Different visas and tax benefits of NHR Tax regime

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Difference between a D7 visa & Non-Habitual Residency (NHR) tax regime in Portugal

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The D7 visa and the NHR tax programme in Portugal are not the same thing.

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The D7 Visa: is a long-term residence visa designed for individuals who wish to live in Portugal without engaging in any specific employment.

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The NHR program: is a tax regime in Portugal that provides certain tax advantages to individuals who become tax residents in the country. The NHR program is designed to attract foreign professionals, entrepreneurs, and retirees to Portugal.

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The Portuguese government announced in their state budget for 2024, that the NHR tax regime closes to new entrants on the 31st of December 2023, and only those that have applied before this date and have taken serious steps to prove intent and meet the grandfathering items laid out by the government can be eligible to receive NHR tax status in 2024.

If these requirements are not in place, it is borderline impossible for the professional supply chains in Portugal to be able to grandfather your NHR tax status application, early in 2024.

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D7 Visa

Requirements:

To obtain a D7 visa, applicants need to demonstrate that they have sufficient means of support themselves such as  4 times the national minimum wage of Portugal which is €740 per month. You also need a clean criminal record as a requirement.

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The visa holder is allowed to reside in Portugal for an initial period, after which it can be renewed.

With a D7 visa, you can live in Portugal but cannot undertake any professional to receive employment income or work-related activities such as rental income from Portuguese properties.

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NHR tax regime

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Recent update regarding the NHR tax regime:

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The Portuguese government announced in their state budget for 2024, that the NHR tax regime closes to new entrants on the 31st of December 2023, and only those that have applied before this date and have taken serious steps to prove intent and meet the grandfathering items laid out by the government can be eligible to receive NHR tax status in 2024.

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If these requirements are not in place, it is borderline impossible for the professional supply chains in Portugal to be able to grandfather your NHR tax status application, early in 2024.

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Requirements:

1. Become a tax resident in Portugal.

2.Not have been a tax resident in Portugal for the five years preceding their application.

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Tax advantages: Pension tax carries a 10% tax rate, with dividends and royalties, capital gains and rental income on non Portugal derived income at 0% tax under the NHR program.

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It is also important to note that within the first 3 years of securing NHR tax status that you talk to one of our advisors about financial and tax planning for beyond the 10 year tax period of NHR. This avoids significant tax consequences and one of our advisors can talk you through the benefits and process.

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Digital Nomad visa (D8)

With close to 13% of the worlds working population now being remote workers, leaving your home country and moving abroad has become much easier without the added struggle of changing careers. Portugal has become a popular destination for these ‘digital nomads’, as the country is renowned for having a well-developed telecommunications infrastructure.

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The nomad visa allows remote workers or digital freelancers to receive residence permit in Portugal. Such nomads can easily find fast and reliable internet connections throughout the country, allowing them to work from wherever they wish, not just ‘work from home’.

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Digital Nomad Visa requirements

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The visa requirements to obtain a digital nomad visa, you must:

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1. prove that you can work remotely,

2. meet the income requirement of over €3000 + per month

3. valid health insurance coverage

4. clean criminal record

5. not have any outstanding debt or tax obligations in Portugal.

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Things to note:

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It is important to note that immigration and tax laws can change over time, so it is advisable to talk with one of our experts to obtain accurate and up-to-date information regarding the D7 or Digital Nomad Visa (D8) and the NHR tax regime programme in Portugal.

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Disclaimer: The guidance above should not be fully relied upon and does not constitute formal instructed professional advice. In relation to tax advice in Portugal, please engage and instruct a regulated professional for all tax advice and structured financial planning. Please contact Portugal Pathways if you would like an introduction to one of our professional advisors.

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