Portugal's Non-Habitual Residents Regime

Non-Habitual Residents Regime (Europe’s best kept secret)

Portugal offers a very attractive tax regime for individuals who become tax resident in Portugal. The scheme is known as the “Non Habitual Residents Regime” (NHRR). This regime provides for a flat personal income tax rate of 20% for qualifying (self) employment income from activities performed in Portugal and a tax exemption for almost all foreign source income.

Add to this free remittance of funds, a friendly residence permit regime allowing for free movement within the Schengen area, the possibility of applying for Portuguese nationality and consequently an EU passport, and the absence of wealth tax and gift and inheritance tax, and it is clear why Portugal is a very attractive location.

The country is recognised as a premium tourism and real estate tourism location, as well as a leading EU country in R&D and information technology. The government has launched an economic strategy focused on boosting exports and foreign direct investment.

The Portuguese economy has become increasingly diversified and service-based since the country joined the European Union (EU) in 1986. Portugal ranks 42 out of 137 countries in the 2017-2018 World Economic Forums' Global Competitiveness Report and ranks 29 out of 190 countries in the 2018 World Bank Doing Business Report.

Portugal’s Tax Regime for Non-Habitual Residents

The NHRR tax regime, which is a beneficial Personal Income Tax (PIT) regime, is available to individuals becoming tax resident in Portugal, provided they were not Portuguese tax resident in any of the previous five years. The status is granted for a period of 10 years. Portugal is committed to attracting foreign talents, as well as High Net Worth Individuals and their families.

A person is considered tax resident in Portugal if any one of the following conditions is met:

• Spend more than 183 days, consecutive or not, in Portugal in any 12-month period starting or ending in the fiscal year concerned; or

•Regardless of spending less than 183 days in Portugal, maintain a residence suggesting being a habitual resident in Portugal during any day of the period referred above.