How existing NHR tax regime holders can avoid significant tax consequences?

Many people already approved and on the Non-Habitual Residency (NHR) tax regime  fail to plan for the long term after the 10-year qualified period ends as there are significant financial benefits available if structured correctly ongoing tax and wealth management well beyond NHR tax status ending. Our experts work with current approved NHR status people within the first few years of approval to ensure that they avoid significant tax consequences way before the 10 year exemption ends.

‍

If you structure your income in the right way you can pay as little as 3.8% tax per year for 20 years on your overseas pension and other assets held outside of Portugal, such as dividends, royalties and alike. For example, the 0% tax under NHR is for 10 years and if this is not planned correctly within the first few years, tax rates after that 10 years are significantly higher.

At the beginning of October 2023, the Portuguese government indicated that Non-Habitual Residency (NHR) will end at some point in 2024 to new entrants. It is vital that you get expert advice to ensure you meet these deadlines for new entrants from one of our team. Delaying this advice, has significant financial consequences.

If someone is already on the Portugal Non-Habitual Residency (NHR) tax regime, it is advisable to start tax planning at least 6-7 years before the 10-year NHR tax exemption period finishes.  This is because the end of the exemption period will significantly change the individual's tax status, and proper pre-planning is essential to avoid any unexpected tax liabilities.

 ^{Learn more...}

For those already approved for NHR tax benefit, it is vital that you get early advice on financial and tax planning, so that you continue to optimise your position beyond the NHR finishing. If you want to find out more on how this impacts you, please contact us today.

‍

Here are some reasons why it is crucial to start early on your financial and tax planning throughout the 10 year NHR tax regime period:

1.  Reviewing your current tax situation: It is essential to review your current tax situation and assess how it might change once the NHR exemption period is over.  This will help you identify any potential tax liabilities and plan accordingly.

2.  Explore your financial options and opportunities early: Once the NHR exemption period ends, your tax liability in Portugal may increase, and you may need to explore new investment opportunities that are more tax efficient.  This could involve structuring your finances using tax efficient investment bonds or trusts through our proprietary financial planning systems designed by our experts.

‍

3.  Restructuring your assets: Depending on your current asset structure, you may need to restructure your assets to optimise your tax position once the NHR exemption period ends.  This could involve transferring some of your assets to a holding company or a trust, which could help reduce your tax liability.

4.  Reviewing your residency status: It is important to review your residency status once the NHR exemption period ends, as this may impact your tax liability in Portugal.  You may need to consider becoming a permanent resident or exploring other residency options that are tax efficient.

‍

In summary, starting tax planning early will help you identify potential tax liabilities, explore new investment opportunities, restructure your assets, and review your residency status to optimise your tax position once the NHR exemption period ends. This will help you avoid unexpected tax liabilities and remain tax-efficient in Portugal.

It is important to always have a meeting and check with one of our advisors that you are not inadvertently paying too much in tax and to financial advisors.

‍

We do it all!

‍

We pride ourselves on delivering the lowest combined tax and fee structure in Portugal for our qualifying clients.

‍

‍

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.

‍