Have you heard about Portugal's non-habitual resident (NHR) tax regime? If not, you may be missing out on a massive opportunity for tax savings and the chance to live in one of the most beautiful locations in Europe.
The Portugal NHR provides lucrative tax breaks to foreign residents and has already proven instrumental in attracting more than 10,000 citizens from all over the world. In the process, these new residents have alleviated their tax burdens.
The NHR tax is a win-win for everyone involved. Here's what you need to know about the NHR status in Portugal and whether it's right for you.
This mostly applies to interest earned and dividends. Capital gains tax and rental income are not included.
This is only the case if it's not your main source of income and you are not deemed a trader.
You need to consider that the company should have directors and shareholders that aren't based in Portugal, or it can be classified as a Portuguese company, and you will be taxed in Portugal.
There is no wealth tax in Portugal with this status
If you have a foreign pension, it will be taxed at just 10%. Currently, the tax-free allowance is set at €10,841 per year
If you are deemed a high-value professional, your income tax as a freelancer is capped at 20%
This status entitles you to remain in Portugal for up to 10 years. After only five years, you are eligible for Portuguese citizenship.
Portugal is 80% cheaper than countries like Australia, the USA, or the UK. Housing costs in cities like Lisbon have increased quite dramatically over the years; however, other countries' housing costs are significantly lower.
We strongly advise traveling to Portugal first to fully appreciate its distinctive atmosphere and choose your ideal location. We've teamed up with Uniplaces to provide an exclusive 25% discount using code UARA15CL in order to make your exploratory trip more affordable. You can experience Portugal firsthand before relocating thanks to their reasonably priced lodgings.
If you're a professional or investor with what Portugal has deemed "high cultural and economic worth," then the NHR could help you keep more of your taxable income. Enacted in 2009, the NHR permits substantial tax savings for those who qualify.
What are some of the benefits of the program? Those who qualify for this designation will receive special personal income tax treatment for the next decade. On almost all foreign sources of income, they'll enjoy tax exemption.
But the advantages don't stop there. NHRs will also enjoy a 20 percent flat tax on self-employment and specific professions instead of Portugal's standard income tax rates of up to 48 percent.
To access these benefits, there are no minimum stay requirements. What's more, within the European Union, you'll become part of a white-listed tax environment.
You'll also enjoy free remittance of funds to Portugal, no wealth tax, and tax exemptions for inheritance and gifts to direct family members. As you can see, the pros are clear when it comes to gaining NHR status.
Do you have a job that qualifies as having high added value to Portugal? Jobs in Portugal with visa sponsorship must contribute to economic or cultural worth. These professions include:
If your career falls into one of these categories, you have a clear pathway to gaining a Portugal visa that will, in turn, permit you to apply for NHR status.
What about the retirement in Portugal visa options? As one of the most affordable countries in Europe, it should be at the top of your list.
Like professionals and other employees, you may also be able to take advantage of the tax benefits outlined in this article. Explore the ins and outs of retiring to Portugal further.
Portugal's NHR tax regime stems from the nation's relationship with double-taxation agreements (DTAs). These agreements stipulate that most income categories need only be taxed in the nation of their source income.
Despite this, most countries don't tax the income of non-residents because they want to appear open to foreign investment. For this reason, you can receive foreign income more or less tax-free in Portugal if you're from a nation that has signed a double taxation agreement with the country.
To date, Portugal boasts 79 such agreements. What if your homeland isn't in the mix? You may use the Organization for Economic Cooperation and Development (OECD) model tax convention.If you are considering getting an NHR, check out our NHR price comparison from leading firms.
At this point, you're likely wondering how to get your hands on an invaluable Portugal visa. The first step remains to ensure you qualify for NHR status. To do this, you'll need to meet one of the following two criteria:
As you can see, if you're not a citizen of the EU or Switzerland, you'll need to take advantage of Portugal's Golden Visa Program or their other visa options to gain NHR tax benefits. How does the other visa program work? Let's take a closer look.
It's one of the most popular visas among non-EU citizens. Portugal’s "Passive Income Visa" (a.k.a. “D7 Visa”, among other names), a residence visa followed by a residence permit for non-EU citizens that have sufficient regular passive income (please let us know if you wish to receive information about other possible residence permits):
For someone intending to move to Portugal, this visa constitutes a good alternative to the Golden Visa: no investment is required, the application processing is faster, and the government fees are comparatively insignificant (for a family of 3, the savings in government fees will be around €30,000.00).
The “Passive Income Residence Permit” does not preclude the holder from having a professional activity in Portugal, and, provided the applicant has sufficient passive income, it is generally the best option for someone who intends to live in this country.
You may also like to note that as a new resident of Portugal, you will be eligible to benefit from a special tax status under the so-called "non-habitual resident" (NHR) tax regime, which will allow you to enjoy a 10-year tax exemption on most non-Portugal-sourced types of income.
For the D7 application, you must prove that you have passive income, which can be pensions, dividends, investments, self-employment, or rental income. Employment or funds in the bank alone are not usually eligible.
Each household member must have the following as a means of livelihood for the 12-month period:
• First applicant adult: €8,460 ;
• Second or more adults: €3,990 each;
• Children under the age of 18 and older if dependents: €2,394
Income must be proven each year.
For non-European Union and non-Swiss residents, you can take the Golden Visa route to gain access to Portugal's tax advantages.
Where to start? You have a range of investment options from which to choose when it comes to how and where you invest. Most applicants put money in real estate or funds, which must be held for a minimum of five years.
As you've probably guessed, the Golden Visa for Portugal remains one of the most popular residency-by-investment programs in the world. Since the program began in 2012, it has permitted thousands of families to relocate.
That said, you should cultivate a certain sense of urgency when considering a Portugal Golden Visa. Why? Starting January 1, 2022, the program will make some critical changes.
These changes include:
Once you meet this investment requirement, you'll need to spend a minimum of seven days in Portugal during the first year.
What's the stay requirement after that? You must spend 14 days in the country every two years.
One of the most significant advantages of the Portugal Golden Visa is that you can include your dependent family in your application. In other words, your entire family can benefit from the same tax benefits and a second residence with you.
Family members include your spouse or legal partner, children under age 18, and dependent children under 26. What's more, you may include parents of either spouse 66 years of age or older, dependent parents 55 years of age or older, and siblings under the age of 18.
As you can see, it behooves you to apply for the Golden Visa as soon as possible.
Fortunately, the actual process of securing the Golden Visa is straightforward. But you'll need to follow a handful of steps before getting approved.
Once you get a visa, you'll have the opportunity to become a permanent resident or citizen. But to do this, you'll need to follow some guidelines, depending on which visa you choose.
The most common visas are the D7, or passive income, the D2 or entrepreneur visa, the D6 or family reunion visa, the D8 or digital nomad visa, and the Golden Visa. Check out all the Portugal visa types. All these visas have some common steps:
Once you've completed these steps, you'll gain access to a valid visa for two years. After that, you must apply for a residency permit, which is good for two years.
By the fifth year, you may apply for permanent residency and citizenship or renew your Golden Visa in year six. Let's break these steps down further so you have a complete understanding of what the process looks like.
What does the onboarding process look like? You'll need to complete onboarding paperwork for yourself and your family.
Once you've ensured this paperwork is complete, You'll need to submit it for review. At Movingto, we will guide you from end to end, so you won't have to worry about anything apart from sending the documents to our immigration lawyers.
From there, you can get a Portuguese tax identification number (NIF). Once you've got this NIF, you may open a bank account in the country. Opening a bank account in Portugal and getting the NIF number can be done remotely.
After that, we can officially start the online application. Work with an expert to ensure you correctly fill out the application and complete all necessary steps. Remember, thamajorityayority documents have apostilledostiltranslatedaintotPortuguese. This paperwork is done by your immigration lawyers as part of the process.
Once you've sent in your online application, wait for pre-approval status. They base this pre-approval status on your future fulfillment of the requirements outlined in the application.
After you've received pre-approval status, you'll wait approximately two months. At that point, you'll attend a biometrics collection session. This live session must take place in Portugal.
The Serviço de Estrangeiros e Fronteiras (SEF) will take roughly four months to approve your Golden Visa after you have visited Portugal for biometrics.
You'll pay the government permit issue fee, and you'll receive your cards. Typically, you'll work with a visa agency that will collect these cards on your behalf and send them to you.
Once you acquire residency in Portugal, you can apply for NHR status.
NHR requirements include holding residence in Portugal on the 31st of December of the year you apply. You must also intend to maintain habitual residence to get a visa to live in Portugal.
What does the process of applying for the NHR look like? It starts with proof of residency. Citizens of the EU, EEA, or Switzerland can register without a visa. To do so, they'll need to head to their region's city hall to present an EHIC card and passport.
From there, EU and Swiss residents must apply for their nine-digit NIF numbers. With an NIF, you can register as a tax resident in the Philippines. Your NIF must have your Portuguese address; otherwise, you won't be considered a tax resident even though you were living in Portugal.
What does the process look like for non-EU residents? Once you get any of the Portugal visa types, you will be able to apply for NHR status.
Keep your NIF number handy, as you'll need it. You'll also need to supply your email address, fiscal address, and phone number. Keep the following documents at the ready as you register:
In approximately 1-2 weeks after completing your application and submitting it, you'll receive your official NHR status. As you can see, the process is somewhat elaborate and best done with a professional's help.
A lot of people make the mistake of thinking NHR is some kind of residency visa. It’s not. NHR is purely tax-related.
If you’re from outside the EU, EEA, or Switzerland and you don’t have an EU, EEA, or Swiss passport, you will most likely need to obtain a residency permit (such as the D7, D2, D6, D8, or Golden Visa) to move to Portugal. Once you have moved to Portugal, you will be able to apply for the NHR program, but the two are not connected.
NHR is an extremely confusing term, and many take it to mean it’s for people who don’t live in Portugal. In fact, the opposite is true: NHR is for people who live here and are tax resident he
What else do you need to know about Portugal before considering a move? It holds a reputation for being the most crypto-friendly nation in Europe,Ethereum, from and with good reason.
Crypto earnings are tax-free in Portugal. Yes, you read that right. From Bitcoin to Ethereum, Dogecoin to Ripple, you won't pay taxes when you make money on individual crypto investments.
How is this possible? In Portugal, cryptocurrencies aren't considered money because they're not legal tender. What's more, they fall outside the legal definitions of taxable income in Portugal.
Of course, there's a caveat to this. Professional traders must pay taxes. The tax-free status only applies to individual trading.
If you are interested in learning more about NHR, check out all our articles to see how we can help you during your move!
Ana has worked in many startups and moved to a few countries, which led her to create MovingTo. She believes that remote work is a growing trend that is here to stay and that digital nomads will move to countries that have more to offer than the ones you were born into. She mostly writes opinion pieces for MovingTo.
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