Legal Advisor - Non-habitual residents - Saving Tax

None habitual tax residence

For those who that would like to live in Portugal, a special tax regime for non-habitual residents (NHR) could apply which may lead to the individuals paying considerably less tax. In short the NHR regime is applicable to individuals who meet the criteria to qualify as tax resident in Portugal by staying in Portugal for more than 183 days during the related year or have, on the 31st December of the relevant year, a property that they intend to use as their habitual residence and have not been taxed as tax resident in Portugal for the previous five years. Once the NHR regime is granted, it applies for 10 consecutive years so long as the individual continues to meet the criteria to qualify as a tax resident.

The favourable tax regime for NHR in Portugal includes:

  • a tax rate of just 20% applicable to employment and self derived from a "high value-added activities", as per a list published by the Portuguese tax authorities.
  • any employment income taxed from a foreign source will be exempt from taxation.
  • tax exemption (with progression) for foreign source income (pensions, rental incomes, capital gains, dividends, interests, as well as other investment incomes).
  • full tax exemption for gifts on inheritance to spouse, descendent or ascendants. Inheritance or gifts to other individuals will be either tax exempt also or subject to a flat 10% stamp tax rate.
  • no wealth tax and free remittance of funds in Portugal or abroad.
  • any capital gains from the sales of shares is taxed at a flat rate of 25%, but with an exemption up to €500 per year.

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