Natural persons’ foreign income is subject to a unique tax regime known as the Non-habitual Resident Program (NHR). This scheme is specially created for those who want to move their residency to Portugal.
After applying, you will receive the status of tax resident in Portugal. In some cases, your taxes will be lower or excluded from taxation. Unless you become a tax non-resident for five years before submitting a new application to the scheme, the NHR status is valid for ten consecutive and non-renewable years.
In essence, the NHR program offers qualified candidates a flat 20% tax rate on income earned in Portugal (instead of the typical top rate of 48%).
This can apply to seniors who get pension income and anyone with other types of income, such as dividends from foreign corporations, investments, or even an overseas salary.
The main goal of the Non-Habitual Resident Portugal Scheme is to provide you with the chance to lower your tax rate and open up business prospects abroad if you have a high income or high net worth.
Everything you need to know about the non-habitual resident tax scheme in Portugal will be covered in our guide, including how to determine if you qualify, what kind of tax benefits you may anticipate, and a step-by-step explanation of how to apply.
At Golden Port Visa we are here to help you at every step of the Portuguese Golden Visa.
Eligibility for Portugal NHR Status
Several important criteria must be met to qualify for the NHR.
You must first establish legal residency in Portugal. For instance, if you are an EU citizen or are from outside the EU, you can accomplish this through the Golden Visa program.
The next step is for you to register as a Portuguese tax resident. You are considered a tax resident if you live in Portugal for more than six months a year.
Additionally, you must possess a Portuguese Tax Number (NIF) and ensure that it is associated with a Portuguese address. You must complete this final step for your NHR application to be submitted properly.
NHR benefits are available for a 10-year (non-renewable) period beginning when you become a Portuguese tax resident.
The date you register your Portuguese address with the tax authorities is often used to determine this. This data can be verified on the Portuguese Finance Portal.
Taxes for Non-Habitual Residents in Portugal
There is a lot of misunderstanding regarding how income is taxed under the NHR plan.
The source of the income—whether it comes from Portugal or abroad—is an important factor to consider when evaluating revenue under NHR.
The Portuguese tax authorities classify two forms of income from Portuguese sources as qualifying for the non-habitual residence plan in terms of professional activity.
Class A: Employment
Type B: Independent contractors and self-employed
If either of these descriptions fits you and your income is derived from domestic sources in Portugal, you can be qualified for a flat tax of 20%.
Foreign source income
Portugal is frequently perceived as a tax-free country, although this isn’t true at all.
If you decide to become a non-habitual resident of Portugal, some benefits may still be available, depending on the nature of your foreign source of income.
Rental income, capital gains from real estate, dividends, interest from savings, and royalties are exempt from tax in Portugal as long as they come from abroad.
Under NHR, foreign-sourced pensions were previously subject to 0% tax. However, this has since changed to 10%.
Income from foreign-source dividends
If coming from a DTA nation where dividends are taxed at the source, tax-free in Portugal.
Income from real estate rentals and capital gains on property
As long as they don’t come from a tax haven on the list of blacklisted countries, both are tax-exempt in Portugal under HNR.
Income from cryptocurrency
Profits from bitcoin portfolios and wages received in cryptocurrencies are tax-free. Cryptocurrency day trading income is subject to the standard Portuguese progressive tax rates of 14.5% to 48%.
How to apply for Non-Habitual Portugal Residence
Making sure you are listed as a tax resident in Portugal is the first step for NHR. This entails having your Portuguese address registered with a NIF (tax number).
The year after you become a tax resident, on March 31st, is when you must submit your NHR application.
Here are the steps to follow:
- Declare your residency in Portugal. You can do this by going to your neighborhood town hall with your passport if you’re an EU citizen. You must schedule a meeting with SEF to apply for your residency card if you are a non-EU citizen.
- Request a NIF. You can do this by providing address verification from a country other than Portugal, like a bank statement from your residence in the UK. But before requesting NHR status, you must switch it to a Portuguese address. Bring your property deeds to the Finanças office as proof of address if you want to apply for the NIF with your address in Portugal. Also, acceptable would be a utility bill.
- After that, you must register on the Finanças website. To whichever address is listed on your NIF, they will mail a password to you. Make sure someone is there to accept the mail on your behalf and provide you the password if you received your NIF at an international address.
- You can independently apply NHR after you have access to the Finanças portal.
The Non-Habitual Resident Portugal Tax Scheme offers an intriguing perk for individuals considering moving to Portugal.
Numerous overseas sources of income may be excluded from Portuguese taxes due to NHR status. The Portugal HNR is not a zero-tax position if that’s your primary motivation for obtaining a second residency.
Golden Port Visa is here to help you with every step. We are your dependable Portuguese partner who will assist you in accomplishing your relocation goal; we are more than just an immigration consultancy.
Get in touch with us to arrange a free call or learn more about the program.
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