Portugal’s Non-Habitual Resident (NHR) Tax Code & Golden Visa Regime
It is not an exaggeration to say that Portugal’s NHR and Golden Visa regimes offer two of the most beneficial tax and residence arrangements available in the world.
The NHR Tax Code
- The NHR tax code is designed to attract foreign individuals to Portugal to entice investment and increase employment opportunities in Portugal
- NHRs are Tax Residents of Portugal but they can benefit from preferential tax rates and in many cases, receive income and interest, which is totally exempt from Personal Income Tax (PIT)
- Any person who has not been resident in Portugal in the past 5 years and who subsequently becomes resident of Portugal may be entitled to apply for this status
- The NHR is valid for 10 years – and may well be extended in the future
- Individuals who qualify must apply by 31st March in the year following registering as a resident of Portugal
Tax Treatment of *Foreign Source Income (generated outside Portugal)
|Category||Taxation in Portugal|
|Real Estate Rentals||Tax Exempt|
|Capital Gains||Tax Exempt|
|Self employment||Exempt-as long as obtained from abroad|
* Sources of income from any of the 81 “Black Listed” territories will not qualify under the NHR tax code
Portugal Source Income
Any income generated in Portugal will be taxed at a flat rate of 20% instead of at the normal progressive rates: up to 48%
Certain professions, such as architects, engineers, doctors, university professors, auditors and tax consultants and other esoteric occupations may also obtain a favoured tax status.
In essence then, anyone who qualifies for residence in Portugal and who can meet the NHR criteria can obtain the these tax privileges .
Importantly, as well as taking tax advice in Portugal, candidates for the NHR tax Code should ensure that they have informed their home country’s tax authorities that they are leaving to avoid any risk of double taxation.Please note, however, that other countries may challenge such residency status by arguing that in accordance with their domestic rules the relevant person should be considered resident in such jurisdiction. If that becomes the case, i.e. if there is a conflict of residency where two countries consider the same individual resident in both their respective jurisdictions, the tie-break clause established under the tax treaties will apply.
In the case of the United Kingdom, the new Statutory Residence Test (SRT) “maze” can exclude a claim of non UK residence, or inhibit the number of days one can visit the UK in the first three years of non-UK Residence unless certain steps are taken.
How can we help?
- We can advise and assist in obtaining NHR with suitably qualified Portuguese associates and assist in obtaining applying for the NHR tax code treatment
- We can refer clients to our UK tax advisors who will ensuring that the correct procedures are adopted so that the SRT non-resident status is met. This will ensure, with the agreement of HMRC, no UK tax returns being necessary in the future
- Likewise, our qualified Portuguese associates, will provide the necessary forms under the Portugal Double Tax Agreements to ensure any UK non- Government pension income is paid gross
Who Can Apply for the Golden Visa
Third State citizens involved in an investment activity, either individually or through a company conducting, at least, one of the following operations in national territory for a minimum period of five years:
I) Capital transfer with a value equal to or above 1 million Euros;
II) Creation of, at least, 30 job positions;
III) Acquisition of real estate with a value equal to or above 500 thousand Euros.
It covers shareholders of companies already set up in Portugal, or in another EU State, with a stable residence in Portugal and with tax obligations fulfilled.
- The investment function established for the Golden Visa has to made and maintained for a minimum of 5 years from the date of which the Golden Visa is established
- The Golden Visa is initially valued for 1 year, renewable for each 2 year period required
- Holders of the golden visa may need to evidence that they have stayed on Portuguese territory for at least 7 days in the first year and 14 days in the subsequent 2 year renewal periods
- After the 6th year, the Visa holder is eligible to apply for Portuguese citizenship, if they so desire
How can we help?
In conjunction with our Portugal Legal associates we can guide applicants through all aspects the process of obtaining the Golden Visa permit.