09 June 2020
The beautiful views and weather are not the only things that make Portugal an attractive place to settle down. The Portuguese government offers various incentives to expatriates, retirees, and other non-habitual residents with the aim to attract individuals and industrialists who may add value to their economy. There are certain residency rules that make you eligible for non-habitual residency benefits in Portugal. While non-EU members can also qualify for it, EU citizens will find it much easier to enjoy all that NHR has to offer.
The NHR can be considered a decade-long tax holiday due to the various benefits it offers, and you get to live in a white-listed EU country. To qualify for this tax regime, you must spend at least 183 days in Portugal during the course of a year. Additionally, it is extended to individuals who were not taxed as Portuguese residents during the last five years but will now be taxpaying residents in Portugal.
Tax Exemption on Pensions – If you're a British pensioner, you can enjoy tax-free income from most types of pensions. For example on State pension, company pension, and private pension. Non-government pensions will be free from taxes in both countries, but pension from UK government services like army, teaching, police, and NHS will always be taxable.
Tax Exemption on Foreign income – For a full ten years, you can receive most types of income from outside of Portugal without paying tax on it. This includes dividends, rentals, interest, and real estate gains. Income taxable in your home country may be exempt due to double taxation treaties between the two nations. However, it is possible that you won’t need to pay tax in either country due to disregarded income regulations.
A Flat Income Tax Rate – The regular income tax rates in Portugal can go as high as 48%,but under NHR, self-employment or working in certain professions in Portugal gets you a flat 20% tax on income. The professions that qualify for this incentive are pre-defined, including singers, architects, painters, geologists, doctors, scientists, and other high-value fields.
Remittances are free – Funds can be remitted to Portugal for free.
More Tax Exemptions – Inheritances and gifts to members of your immediate family are tax-exempt, and there is no wealth tax.
There is no requirement for a minimum stay duration.
What is meant by the term ‘non-habitual’?
Non-habitual does not imply that you need to be a tax resident of another country besides Portugal. It simply refers to the fact that the tax regime of NHR is valid for a limited time of ten years. You need to be a habitual resident and taxpayer in Portugal.
Is a statement of assets necessary?
No, it's not required for NHR applications nor will it be needed to file your tax returns in Portugal.
Is it acceptable to rent property instead of purchasing it?
Yes. For tax purposes, you can submit the rental contract to tax authorities to confirm your residence in Portugal.
Is there a risk that the NHR initiative might be discontinued?
Since its introduction in 2009, the NHR regime has consistently grown and has proven to be a successful initiative by the Portuguese government. The program continues to expand and has benefited both foreign investors and Portugal’s economy by giving it a boost in investments.
Does an NHR beneficiary still have to pay income tax on his/her source of income from another country?
Once you have been registered in Portugal for NHR, you can obtain an internationally recognized certificate of residence from tax authorities. It is then submitted to the relevant department in the country, which is the source of your income, and this makes it exempt from tax in that country. Withholding tax will still be deducted, if applicable.
What are the requirements for buying real estate in Portugal?
There are several important things to consider. Advance payment must be made, which will be a percentage of the total amount, as well as a few land taxes. Make sure you have obtained the licenses necessary according to how the land will be used. You can also obtain a mortgage from Portuguese banks if you fulfill all the requirements. Registration, deed signing, transfer of ownership, and preliminary agreements are all essential aspects of property purchases. Most importantly, don’t forget to perform due diligence on the property. Seek the advice of a professional before making any land purchases.
This Golden Visa is another way to become a resident of Portugal by making investments. This initiative offers citizens of non-EU countries to become permanent Portuguese residents since they are not eligible for NHR.There are also some requirements that must be met in order to qualify for the Golden Visa Program. The benefits of applying for residency through this program are:
· Eligibility for citizenship in Portugal after five years.
· Freedom to move between the 26 European countries that comprise the Schengen Area.
· Your spouse, dependent parents, and children will be eligible for all benefits accorded to you.
· A stay in Portugal of just seven days during the first year and 14 days in each year that follows is required.
· There are several investment opportunities to choose from.
· You and your family can enjoy the stability, security and opportunities made possible with a second residence.
You can also become a Non-habitual resident after this and avail the ten-year long tax holiday. Any income you earn in countries outside of Portugal will not be taxed.
You may contact us if you are interested in obtaining NHR in Portugal.