NHR- Portugal's non-habitual resident tax regime

Index

• What is this status?
• How to order?
• What are the tax benefits?

What is this status?

The status of non-habitual resident is a special status that aims to attract professionals who carry out activities with high added value or intellectual property, who are not residents of Portugal, in addition to people who benefit from pensions obtained abroad. This statute was approved in 2009 and, to enjoy it for 10 consecutive years, you must be considered a resident under Portuguese law and have not been taxed as a tax resident in Portugal in the five years preceding the application for the statute. The previous condition applies both to foreign citizens and to nationals who are living outside the country and who wish to return to Portugal.

How to order?

The status of non-habitual resident can be requested by a taxpayer who, a priori, must ensure that he is registered as a resident in Portugal, with a finance service or any service of Loja do Cidadão. After enrolling the taxpayer, the taxpayer may proceed to apply for non-habitual resident status.

This request must be made by March 31 of the year following the year in which the taxpayer became a resident in Portugal. According to the documentation available on the Finance Portal, in order to be able to apply for the status, taxpayers must make a request addressed to the director of taxpayer registration services, which can be delivered to any Finance service.

Pay special attention that to be considered a resident in Portugal, you must stay more than 183 days in Portuguese territory. Another possibility is to own a house that aims to maintain it and use it as a habitual residence.

What are the tax benefits?

In addition to other advantages, the status of non-habitual resident brings with it some tax benefits that you can enjoy.

First, these benefits vary depending on the type of income that a given taxpayer receives. For example, taxpayers who have income in Portuguese dependent and independent work can enjoy a lower rate of IRS, in this case 20%. However, this rate reduction is not applicable to all workers. Thus, it focuses only on taxpayers who have activities with high added value. Thus, taxpayers who work as doctors, architects, psychologists, teachers, among others, will be able to enjoy this benefit. The list of these activities can be found in Ordinance No. 230/2019. Please note that you may need to provide proof of the activity you perform after submitting your IRS. To do so, you can provide proof of one of the following elements:

• a declaration issued by the employer;
• an employment contract;
• a power of attorney with the powers of direction and binding of the legal person, if you are part of the company's senior management.

For taxpayers who have obtained income from dependent and independent work abroad, the tax exemption method in Portugal is applied. Thus, it means that these taxpayers do not pay tax in Portuguese territory, as long as they are subject to taxation in another country. In addition, they are also considered if they are covered by other criteria provided for by law.

In the event that the taxpayer is a foreign pensioner, who is receiving his retirement through another country, then exactly the same method of tax exemption in Portugal is applied. This, subject to the fulfillment of one of the required requirements, presented below:

• be taxed in the other Contracting State, provided that there is an agreement between the two States to prevent double taxation;
• when, according to the criteria presented in paragraph 1 of article 18 of the CIRS, the income should not be considered as obtained in Portugal.

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