The Portuguese Non-Habitual Residency status enables those who become tax resident in Portugal, and are accepted as NHR, the opportunity to receive qualifying income-tax-free both in Portugal and in the country of source of the income.
The NHR regime represents a major step forward in making Portugal a tax free jurisdiction for individuals in receipt of qualifying non-resident income.
Qualifying income includes pension, dividend, royalty and interest income.
This attractive regime also covers professional income from high value-added activities, which benefit from a special flat tax rate of 20%.
The sole requirement to benefit from this preferential treatment is to become a Portuguese tax resident, not having been a tax resident in Portugal in the previous five years. This status is granted for 10 years.
We at EDGE International Lawyers are tax specialist lawyers and we have been providing advice to international clients on all forms of foreign investment for nearly 30 years.
EDGE provides substantially more legal assistance than simply making the NHR application on the client’s behalf. We assist the client each step of the way from pre-application through the application phase itself, and with post-application matters including the various administrative issues and the introduction to the accountant who will file the client’s tax return.
The team has the depth and breadth of experience in providing the required advice to a very large number of NHRs of different nationalities and this personalised advice has enabled clients to take full advantage of the benefits available under the programme.
We have a 100% success rate for NHR applications.
Including pre-application due diligence and tax report, plus coordination of required documentation.
Obtaining your non-resident tax number, your Parish Certificate and your 5-year EU Residency Certificate (particularly relevant for British nationals pre-Brexit).
Preparing the application documents.
Changing your registration at the Tax Department and submitting your NHR application to the Tax Authorities, accompanying the application to approval (100% success rate).
Opening a Portuguese Bank Account, driving licence registration, Registration at local Health Centre, and assistance with the utility contracts.
To ensure your NHR tax return is submitted efficiently and effectively.
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Including the need to execute a Will.
Taxation advice on the use of an appropriate corporate structure with the NHR programme.
Support with filings and compliance generally.
The Non-Habitual Resident regime was introduced in Portugal in 2009. One of the principal objectives of this regime was to attract individuals and their families to Portugal by making it beneficial from a tax perspective to become tax resident in Portugal. As a result Portuguese NHRs have the ability to: grow their wealth in a white listed jurisdiction; earn income in a tax friendly environment; dispose of their assets and benefit from tax exemptions; pass on their wealth without inheritance or gift taxes, namely for children or spouse; and to enjoy their retirement without tax on their pensions.
A Non-Habitual Resident (“NHR”) will be exempt from personal income tax on certain types of qualifying income if this income is subject to tax in the country of source under an existing Double Tax Treaty that allows for this or, if no Tax Treaty exists, were subject to tax in another jurisdiction and are not considered as Portuguese source income under domestic rules. Certain types of qualifying income under the regime will also benefit from a double tax exemption i.e. an exemption in Portugal and in the source jurisdiction. A special flat rate of 20% is also applicable for certain types of income arising from a number of highly qualified activities.
Pensions, dividends, royalties and interest from non-Portuguese sourced income are exempt from personal income tax in Portugal. Certain types of salaries, provided they are paid from a non-Portuguese source, can also be exempt from tax.
Any individual who becomes Portuguese tax resident in accordance with Portuguese Law i.e. who has his habitual residence in Portugal or who spends more than 183 days in Portugal in the tax year, which runs from 1st January to 31st December or has a dwelling in Portugal at 31 December of that year with the intention to hold it as his habitual residence, and has not been taxed in Portugal, as tax resident, in the previous five years.
You may apply when you have become a Portuguese tax resident or before 31st March of the following tax year. If you wish to apply for the NHR regime EDGE can guarantee a prompt consideration of you application. EDGE has a direct channel to the central authorities dealing with the NHR regime and we are confident that we will obtain a decision on your NHR application within 7 days.
If you wish to obtain a prompt decision on your NHR application, EDGE can guide you through the process enabling you to obtain a decision within a timeframe of less than a week after the application has been made. The status will be backdated to the date of becoming Portuguese tax resident.
Whilst there are no guarantees that applications will be successful, EDGE has a 100% success rate to date. As long as the NHR applicant fulfils all the legal requirements of Portuguese tax residency and the specific requirements to become a NHR, there is no reason for the registration to be rejected.
Our fees for processing the application for NHR status are fixed on a case-by-case basis but we can assure that the fees are very competitive, particularly in light of the high level of service given. Prior to making the application we will conduct a due diligence on your income and, where appropriate, suggest any restructuring in order to maximize the benefit under the programme. You will be updated regularly in relation to the process and the NHR team will ensure that your application is processed promptly and efficiently and followed through with the Tax Department regularly.
Successful NHRs will have access to all the benefits of an ordinary Portuguese tax resident including healthcare.
No. The term “non-habitual” often leads to misinterpretations. It means that under the NHR regime you are required to have your tax residency, and are habitually resident, in Portugal. As this regime is valid for each applicant for a period of 10 years tax authorities used the term “non-habitual”.
Yes. Rental is an option under the NHR regime. As occurs when you purchase a property, if you are renting a property you may be required from tax authorities to provide evidence of your address in Portugal, which can be done through providing a copy of your rental contract.
When applying for the NHR regime, you will not need to provide any statement of assets. This will also not be required when filing your first tax return. In each tax return you will only be required to provide information on the value of each category of your annual income.
The regime was implemented in 2009 but only became fully operational in 2010. However, the programme is maturing and shows every sign of continuing to form an important part of Portuguese foreign investment programme.
After your registration as a NHR in Portugal you are able to request an international certificate of residence to the Portuguese tax authorities. This document then has to be sent to the tax authorities of source of income and that should enable you to be exempt of tax in that jurisdiction, unless a withholding tax applies.
You can backdate your registration as a NHR in Portugal to the date on which you became tax resident in Portugal, always remembering that the deadline for making the NHR application is 31st March of the tax year after you became tax resident in Portugal.
An application for NHR status is, in a large number of cases, preceded by a property investment in Portugal. Prior to making any property investment, you should consider the following issues.