TAX-FREE LIVING AS A PORTUGAL RESIDENT
Portugal's non habitual resident (“NHR”) taxation regime is attracting individuals of independent means, pensioners and skilled professionals to establish residency in this country for tax purposes without being subject to any minimum or maximum stay requirements.
The regime grants qualifying individuals the possibility of becoming tax residents of a white-listed jurisdiction and legally avoiding tax on most categories of foreign-source income for a minimum period of 10 years. A qualifying individual is one who: (1) is entitled to live in Portugal, either on the grounds of citizenship (EU/EEA/Swiss) or under a special permit (e.g. a "Golden Visa"); and (2) becomes a tax resident of Portugal after not having been one during at least the previous 5 years.
Under this regime, foreign-source income from employment will be tax exempt in Portugal if it is taxed, at whatever rate, in the source country. Income from employment in eligible occupations will be taxed at a flat rate of 20% if it is either Portugal-sourced or if it is not taxed in another source country.
Crucially, other foreign-source income categories will be tax exempt in Portugal if they may be taxed in the source country under a double tax convention or, in its absence, the OECD model tax convention. Now, most double tax conventions, as well as the OECD model convention, do grant the possibility to tax most income categories to the source country; but in practice, so as to attract foreign investment, many countries will not make use of such possibility to tax non residents. It follows that most foreign-source income will be zero taxed in the hands of an NHR. This will generally be the case of profits derived from eligible occupations, dividends, interest, real estate income and capital gains from the alienation of real estate. Income categories that deserve careful consideration are royalties and capital gains from the alienation of securities, since the OECD model tax convention and several conventions grant the power to tax them only to the country of residence of the taxpayer. This being the case, converting such categories into zero-taxed categories (e.g. dividends) will not generally present any difficulties.
As regards occupational pensions, the situation is even simpler: as long as they may not be deemed as Portugal-sourced, they simply won't be taxed in the hands of an NHR.
Belion Partners's legal, financial and real estate teams provide assistance with all aspects of planning, obtaining and enjoying Portugal NHR status.
Read or download the full guide to Portugal's non habitual resident regime now >
The regime grants qualifying individuals the possibility of becoming tax residents of a white-listed jurisdiction and legally avoiding tax on most categories of foreign-source income for a minimum period of 10 years. A qualifying individual is one who: (1) is entitled to live in Portugal, either on the grounds of citizenship (EU/EEA/Swiss) or under a special permit (e.g. a "Golden Visa"); and (2) becomes a tax resident of Portugal after not having been one during at least the previous 5 years.
Under this regime, foreign-source income from employment will be tax exempt in Portugal if it is taxed, at whatever rate, in the source country. Income from employment in eligible occupations will be taxed at a flat rate of 20% if it is either Portugal-sourced or if it is not taxed in another source country.
Crucially, other foreign-source income categories will be tax exempt in Portugal if they may be taxed in the source country under a double tax convention or, in its absence, the OECD model tax convention. Now, most double tax conventions, as well as the OECD model convention, do grant the possibility to tax most income categories to the source country; but in practice, so as to attract foreign investment, many countries will not make use of such possibility to tax non residents. It follows that most foreign-source income will be zero taxed in the hands of an NHR. This will generally be the case of profits derived from eligible occupations, dividends, interest, real estate income and capital gains from the alienation of real estate. Income categories that deserve careful consideration are royalties and capital gains from the alienation of securities, since the OECD model tax convention and several conventions grant the power to tax them only to the country of residence of the taxpayer. This being the case, converting such categories into zero-taxed categories (e.g. dividends) will not generally present any difficulties.
As regards occupational pensions, the situation is even simpler: as long as they may not be deemed as Portugal-sourced, they simply won't be taxed in the hands of an NHR.
Belion Partners's legal, financial and real estate teams provide assistance with all aspects of planning, obtaining and enjoying Portugal NHR status.
Read or download the full guide to Portugal's non habitual resident regime now >
Belion Partners is the leading provider of Portugal residency and property investment assistance and renders a full service of the highest quality, whilst charging the most competitive fees in the market. In order to receive a quote, please contact us and be as specific as possible about your requirements.