NHR Portugal

Non-Habitual Tax Resident (NHR) goes for non-resident individuals who wish to establish a permanent or temporary residence in Portugal.
Article Published: 08 Feb, 2021, Updated: 17 Jan, 2023 under Non-Habitual Residency (NHR) Tax Status Application

A popular reason among our clients for choosing Portugal as the country they want to live in, is the preferential tax regime known as the Non-Habitual Tax Resident (NHR).

This non habitual resident in Portugal system is meant to improve Portuguese economic competitiveness as it targets non-resident individuals who wish to establish a permanent or temporary residence in Portugal, allowing them to benefit from a sizeable reduction in the taxes they must pay.

While many are unaware that there have been a few changes over the years in this tax policy, it is still extremely beneficial to certain taxpayers.

Details of the Current System

As of today, the NHR regime establishes tax exemptions on foreign sourced income, in some cases, and those who register from April 2020 are liable to a 10% tax rate on pension income, instead of the previous full exemption.

Compared with other European countries this is a very interesting and appealing environment, especially if you also consider the high standard of living for an expat in Portugal, a country that offers not only an exceptional tax regime, but also great weather, high quality and almost free health care as well as business opportunities in a safe, legally certain part of Europe.

Why would you be interested in obtaining the NHR status in Portugal?

Actually, if one decides to work in Portugal, under the NHR regime, a limited 20% taxation of income from employment and independent personal services will be charged, in any case a much lower rate than the one would be charged in normal circumstances.

Application Process

Individuals who become resident for tax purposes in Portugal without having done so in the previous five years, may apply.

The application must be submitted up to March 31st of the tax year following that in which the Portuguese tax residency is acquired. Therefore, one must:

  1. register as non-resident taxpayers;
  2. obtain residence permits (for non-EU nationals) and residence certificates (for EU nationals);
  3. register as tax residents; and
  4. only then apply for the non-habitual resident status, considering the deadline.

We are frequently asked whether it is possible to register as NHR prior to obtaining residency. While an interesting question, we are afraid the answer is NO.

For instance, in the case of the D7 VISA, the applicant must obtain the D7 VISA in the origin country, travel to Portugal and attend the SEF appointment in order to get the residency card.

Only after this step should they change their tax address to the Portuguese address, becoming a tax resident, and only then, apply for the NHR.

Nowadays the application is managed online and be must be completed extremely carefully as it can jeopardise obtaining approval of NHR status.

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Service Details

Non-Habitual Residency (NHR) Tax Status Application

This service is available across Portugal

Who Is This Service For?

This generous tax scheme is open to any EU or Non-EU resident who has NOT been a resident of Portgual during the previous 5 years. Holders of Non-Habitual Resident Status (NHR), for a period of ten consecutive years, are entitled to:

  • exemption of income obtained abroad from dividends on business profits, property rental income and real estate capital gains, intellectual or industrial property;
  • taxation on income obtained in Portugal at reduced rates in the case of high added value activities (e.g. 20% for employment or self-employment income and 28% for capital and real estate income).
  • Pension income (non-governmental) taxed at a flat-rate of 10%

An important difference between this route to residency and the Golden visa is that here you are not entitled to work, but it is perhaps a more accessible option for residency.

Even not being allowed to work in Portugal that does not mean you will not be allowed to work in any other country provided you do not lose Portuguese residence by staying abroad working for longer periods of time.

What Does This Service Consist Of?

  • An initial discussion with an accountant or tax lawyer highly experienced in making successful applications for NHR status to determine the suitability of the scheme for your particular circumstances
  • Process your application for residency in Portugal under the visa scheme most appropriate for you
  • We make the application on your behalf to the appropriate governmental bodies, on your behalf, at the correct time ie contemporaneously with the application for residency, to avoid potential rejection of the application due to being considered as already resident

 

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When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

  • Verification of the regulatory status of your professional.
  • Fees as recommended by the Local Professional Body
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  • Service levels agreed in advance and guaranteed.
  • All professionals must hold professional indemnity insurance.
  • Professionals' proficiency in English monitored.
  • Continuous quality controls and reviews.

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