Background

Portugal's Non-Habitual Resident Regime (NHR) attracts thousands of new residents to Portugal, by offering competitive tax rates, and in the right circumstances, full tax exemptions on certain foreign income, for ten years.

Visa Opportunities in Portugal

Portugal is an attractive and popular location. Not only is it undoubtedly a beautiful country, offering an attractive lifestyle and way of life, it also offers a temporary residence visa for digital nomads, which freelancers and entrepreneurs often take advantage of, and the popular Golden Visa and the Non-Habitual Resident (NHR) programme, which when combined together, offer an interesting route for individuals to move to Portugal and enjoy very agreeable tax advantages once they relocate.

Relevance of Golden Visa and the Non-habitual Residents Regime

Portugal's Golden Visa is less important for EU citizens, as they already have the right to live in Portugal without formal immigration or investment requirements needing to be met, but the buzz and energy in Portugal has sparked interest amongst many.

Portugal is currently attracting the affluent, as well as a wide range of other individuals, through the favourable tax regime: the NHR, which is a major motivator for both EU and non-EU citizens.

The Non-Habitual Resident Regime Explained

NHR lasts for 10 years and is available to EU and non-EU citizens who become tax resident in Portugal, provided they have not been resident in Portugal for the previous 5 years.

Individuals can enjoy non-habitual status, whereby income derived from employment or independent individual services, from a domestic (Portuguese) source, is taxed at a special flat rate of 20%, provided the income is from high value-added activities or are of a scientific, artistic, or technical nature.

A tax exemption may apply to income derived from a foreign source.

Criteria to Meet NHR Status

The following criteria must be met:

  • The right to reside in Portugal, either by being an EU/EEA/Swiss citizen, or through schemes such as the Golden Visa programme.
  • Must not have been resident in Portugal within the last five Portuguese tax years.
  • Must not have been a Portuguese tax resident in the five years prior to taking up residence in Portugal.
  • The individual must have a place to live in Portugal, this could be the rental of a modest apartment.
  • To apply for NHR, a fiscal representative, such as Dixcart, needs to be appointed in Portugal.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.