TAX

Our typical tax advice includes the analysis of the Portuguese taxation of each relevant category of income in the light of both Portuguese tax law and, where applicable, the relevant double taxation agreement, plus, if relevant, liaising with the Client's tax advisers in the country of source of the income.

So we can provide proper and timely advice before the Client makes a decision to invest in Portugal and/or move thereto, it is crucial that we thoroughly understand the Client's specific case, notably by ascertaining the full spectrum of the relevant income and the respective sources.

To learn more and get a quote, submit a Tax Enquiry Form

About Portugal's Non-Habitual Resident (NHR) Tax Regime

NHR status grants a new resident of Portugal a 10-year tax exemption on most non-Portugal-sourced types of income, whether or not they are taxed at source, and whether or not, under a double taxation agreement (DTA), tax at source is reduced (e.g. on dividends, interest or royalties) or even eliminated. Holding ​NHR status does not have any disadvantage whatsoever, but, on the contrary, may grant important advantages. If you decide to move to Portugal, it is therefore highly recommended that you apply for it, even if it does not bring you any immediate advantage. 

The NHR regime is open to anyone that meets the eligibility criteria and the only such criteria are that the applicant:

• Has the right to reside in Portugal (an EU/EEA/Swiss citizen or the holder of a residence permit);
• Has not been a tax resident of the country during the previous 5 years (hence "non-habitual", not a particularly well chosen name);
• Has title to the use of a residential property in Portugal (by either buying, renting or borrowing it);
• Registers as a Portugal tax resident declaring such residential property to be his/her home; and
• Applies for NHR status, which is done online, on the tax office portal.

Once obtained, NHR status will not in principle be lost under any circumstances during its 10-year statutory period. Even if the holder suspends his/her Portugal tax residence during this period, he/she will automatically reacquire NHR status upon resuming such residence. 

The Portuguese taxation of the main types of income under the NHR regime is broadly as follows:

1. Employment income (which will be subject to social security contributions if Portugal-sourced) will be:
2. tax-exempt if foreign-sourced and effectively taxed at source, no matter at what rate and independently of whether or not the source country is a blacklisted tax haven; or
3. optionally taxed at the flat rate of 20% in the case of an eligible professional occupation*, independently of the country of source; or
4. otherwise, taxed at the normal progressive rates applicable to habitual residents.
5. Self-employment income (which will be subject to social security contributions except if the taxpayer already contributes to another social security system) will be taxed at the normal progressive rates applicable to habitual residents unless it is derived from an eligible professional occupation*. In the event it is so derived, then it will be:
6. tax-exempt in Portugal if it is foreign-sourced and may be taxed at source under a DTA or, in the latter's absence, under the OECD model tax convention (provided in this case that the source country is not a blacklisted tax haven), namely for being obtained through the individual's fixed base or permanent establishment in the other country;
7. otherwise taxed at the optional flat rate of 20% (but the taxpayer may choose the normal progressive rates, which may make sense in the case of a very low level of income).
8. Royalties and income from financial assets, including interest, dividends and life insurance income, will be:
9. tax-exempt if it is foreign-sourced and it may be taxed at source under a DTA;
10. also tax-exempt if it is foreign-sourced, but, there being no DTA, the source country is not a blacklisted tax haven and the income may be taxed at source under the OECD model tax convention;
11. otherwise taxed at 28%, or 35% if the source is a blacklisted tax haven.
12. Real estate income and capital gains will be:
13. tax-exempt if foreign-sourced and it may be taxed at source under a DTA;
14. also tax-exempt if it is foreign-sourced, but, there being no DTA, the source country is not a blacklisted tax haven and the income may be taxed at source under the OECD model tax convention;
15. otherwise:
16. rental income is taxed at either the optional rate of 28% or else at the normal progressive rates applicable to habitual residents; and
17. net capital gains are taxed on 50%, at the normal progressive rates applicable to habitual residents.
18. Capital gains from the disposal of securities (shares, bonds, etc) will be subject to tax at the optional rate of 28% (or at 35% if the source is a blacklisted tax haven) on the balance of gains less losses. As such, where the anticipated net gains are substantial, the beneficiary should seek tax advice prior to a move to Portugal.
19. Pension income will be taxed at the rate of 10%, if foreign-sourced. The same taxation rules may apply to pre-retirement income, pension funds and retirement saving funds income, advance payments or capital receipts. Specific tax advice should be sought.​

Eligible occupations for those that become tax residents of Portugal after 1st January 2020 are as follows:

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I - The following professionals, provided they hold at least (a) a level 4 qualification under the European Qualifications Framework, or (b) level 35 of the International Standard Classification of Education, or (c) 5 years of duly proven professional experience:

• General Managers, Executive Managers
• Administrative Managers, Commercial Managers
• Production Managers, Specialised Services Managers
• Hospitality, Restaurant, Retail and Other Services Managers
• Specialist Physicists, Mathematicians, Engineers and related Technologists
• Medicine Doctors
• Dentists and Stomatologists
• University and Higher Education Teachers
• ICT Technologists
• Authors, Journalists and Linguists
• Creative and Performance Artists
• Intermediate level Science and Engineering Technicians and Professionals
• ICT Technicians
• Market-oriented Farmers and qualified Agriculture and Animal Husbandry workers
• Market-oriented Forestry, Fisheries and Hunting qualified workers
• Industry, Construction and Handicraft qualified workers
• Plant and Machine Operators and Assembly Workers, namely operators of fixed installations and machinery

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II - Directors and Managers of businesses that promote productive investment in eligible projects that qualify for tax benefits under a concession agreement entered into under the Investment Tax Code.