Why Should I Move My Residence to Portugal?
By Sérgio Ramos, Pontes, Baptista & Associados
What is a Non-Habitual Resident (NHR)? One of the principal objectives of this regime was to attract individuals and their families to Portugal by making it beneficial from a tax perspective to become tax resident in Portugal. The NHR regime provides a flat income tax rate of 20% for certain Portuguese employment and self-employment sourced income.
An NHR will also be exempt from personal income tax on certain types of qualifying income if this income is subject to tax in the country of source under an existing double taxation treaty that allows for this or, if no Tax Treaty exists, were subject to tax in another jurisdiction and not considered Portuguesesourced income under domestic rules.
Duration of the special tax regime
NHR status applies for a consecutive 10-year period. It is worth noting that this period can be interrupted for one or more years and the individual can still benefit from the regime for the remaining period provided that the conditions for being a tax resident of Portugal in each year of election are met.
How do I qualify as an NHR
In order to qualify as an NHR, an individual must meet the following requirements:
- be tax resident under Portuguese domestic legislation; and
- not have been taxed as a Portuguese resident in the five years prior to taking up residence in Portugal.
An individual is a tax resident in Portugal for any year in which:
- they live in Portugal for more than 183 days (continuously or not) during a 12-month period which begins or ends in that tax year; or
- they have residential accommodation available in Portugal in any day of that 12-month period which is used as the individual’s habitual abode.
Related links: http://info.portaldasfinancas.gov.pt/NR/rdonlyres/83762009-3DC2-47FC-ABBE-35EFE35E8865/0/IRS_RNH_PT.pdf
Sérgio RamosPontes, Baptista & Associados, Lisbon, Portugal
T: +351 213 479 397
Sérgio Ramos Partner of Pontes, Baptista & Associados holds a degree in Auditing, a postgraduate degree in Management and Taxation, is an auditor and tax consultant at various audit firms and an author and speaker for accounting, tax and auditing matters.
Pontes, Baptista & Associados is a vehicle for the development of their audit activities and other related services. Right from the start, the firm’s focus and ongoing priority has been ensuring quality, competence and independence. In order to continually improve the quality of its services and access international knowledge databases and shares experiences with colleagues from all around the world, the society integrated as independent member the Geneva Group International. Growth and improvement represent a daily motivation as the firm conducts audits to uphold the credibility of their clients’ financial information.
Published: Spring 2017 l Photo: Colourbox.de - Neirfy