Non-Habitual Residency (NHR) tax benefits in Portugal

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Click here to learn about Portugal's new Tax Incentive for Scientific Research and Innovation (IFICI), also known as NHR 2.0.

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The NHR program offers significant tax benefits for a period of ten years to individuals who become tax residents in Portugal, while not having been tax residents in the country in the previous five years.

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Eligibility Criteria

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To be eligible for the NHR status, individuals must:

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 Benefits of NHR

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The NHR program provides attractive tax benefits for both foreign-sourced income and Portuguese-sourced income. The specifics include:

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1. Non Portugal derived income: This includes, rental income, capital gains, royalties, interest, dividends. As a general rule, NHR holders can receive this income at 0% tax rate, and 10% on pension income. Income from jobs in Portugal is taxed at a flat 20%.

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There are also tax incentives for highly sought after professions based on income derived from Portugal.

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Application Process

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The application process for NHR status is relatively straightforward:

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1. Register as a tax resident in Portugal.
2. Apply for NHR status via Portugal's Tax Authority website or with the help of a local tax advisor.
3. Once your application is approved, you'll have NHR status for a period of 10 years.

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Key Considerations

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While the NHR program offers significant benefits, it's important to understand the implications of becoming a tax resident in Portugal and how this affects your overall tax situation. Each individual's situation is unique, and what works for one person may not work for another.

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Therefore, it's crucial to seek professional advice before making any decisions.

The Non-Habitual Residency program is an excellent opportunity for those considering moving to Portugal to benefit from a favourable tax regime, all while enjoying the incredible lifestyle, culture, and climate that Portugal has to offer.

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Potential end to the NHR tax regime

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On October 3rd, during an interview with CNN Portugal, Prime Minister Antonio Costa alluded to the potential discontinuation of the Non-Habitual Residency (NHR) tax scheme. He mentioned that it "may be phased out by 2024."

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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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