Among the most attractive features is the exemption from taxation in Portugal of income generated outside Portuguese territory, including capital income, income from real estate assets and capital gains.

This is a particularly attractive tax regime for highly qualified personnel engaged in high value-added activities, but also for High-Net-Worth Individuals (HNWIs), as it guarantees access to more favorable tax conditions than in other countries.

The NHR regime in Portugal is very competitive compared to similar regimes and is sought after by many foreign nationals wishing to reside and invest, benefiting from full or partial tax exemptions.

The fact that it is a 10-year scheme, the rates and its application to self-employed, dependents and pensioners have contributed to this.

1. Not having been tax resident in Portugal in the previous 5 years – It must be demonstrated that the person concerned has not been resident in Portuguese territory in any of the previous 5 years;

2. Must register with the tax authorities and fulfil the conditions required to be considered tax resident in Portugal:

• Stay in Portuguese territory for more than 183 days, continuous or interrupted, in a period of 12 months;

• Have a property in Portuguese territory (rental or ownership), demonstrating the intention to establish in Portugal his or her habitual and permanent residence.

NHR status allows individuals to benefit from a special IRS regime, but these advantages vary depending on the source of the income.

A) Tax regime for income earned in Portugal

Regarding income earned in Portugal, the granting of non-habitual tax resident status will allow the holder of income from employment or self-employment to benefit from the regime, provided that the income derives from the exercise of high value-added activities, as provided for in Portaria No 12/2010 of January 7.

Examples of high value-added activities

– General managers and executive directors of companies;

– Medical doctors;

– University and higher education teachers;

– Engineers, IT, communication, scientific and engineering professions;

– Journalists and artists.

Each activity must be analyzed in detail to verify its eligibility for the application of the tax rate on income earned in Portugal.

The applicable tax rates are as follows:

B) Tax treatment of income earned abroad

Income earned abroad can benefit from the IRS exemption, the regime of the State of the source of the income having to be confirmed, as well as the qualification of the income.

A distinction must also be made between (i) income from employment; (ii) income from self-employment in high value-added service activities, income from capital (interest, dividends), income from land and capital gains from the transfer of shares or real estate for valuable consideration; (iii) pensions, as the taxation of each of these has its own rules.

Therefore, the following exemptions and tax rates apply:

1 – Obtain a Portuguese tax identification number (NIF) as a non-resident;

2 – Change of status with the tax authorities to tax resident in Portugal, until March 31 of the year following the first year of tax residence in Portugal;

• Tax planning in Portugal and of your income located abroad.
• Advice on dual residence and taxation of income and wealth – see if you qualify for NHR.
• Obtain a NIF as a non-resident.
• Opening a bank account in Portugal.
• Assistance in acquiring/renting a permanent home in Portugal.
• Registration as an EU citizen at the City Hall or visa at the Foreigners and Borders Service if outside the EU.
• Registration with the tax authorities as a tax resident in Portugal.
• Application for non-habitual resident status – Until March 31 of the following year.
• Obtain the certificate of tax resident in Portugal and register as a non-tax resident in the country of origin.
• Complete and submit the annual tax return.