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Non-habitual resident - NHR

Special status to pay less tax

NHR status

NHR status can help taxpayers pay less tax or even exempt them from paying tax in Portugal altogether. The status is available for a period of 10 years.

In most cases, for a taxable person who wants to reside in Portugal, it is highly recommended that they apply for registration as an NHR, even if this does not bring any immediate advantages.

Access to the status

Anyone can access NHR status by fulfilling the following requirements:

1. have the right to reside in Portugal (EU/EEA/Swiss citizen or holder of a residence permit);
2. You have not been a tax resident in Portugal for the last 5 years;
3. You are tax resident in Portugal.

Income taxation

The taxation of income under the NHR regime should be as follows (although we advise you to take tax advice on a case-by-case basis). Active income from employment (which will be subject to social security contributions if it originates in Portugal) will be:

exempt from tax if they are of foreign origin and effectively taxed in that country, regardless of the rate and regardless of whether the country of origin is on the list of tax havens; or optionally taxed at the flat rate of 20% in the case of an eligible professional occupation *, regardless of the country of origin; or taxed at the normal progressive rates applicable to habitual residents.

Self-employed

Self-employed income (which will be subject to social security contributions, unless the taxpayer already contributes to another similar system) will be taxed at the normal progressive rates applicable to habitual residents, unless it derives from a qualified professional occupation, in which case it will be:

exempt from tax in Portugal if it is of foreign origin and can be taxed at source in accordance with an ADT or, failing that, in accordance with the OECD model tax convention (provided that the country of origin is not on the list of tax havens), namely if it is obtained from a permanent establishment in that other country; otherwise, it will be taxed at the optional flat rate of 20% (but the taxpayer can choose the normal progressive rates, which may make sense in the case of a very low level of income).

Royalties and passive income

Royalties and passive income from financial assets, including interest, dividends and life insurance, will be:

tax-exempt if it is of foreign origin and can be taxed at source under a DTA; it will also be tax-exempt if it is of foreign origin but, if there is no DTA and the country of origin is not a tax haven, the income can be taxed at source under the OECD model tax convention; otherwise, it will be taxed at 28% or 35% if the source is a tax haven.

The information provided above is general information, so it will always be necessary to analyze each case to see if the client complies with the requirements of the law.

Q & A

The answer is no. The NHR is a tax status that can reduce your tax liability or even grant you some exemptions, depending on the sources of income and where the income is paid. The NHR applicant must first obtain a temporary permit from the Aliens Service ("SEF") and only then apply for the NHR tax regime.

The answer is no. The idea that obtaining NHR status gives you an automatic exemption on all foreign sources of income is wrong. We must analyze each of the sources of income and the country of origin to assess how the income will be taxed in Portugal under the NHR tax regime.

Although NHR means non-habitual resident, this does not mean that you are not tax resident in Portugal. The NHR tax regime is available to tax residents who have not been tax residents for the last 5 years. As a tax resident, you must stay in Portugal for at least 183 days, consecutive or interpolated, in a 12-month period, or have a place available above that allows it to be presumed that you occupy it as your habitual residence.

The NHR tax regime is an autonomous and unique application. It will only affect the tax liability of the natural person applying for this status.

A taxpayer who is already enjoying an exemption or a flat tax rate of 20% or 10% will have no impact on their tax liability. In all other cases, it is worth indicating your tax identification number (NIF) so that you can deduct the expenses from your taxable income. However, a full and complete answer to this question always requires an analysis of the taxpayer's personal case.

The Tax Authority will not revoke the NHR benefits that you have enjoyed during those 5 years. You can always return before the end of the NHR period to reapply for the NHR and take advantage of the remaining period available.

The answer is no. After this 10-year period, you will be considered a normal tax resident and will be subject to our progressive tax rates of up to 53%.

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