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Non-Habitual Residency in Portugal

By Mark Quinn - Topics: non-habitual residency in Portugal, Portugal
This article is published on: 29th November 2021

What is Non-Habitual Residency (NHR)
and can I apply?

The Non-Habitual Residence (NHR) scheme is a 10 year beneficial scheme of taxation introduced to encourage individuals to come to live and work in Portugal.

Provided certain conditions are met, the primary scheme benefits are:

  • a 10% flat rate on non-Portuguese sourced pension income. Some forms of UK pension income, generally government service pensions, will always be taxed in the UK
  • tax free interest and investment income generated outside of Portugal
  • tax free capital gains generated outside of Portugal
  • 20% flat rate tax on earned income (self-employed or employed) for those with a qualifying profession. There is a prescribed list of qualifying professions

To meet the eligibility requirements, you:

  • must not have been tax resident in Portugal in the last 5 years
  • must have a permanent residence in Portugal. This residence can either be rented or owned

Applications for NHR must be submitted by the 31st March following your permanent arrival in Portugal.

If you are moving to Portugal, planning early is the key to favourably positioning yourself and obtaining NHR is highly advantageous as the tax savings can be very significant.

Having said this, whilst in the vast majority of cases NHR is beneficial, we have come across instances where NHR would have actually increased a clients’ tax liability.

We have written a detailed guide on the NHR regime that is available on our website. However, seeking advice is crucial and we welcome you to contact us.

Article by Mark Quinn

If you are based in Portugal or are thinking of moving to Portugal, you can contact Mark at: mark.quinn@spectrum-ifa.com for more information. If you are based in another area within Europe, please complete the form below and we will put a local adviser in touch with you.

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