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Non-habitual resident tax scheme

What is it?

Any natural person who has been attributed the status of non-habitual resident may have a number of fiscal advantages during a period of 10 years, from exemption from payment of any tax on a certain type of income to the payment of tax on income at a fixed rate of IRS of 20% during that period.

  • 1

    How can you acquire the Status of Non-Habitual Resident?

    1. You have not been resident in Portugal in the last 5 years;

    2. Register as a tax resident in Portugal in the local Tax Office (for this you should have remained in Portugal for over 183 days, consecutive or not, or when you have remained for less time, have a residence there, on 31 December of this year, that would presume that there is the intention of maintaining and occupying it as an habitual residence);

    3. Request the attribution of the status of Non-Habitual Resident when you register as a tax resident in Portugal or up to 31 March of the year following the year in which you become resident in Portugal.

  • 2

    Can Portuguese emigrants also acquire the Status of Non-Habitual Resident?

    Portuguese citizens who emigrate can obtain the Status of Non-Habitual Resident, if they decide to permanently return to Portugal, and, consequently, benefit from those exemptions and reduced rates. In fact, it is said that this status was initially created with the Portuguese diaspora in mind, as a way of attracting their savings.

    In order to do this they only need to meet those three assumptions. However, when these Portuguese citizens left the country they already certainly had a Taxpayer No., and were registered for tax purposes as residents, they should check as soon as possible if they are still registered as tax residents. If this is the case, they should change their state of resident to non-resident as soon as possible, so that when they return definitively to Portugal they easily comply with the assumption that they have not been tax residents in Portugal in the last 5 years.

  • 3

    Once the Status of Non-Habitual Resident has been obtained, what is the rate and incidence of taxation applicable to income EARNED IN THE NATIONAL TERRITORY?

    In the case of dependent or independent work, the tax rate applicable is 20%.

     Taxation only applies on income arising from high added value activities with a scientific, artistic or technical character:

     Architects, engineers and similar

     Plastic artists, actors and musicians

     Auditors

     Doctors and dentists, teachers and psychologists

     Liberal professions, technicians and equivalent

     Senior management

     Investors, administrators and managers, when on the staff of companies that have been covered by the contractual regime contemplated in the Investment Tax Code.

     Registration as a Non-Habitual Resident grants the right to be taxed as such for a period of 10 years from the year of their registration as tax resident in the Portuguese territory.

  • 4

    Once the Status of Non-Habitual Resident has been obtained, in what cases does the exemption from taxation on income EARNED ABROAD by Non-Habitual Residents in Portugal apply?

    In the case of pensioners and retired people, when:

     • the income is taxed in the State of origin, under the double taxation avoidance agreement between Portugal and this State; or,

     • under criteria contemplated in the Personal Income Tax Code, the income is not considered to be obtained by a Portuguese source.

     In the case of income arising from dependent work, when:

     • the income is taxed in the State of origin, under the double taxation avoidance agreement between Portugal and this State, or;

     • this income is taxed in another State with which Portugal has not signed a double taxation avoidance agreement, provided that the income is not considered as obtained in the Portuguese territory pursuant to article 18 of the Personal Income Tax Code.

     In the case of income arising from independent work (from the provision of high added value services of a scientific, artistic or technical character, or from intellectual or industrial property, from income from capital, from income from property or from Income on capital gains and other asset increases), when::

     • the income can be taxed in the country, territory or region of origin, in conformity with a double taxation avoidance agreement between Portugal and this State, or;

     • when there is no double taxation avoidance agreement, the OECD Model tax Convention may be applicable (considering the observations and reservations raised by Portugal) and provided that the country, territory or region of origin does not have a privileged taxation scheme, and provided that the income is not considered as being obtained in the Portuguese territory pursuant to article 18 of the Personal Income Tax Code.