• Portuguese Non-Habitual Tax Residents Regime

    By Marina Andrade

    12-10-2018

    Portugal is part of the European Union, the Euro Zone and the Schengen area, having, nowadays, a stable political and social environment, a secure society, and a fantastic quality of life. In resume, Portugal offers a favorable investment climate, with a very attractive Tax Regime (Portuguese Non-Habitual Tax Residents Regime) for the foreigner citizens that intent to come to Portugal.

    The Portuguese Non-Habitual Tax Residents Regime enables those who become tax resident in Portugal, and are accepted by the Tax Authorities in Portugal as Non-Habitual Tax Residents, the opportunity to receive qualifying income tax free both in Portugal and in the country of source of the income – usually the origin/nationality country.

    The Non-Habitual Tax Residents regime represents a huge step forward in transforming Portugal in a tax-free jurisdiction for individuals, residents in a European Union Country, in receipt of qualifying non-resident income.

    Regarding the said Legal Regime, it is considered as “qualifying income” the pension, dividend, royalty, interest income, as well as professional income from high value-added activities, which benefit from a special flat tax rate of 20%.

    The special tax regime for non-habitual tax residents, with the said flat income tax rate of 20% for certain Portuguese employment and self-employment source income further increases the attractiveness of the country and shows the commitment to attract the best international talent, as well as wealthy individuals.

    The Portuguese tax system offers amazing opportunities in relation to wealth and inheritance taxes as well as business and rental income, capital gains, dividends and pensions.

    There are some legal requirements for those that intent to request the said Tax Regime:

    1. To become a Portuguese tax resident;
    2. Not having been a tax resident in Portugal in the previous five years;
    3. Remaining in Portugal for more than 183 days in any period of 12 months beginning or ending in the year in question; or if the applicant reside in Portugal for a shorter period, he must dispose, in any period of 12 months beginning or ending during the year in question, of a residence in Portugal in such conditions that it may be considered hat there is the intention to keep and occupy it as a habitual residence.

    As a way of increase the coming of foreigner citizens that intent to benefit of the said legal regime, The Non-Habitual Tax Resident Status is granted for a period of 10 years.

    Regardless of the pressions suffered by some left-wing Parties, the Portuguese Government decided, on the 2019 State Budget, to maintain the non-habitual tax regime as it is, since it is considered that such regime is responsible for bring foreigner investment to Portugal, which will balance the Portuguese Economy.

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  • The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.

Marina Andrade

Marina Andrade is based in Portugal and has been a member of the Portuguese BAR Association since 2009. Marina Andrade has over 12 years of experience specializing in international issues as Immigration Law and Non Habitual Tax Residence Regime in Portugal. She has written articles in the Portuguese News Papers, as well as in international papers as Multilaw. Marina Andrade gained experience through volunteering, having helped institutions as JA Worldwide.

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