Non Habitual Residency Scheme

Introduced in 2009 the non habitual residency or NHR, was created as a way to attract non-resident citizens to Portugal with tax advantages for those who establish their residency in the country for tax purposes. 

If you are considering moving to Portugal, then you may be eligible for the non habitual residency scheme, which is a very attractive tax benefit achieved by this status. 

Below we will outline what the NHR scheme is in Portugal and what it takes to get these benefits. 

What is the non habitual residency scheme? 

The non habitual residency scheme in Portugal, is a status, that offers tax advantages aimed at professionals qualified in activities with high added value, as well as individuals with high net worth or purchasing power, who establish their residency for tax purposes in the country, in return offering favourable tax benefits to them. 

The scheme is designed to offer exemption to the international double taxation of foreign sourced income and offer a special reduced rate of 20% tax to certain incomes with the tax breaks lasting for 10 years. 

So if you intend on working once residing in Portugal and qualify on the list of exempt professions, you can benefit from a fixed rate on income tax (IRS) of just 20%. 

If you are retired and looking to draw a pension from outside of Portugal, you will be exempt of any income tax (IRS - Imposto sobre o Rendimento de Pessoas Singulares) 

Who can apply for the non habitual residency? 

Any one who has lived aboard  and has not been a resident in Portugal within the last 5 years and wants to move to Portugal is eligible for the scheme. However, you must remain in Portugal for a minimum of 183 days each year to be considered resident. 

What do I need to qualify for the NHR in Portugal? 

In order to qualify for the status, it is necessary to enter an application process with multiple stages.

1.You must apply to become a tax resident in Portugal and receive a fiscal number (NIF - Número de Identificação Fiscal) 

In order to so, you must remain within Portuguese territory, in any given year, for a minimum of 183 days (consecutively or not). Or if not, have the housing conditions that shows that you have the intent to maintain residency. 

2. You must not have been a tax resident of Portugal within the previous 5 years at the time of your application. 

You must show that you have met the criteria of non-resident in the previous 5 years. This also applies to migrants who are looking to return to Portugal. 

You must comply with the requirements of residency each year for the following 10 years in order to benefit from the right to the tax advantages 

You must submit your request to the Portuguese tax authorities and adhere to the regime of non-resident when applying for the status of resident in Portugal.

How do I apply for the Non habitual residency? 

1. Register as resident in Portugal at a tax office and receive a tax identification number;
2. Fill out an online form to receive a password to gain access to the tax authority website;
3. After receiving the password (delivered to your address by mail), register as a non-habitual resident through the tax authority website;
4. Follow the progress of your submission until it is accepted through the same site;
5. Receive confirmation in your online account on the tax authority website in PDF format, and keep it safely stored;
6. If you have a value-added job, submit a certified copy of proof your profession to:

• Direção de Serviços de Registo de Contribuintes
  Avenida João XXI, 76, 6th
  1049-065 Lisbon Portugal

What else do I need to be aware of? 

If you plan to apply for the NHR scheme in Portugal, you will be required to open a Portuguese bank account. 

Depending on where your income originates you may need to register with social security. 

Some incomes obtained within Portugal are exempt, some are not. All incomes from dependent work sourced from outside of Portugal and all pensions sourced from outside of Portugal are deemed to be taxed at source and therefore are exempt from tax under the non habitual residency scheme. 

If you are considering making the move to Portugal and would like to take advantage of the tax benefits available for the NHR scheme, speak to our experiences consultants today who will be happy to advise you on the perfect property in Portugal and put you in touch with knowledge financial specialists who can assist you with you NHR application.  

You can reach us now on +351 915471151 or info@privateluxurycollection.com