Portugal’s NHR (non-habitual resident) tax regime is hugely successful. If you’re considering relocating to Portugal for the sunny weather, stunning landscapes, and seafood delights – you’ll be glad to know that it’s also a smart financial decision.
The NHR scheme offers numerous benefits such as tax-free transactions, low taxes on pension income or wealth, and self-employed or other income is taxed at significantly reduced amounts. This guide will take you through applying for NHR so that you can become a non-habitual resident.
The NHR tax regime offers tax exemptions, tax benefits, and low tax rates for ten years. This article reviews the benefits of the non-habitual resident tax regime, its requirements, tax rates, and important dates.
What is Portugal's NHR tax regime?
Non-habitual residence (NHR) refers to the process of establishing tax residency in Portugal, which enables individuals to enjoy reduced tax rates on income for a duration of 10 years. Notably, NHR holders are not subject to any specific minimum or maximum residency requirements.
Portugal’s non-habitual resident tax regime aims to attract investors and professionals who could contribute to Portugal’s economy and culture. This special tax status for new residents can lead to tax exemptions on a global income, while active income that arises from high value-added activities earned in Portugal is taxed at a flat rate of 20 percent.
NHR status allows substantial tax savings. The scheme was introduced in 2009 to increase Portugal’s global competitiveness by attracting professionals of high cultural and economic worth.
Foreign investors with a Golden Visa can optimize their taxes by applying for NHR status. Digital nomads or individuals on the Tech Visa who aim to spend over 183 days a year in Portugal can also apply.
Latest Updates – October 2023
The Government submitted the State Budget Proposal for 2024 and it includes the changes that determine the end of the non-habitual resident regime.
This is the initial version, which will still be subject to debates and votes, but which, given the majority that the Government party holds in the Assembly, cannot and should not be ignored. In effect, the proposed change has the following consequences from 01/01/2024:
- Anyone who already has the non-habitual residence status at the time of entry into force maintains the status under the same terms until completing 10 years of being under the status;
- Anyone who meets the conditions for registration as non-habitual residents on 31 December, 2023, as well as holders of a residence visa valid on that date, will be able to register within the deadline available (until 31 March 2024) and benefit from the scheme.
The final vote on the budget law will take place on 29 November 2023, until then we will closely monitor the evolution of this topic.
Why become a non-habitual tax resident in Portugal?
Some of the significant advantages to applying for NHR status:
Special tax treatment for ten years: You can benefit from special personal income tax treatment over ten years
Exemption on some foreign income: You can enjoy the tax exemption on almost all foreign source income
20 percent flat rate on some Portuguese income: 20 percent flat rate for certain Portuguese source incomes (from specific professions and self-employment), as opposed to national Portuguese income tax rates of up to 48 percent
Tax residency in white-listed EU country: Become part of a white-listed tax environment
Tax exemptions on donations between direct family members: A tax exemption for gifts or inheritance to direct family members
No wealth tax
Free remittance of funds to Portugal
Portugal NHR and double taxation agreements
A key benefit of Portugal’s non-habitual resident tax regime lies with Double-Taxation Agreements (DTAs).
A double taxation agreement allows for most categories of income to be taxed in the country of the source of income. Most countries, however, choose not to apply income tax to any income earned by non-residents as they want to be seen as jurisdictions open to foreign investment.
In turn, under the NHR tax regime, Portugal will not tax most foreign source income earned by NHR individuals. This allows NHR residents to receive some foreign income completely free of tax.
Portugal currently has signed Double-Taxation Agreements with 81 countries, and the OECD model tax convention may be used in the absence of a DTA.
Who can apply for the non-habitual resident tax regime in Portugal?
The main requirement of the NHR is for the applicant to become a tax resident in Portugal.
To this end, it is essential, from the outset, that the applicant is qualified to live in the country.
Thus, in the year to which the income relates, the applicant must comply with at least one of the following:
- Stay in the country for more than 183 days, consecutive or interpolated, in any period of 12 months beginning or ending in the year in question
- Stay for a shorter period of time, on any day during the period referred to in the previous paragraph, and have had access to housing in conditions that suggest a current intention to maintain and occupy it as their habitual residence
- On 31 December, being a crew member of a ship or aircraft, as long as they are in the service of entities with residence, headquarters or effective management in that territory;
- Carrying out public functions or commissions abroad, at the service of the Portuguese State.
Furthermore, this residence must be possible to substantiate. It’s important to not only fill these requirements above but also not be a tax resident in another country. You should not spend more than 183 days in another country, as it can then presume tax residence.
The other, cumulative requirement is that the applicant has not been a tax resident in Portugal in the previous five years
NHR Portugal minimum stay
In order to avail of NHR status, you must stay for a minimum of 183 days in the country per year or maintain in Portugal a place of abode residence in Portugal as your habitual residence.
It’s also important to note that in order to be a tax resident in Portugal, you must meet the country’s tax residency requirements, and should not comply with the tax residency requirements of another country.
What will happen to my NHR status after ten years?
NHR status only lasts ten years. After ten years, you lose your NHR status and tax benefits, and will have to pay tax at standard Portuguese rates.
NHR and the Portuguese Golden Visa
It’s possible for non-EU/EEA/Swiss citizens to apply for the Portuguese NHR scheme through Portugal’s Golden Visa program. Investors who first acquire residency through the Golden Visa program can then become eligible for the NHR regime in Portugal.
Find out more about the Golden Visa program here.
Global Citizen Solutions can help you take the next step towards investing and securing residency rights in Portugal. As investment and residency program specialists, we can provide personalized advice to help you make the best possible decision.
IMPORTANT UPDATE: PORTUGAL GOLDEN VISA - OCTOBER 2023
The Portugal Golden Visa program has recently undergone substantial changes. The new legislation is now in effect, and it's crucial to note that real estate investments are no longer a valid qualifying option within the program.
However, several attractive investment routes still maintain their eligibility for the program. Please refer to our comprehensive guide: Portugal Golden Visa Ultimate Guide.
Tax residency requirements for the NHR scheme
In order to establish tax residency in Portugal, applicants for the NHR scheme must have a place of residence in Portugal to hold habitual residence, and stay in Portugal for a minimum of 183 days.
Do I have to buy or rent property to prove residency in Portugal?
The NHR regime does not require its beneficiaries to purchase property in Portugal. To comply with the regime’s requirements, applicants must have a domicile in Portugal available to them. This must be a place that demonstrates the intention to hold and occupy the space as a habitual place of residence.
It can, therefore, be beneficial for NHR tax residents to buy property in Portugal; however, a rental contract for 12 months is also sufficient proof of domicile.
What documentation is required to prove domicile?
If you decide to rent a property, you must provide proof of a lease or loan agreement. You can provide a purchase deed instead if you have bought a property.
Tax Under the Non-Habitual Resident Regime in Portugal
Which professions are considered to be of high value under the NHR tax regime?
Professions of high cultural and economic worth are given generous tax exemptions and tax benefits under the NHR regime.
The following professions are considered of high added value:
General director and executive manager of companies
Directors of administrative and commercial services
Directors of production and specialized services
Directors of hotels, restaurants, commerce and other services
Specialists in physical, mathematical sciences, engineering and related techniques
Professor of university and higher education
Specialists in information and communication technologies (ICT)
Authors, journalists and linguists
Creative and performing arts artists
Technicians and professions in science and engineering, at intermediate level
Information and communication technology technicians
Market-oriented farmers and skilled workers in agriculture and animal production
Skilled forestry, fishing and hunting workers, market-oriented
Skilled workers in industry, construction and craftsmen, including in particular skilled workers in metallurgy, metalworking, food processing, wood, clothing, handicrafts, printing, the manufacture of precision instruments, jewelers, craftsmen, workers in electricity and electronics.
Installation and machine operators and assembly workers, namely operators of fixed installations and machines
Workers involved in the professional activities referred to above must have at least qualification level 4 of the European Qualifications Framework or level 35 of the International Standard Classification of Education or have five years of duly proven professional experience.
And other professional activities, including administrators and managers of companies promoting productive investment, as long as they are allocated to eligible projects and with contracts granting tax benefits
Tax treatment of foreign source income under the NHR regime
Beneficiaries of the NHR regime in Portugal with some foreign incomes are largely exempt from taxation in Portugal due to DTAs.
If income is sourced in a country with a double taxation treaty with Portugal, the income will not be taxed in Portugal.
- Foreign source income is taxed at a flat rate of 20 percent if it falls under the list of eligible professions.
- Foreign source income is taxed at a flat rate of 20 percent if it falls under the list of eligible professions.
- This income is also subject to social security contributions unless the individual in question already pays social security contributions into another system.
- Royalties, Dividends and Interests
- Typically exempt between countries that have DTAs between them
- In the absence of DTA, the OECD model convention must still be used
- If they are not exempt, they will be taxed at 28% in Portugal
- Otherwise taxed at 35 percent if the origin country is a blacklisted tax haven
Real estate income and capital gains
Real estate income is typically taxed at source meaning it should be taxed in the country where it is earned.
Capital gains from the disposal of securities (shares, bonds, etc.) will be subject to a rate of 28 percent
Pension income: Taxed at a flat rate of 10 percent (since March 2020). Typically, pension income is subject to withholding tax in the country of origin. After paying tax in Portugal, it is necessary to recover the tax withheld at
Tax treatment of Portuguese source income under the NHR regime
Employment and Self-Employment income
- Usual progressive tax rates apply if employment does not fall under the list of eligible professions.
- If employment falls under eligible NHR professions, or if the income comes from a high value-added activity a flat tax rate of 20 percent is applicable.
Real estate income and capital gains
- Rental income is taxed at an optional rate of 28 percent or otherwise at standard progressive rates.
- Net capital gains are taxed at 50 percent at standard progressive rates.
- Under the NHR, pensions are taxed at usual rates (10 percent)
Portuguese tax table for 2023
Portuguese income tax bands
Portuguese tax rate
up to €7,116
Timeline and Important Dates for NHR application
In order to register for the NHR regime in Portugal, applicants must be registered as a Portuguese tax resident.
NHR applicants must prove tax residency and enroll as such with the tax authorities. The NHR application then has to be made before 31 March to start the tax residency year. It usually takes about two days for an application for the NHR regime to be accepted or declined.
NHR status is granted for a period of ten years, retroactively effective from the date on which the applicant became a resident.
Step-by-Step Application Guide: Non-Habitual Resident Tax Regime in Portugal
Step 1 – Proof of residency
The first step towards applying for the non-habitual resident regime in Portugal is securing residency status in the country. To do so, you must have the legal right to reside in Portugal.
EU/EEA/Swiss are allowed to register for residency without a visa. Depending on the municipality you are applying to/from, you will need certain documents. All that is needed to register citizens can register for residency at their local town hall (Câmara Municipal). Be sure to take the following with you:
- Proof of address (You will need to give a current address, but will not require proof of residency)
At the town hall, you will need to find the correct ticket to register as a “Cidadão Europeu”. The process is fairly straightforward, and the attendant should fill out the form for you. You will then have to pay a fee of around €15.
Non-EU citizens who wish to apply for the NHR regime must first obtain a residence permit to be allowed to settle in Portugal. This can be granted through a number of different methods, but the most common is through the Golden Visa or through the Portugal D7 Visa program.
The process takes place through the “Serviço de Estrangeiros e Fronteiras” (SEF) or at your closest Portuguese Embassy or Consulate.
Take a look at our Golden Visa guide for more information.
Step 2 – Find a specialist accountant for professional advice
The safest way to apply for NHR status in Portugal is with the help of a specialist. This way you can ensure that you have the best understanding of Portuguese tax law and find the best solution for your needs. However, should you wish to apply on your own, you can follow the steps below.
Step 3 – Obtain a Portuguese tax number (NIF)
Everyone who intends to reside or do business in Portugal must have a tax identification number (NIF) in Portugal (Numero de Identificação Fiscal). This is a 9-digit number that serves as an identification for tax purposes.
There are a number of different ways to acquire a NIF. If you are already in Portugal, you can go to your local government finance office (finanças). To get a NIF at a finanças you will need proof of residence (such as a utility bill or rental contract), your residency certificate or visa, and your passport.
Step 4 – Register as a tax resident in Portugal
After you have your NIF, you must register as a tax resident in Portugal. This can also be done at finanças provided that you show you are allowed to live in Portugal (meaning you are previously registered as a European Citizen or holder of a Residence Permit.
Step 5 – Apply for your NHR Status
To do this you will need your NIF, your fiscal address, email address, and phone number. These should be the same details that you used to initially register for your NIF. You will also be asked to provide an answer to a security question.
Once you have registered, a password will be sent to you by post. It should take at most two weeks to arrive.
When your password arrives, you can log into the finanças portal and register your application for the NHR regime. You can do this by accessing Aceda aos Serviços Tributários, clicking on Entregar Pedido, and then finally Inscrição Residente Não Habitual.
To complete your application, you may be required to submit the following documents:
- A declaration stating that you have not been a tax resident in Portugal for the previous 5 years
- Tax returns for the past 5 years
- Proof of purchase of property in Portugal or a rental contract
Request for further evidence
The most common reason behind NHR rejections is a failure to provide enough supporting evidence. You might be required to prove that you have not been a tax resident in Portugal within the past five years. This means submitting further evidence proving that you have been a tax resident in another country.
NHR Regime for US Citizens
US citizens can certainly apply for the scheme. Anyone who meets the requirements can request NHR status. You must live abroad, not have been a resident in Portugal within the last five years and want to move to Portugal.
To be considered a tax resident and benefit from the NHR Scheme in Portugal, applicants must have a place of residence in Portugal on 31 December of that year with the intent to hold habitual residence.
NHR status can also hugely benefit US citizens retiring in Portugal due to its exemptions around income related to pensions.
NHR Regime for UK Citizens
Following the UK’s departure from the EU due to Brexit, it has become slightly more complicated for UK citizens to obtain NHR status. We recommend that UK citizens apply for a D7 Visa or Golden Visa. Upon securing an appropriate visa, the steps to NHR status are the same as outlined above.
Why Work with Us on Your Residence Visa Application
Operating from the heart of Portugal with a diverse international team in Lisbon, Porto, and the Algarve, we offer unparalleled assistance in your journey to secure a Portugal residence permit.
Our dedicated team, comprised of knowledgeable case executives, experienced immigration lawyers, and proficient investment specialists, brings over five decades of combined experience to every case. Our success rate in applications is a testament to our skill and diligence, offering reassurance to applicants on their residency journey.
We take pride in our global reach, having facilitated residency for clients from over 35 different countries. Our proactive onboarding team will conduct a thorough analysis of your situation and will identify the best strategies for setting up your bank account or obtaining your NIF issuance even before your arrival in Portugal.
Contact us today to set up a free consultation with one of our immigration experts to start your residence visa journey.
Why choose Global Citizen Solutions for your Immigration Visa?
GLOBAL APPROACH BY LOCAL EXPERTS
- GCS has offices located across Portugal.
- Members of the US-Portugal and UK-Portugal Chambers of Commerce in Portugal, and the Investment Migration Council (IMC).
- Our expert team can help you throughout your journey to secure your Visa.
100% APPROVAL RATE
- Our successful track record in applications provides reassurance to applicants.
- We have helped clients from more than 35 countries secure residency in Portugal.
- With a single channel of communication, our approach ensures that you have complete clarity on your application.
- Our BeGlobal® Onboarding System allows for a total flow of information.
TRANSPARENCY AND PRIVACY
- Our pricing is clear and detailed, you will not face any hidden costs.
- All data is stored within a GDPR-compliant database on a secure SSL-encrypted server.
Frequenty Asked Questions about Portugal's NHR Tax Regime
What if my income is paid in another country?
If you are being taxed by a country that has a double taxation agreement with Portugal, you will be exempt from having to pay tax in Portugal.
What if my income is earned in Portugal?
Depending on your profession or source of income, you could still be eligible for significant tax breaks. That being said, if your income is being earned in Portugal and you are a tax resident in Portugal, you’ll be subject to Portuguese taxes.
Can applications for non-habitual residency in Portugal be tracked?
If you are registered online at the Portal das Finanças, you can track the progress of your application.
How do you know if registration as a Portuguese non-habitual resident has been accepted?
You can consult the status of your application through the finanças portal. On the website, click Aceda aos Serviços Tributários, then Consultar Pedido, and then finally Inscrição Residente Não Habitual.
How long does it take to apply for the NHR tax regime in Portugal?
You should know within a couple of weeks whether your application has been accepted or declined.
Generally, it takes about two weeks to hear back. If your NIF was recently obtained, then it may take as little as 2 days.
Do I have to be resident outside of Portugal to be a non-habitual tax resident?
No, you can live in Portugal, but the key part is that you must not have been a tax resident for 5 years prior to application. Then, it is necessary to become a tax resident in order to become a non-habitual resident.
Do I have to make a statement of assets to apply for the NHR regime?
No, you will only have to state your income on your tax returns.
How long has the NHR regime in Portugal been available?
The scheme has been in place since 2009 and is growing more popular every year.
Will the NHR regime in Portugal change in the foreseeable future?
The government has presented the State Budget Proposal for 2024, which outlines significant changes that mark the end of the non-habitual resident regime. This initial version is subject to further debates and votes. However, it is important to note that the government party’s majority in the Assembly implies that these changes should not be overlooked or dismissed. The final vote on the budget law is scheduled for 29 November 2023. Until then, we will diligently monitor the developments related to this matter.
Is it possible to backdate my registration as a non-habitual tax resident?
Once your application is successful, your status as a non-habitual tax resident will automatically be backdated to when you first registered as a tax resident in Portugal.
When is the best time to apply for the Portuguese NHR tax regime?
You must apply for the NHR regime before 31 March of the year following the one in which you became a tax resident in Portugal.