as NHR is not automatic, so it is necessary to apply.
- The application for registration as an NHR must be made by March 31 inclusive of the year following that in which he became a tax resident in Portugal.
Other Tax Benefits
Tax on assets
Portugal does not tax assets. However, there are local taxes levied on properties located in Portugal.
Stamp duty is due at the rate of 10% relative to Portuguese assets. However, the spouses, descendants and ascendants, are exceptions, being exempt.
The stamp duty is charged on donations made in Portugal at the rate of 10%. Again, spouses, descendants, and ascendants are exceptions. Property donations are applied at a rate of 0.8%.
Tax Counseling with APORT
APORT provides a full range of services for living, investing and doing business in Portugal. We provide solutions for the fiscal optimisation of individuals and companies planning the move to Portugal.
We want our client to have the comfort of an individual treatment and a careful analysis, aiming at the best planning and the adoption of the tax benefit programs.
The APORT client will receive expert advice considering all tax aspects with our lawyers in Portugal and also in the country of origin.
Portugal is considered a tax haven in Europe. By becoming a non-habitual resident, the individual of great patrimony and his family can have several benefits. You can manage your wealth in a friendly tax environment, dispose of your assets with full tax breaks, and pass on your wealth or assets without inheritance or gift taxes.