The non-habitual tax regime in Portugal aims to attract investors and professionals of high cultural and economic worth, in order to increase the country’s international competitiveness. The regime was first implemented in 2009 and can allow substantial tax savings for those who qualify. The scheme has been highly successful and as a result, there are now over 10,000 non-habitual tax regime residents in Portugal.
What are the advantages to being a non-habitual tax resident in Portugal
There are many advantages to being a non-habitual tax resident in Portugal:
Benefit from a special personal income tax treatment over a 10-year period
Possibility of enjoying a tax exemption on almost all foreign source income
20% flat rate for certain Portuguese source incomes (from specific professions as well as income from self-employment), as opposed to normal Portuguese income tax rates of up to 48%
No minimum stay requirement
Become part of a white-listed tax environment within the EU
A tax exemption for gifts or inheritance to direct family members
No wealth tax
Free remittance of funds to Portugal
Portugal’s non-habitual tax resident and double taxation agreements
An important feature of Portugal’s non-habitual resident tax regime lies in its relationship with Double-Taxation Agreements (DTAs). DTAs allow for most categories of income to be taxed in the country of source of income. Most countries, however, choose not to tax income earned by non-residents as they want to be seen as jurisdictions open for foreign investment.
In turn, under the NHR tax regime, Portugal will not tax most foreign source income earned by NHR individuals because the income may be taxed abroad. This allows for NHR residents to receive foreign income completely free of tax.
Portugal currently has signed Double-Taxation Agreements with 79 countries and the OECD model tax convention may be used in the absence of a DTA.
See below for the list of countries with DTAs with Portugal.