How to Get NHR tax Status in Portugal and What Are the Benefits

There is a special tax status for new tax residents in Portugal known as Non-Habitual Resident (NHR). Once the new tax residents obtain NHR status, they are exempt from paying taxes on their global income. Income earned in Portugal is taxed at a flat rate of 20%. Foreign investors may get a Portugal Golden Visa and optimise their taxes applying for NHR status.

What is Non-Habitual Resident tax status in?Portugal?

The?NHR scheme helps foreigners to?lift their tax burden in?Portugal. This is a?preferential tax status that is issued for?10 years. The?Portugal NHR program has been operating since?2009 and gives the?option to?pay fewer taxes to the new tax residents.

To?apply for?NHR status, you first need to become a tax resident of Portugal by getting a?Portuguese residence permit and staying in?the?country for?183 days a?year.

Under?the?Portugal Golden Visa Program, wealthy people can also obtain a?residence permit by?investing in?the?Portuguese economy. The?program offers eight investment options, including buying a?property. Holders of?a?residence permit in?Portugal have the?right to?live, work, conduct business, and study in?the?country without restrictions.

Benefits of?the?NHR in?Portugal

1. The?flat tax rate for?pensions?from?other countries is 10%. The?rule applies if the?recipient changed his tax residence to?Portuguese and received Non-Habitual Resident status after?April 1st, 2020. Tax residents of?Portugal without Non-Habitual Resident status pay pension tax as income tax: on?a?progressive scale with?a?rate of?up to?48%.
2. The?fixed tax rate on?income from?employment.?Highly qualified professionals who receive salaries from?Portuguese companies or work in?Portugal as self-employed can pay income tax at?a?rate of?20%. In?a?standard situation, income tax is levied on?a?progressive scale: the?rate can be up to?48%.
3. No?taxes on?gifts, inheritance, and wealth?are paid by?non-habitual residents in?Portugal.
4. No?tax on?foreign source income?if it's generated in?the?country that has a?Double Taxation Agreement (DTA) with?Portugal. Foreign sourced income is exempt from?income tax if it is already taxed in?the?source country. The?holder of?the?Non-Habitual Resident status does not?pay tax in?Portugal on?dividends, interest and royalties, capital gains, rental income from?a real estate outside Portugal, or income from?employment in?another country. Global income and retirement benefits are tax exempt in?Portugal if taxes are paid in?the?source country.?

Who can benefit from?the?NHR program

Only new tax residents of?Portugal?can apply for?Non-Habitual Resident tax status. To?do this, the?applicant must fulfil at?least one of?the?conditions:

• Have lived in?Portugal for?more than 183 days in?the?last year;
• Purchase residential real estate in?Portugal, which is used as a?permanent residence;
• To?serve on?a?ship or aircraft of?a?company registered in?Portugal on?December 31st of?the?reporting year;
• Have been in?public service in?the?foreign missions of?the?Portuguese government in?the?past 12 months.
• Highly qualified professionals?like architects, engineers, geologists, artists, top managers, etc.

How to?get the?Non-Habitual Resident tax status

1. Registration of?the?NIF taxpayer number:?It takes place in?person by visiting the?Portuguese tax office, by?email, or through?a?representative. The?procedure for?registering a?taxpayer number takes from?half an hour to?five working days, depending on?the?method of?submitting the?application. Citizens and residents of?countries outside the?European Union receive a?NIF through?a?tax representative.
2. A?change of?tax residence: This?occurs when a?person lives in?Portugal for?more than 183 days a?year. It is not?necessary to?spend six months in?a?row in?the?country: the?total period of?stay is considered so that you can stretch 183 days for?the?entire reporting year. A?person also becomes a?tax resident if he has a?residential property in?Portugal, which is his main place of?residence. To?officially change your tax residence, you need to?contact the?Portuguese tax office.
3. Obtaining the?preferential tax status: You must apply for?preferential tax status no?later than March 31st of?the?year following the?year you change your tax residency to?Portuguese. The?application indicates the?year of?obtaining the?tax residency certificate in?Portugal and the?country of?the?previous tax residence.

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