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Complete guide to the Portugal NHR tax regime

NHR Portugal

Is the NHR tax regime a subject of your concern? If you are about to respond “yes”, then, reading this material is certainly a rational step to take. We are eager to commence if you mean to explore such valuable info!

What is NHR?

NHR is the abbreviation for Non-Habitual Resident. The NHR Portugal Program is a fiscal system offering abroad depositors and dwellers to avail a decreased amount of tax and even exemptions regarding some of them. It is incredibly common at the moment: to be exact, there are 10,000 NHRs today (the smallest number registered), and we can observe the positive tendency.

The initiation of launching a program refers to 2009 while the newest update was suggested in 2020. Its primary goal is to entice more people from abroad to Portugal including real professionals.

Those requesting NHR will be able to enjoy it for ten years. In the meantime, you should bear in mind that an applicant has to be considered a tax resident for every year during this period. Actually, it is quite serious. The matter is that if the tax resident does not confirm such a status, all the privileges will cease to work. 

Why become a non-habitual tax resident in Portugal?

If you opt for being a non-habitual resident (Portugal), you will profit from this greatly.

Primarily, it is a diversity of the tax exemptions you are about to face. Second, you will economize a great deal of your budget. And, we bet this is really substantial for you!

A lot of people are striving to join this category of residents. It is another proof that this is a really nice way to cut your expenditure. Scan the section below to clarify the peculiarities!

Advantages of the NHR Portugal

There are quite a few pros you can savor in the case of being one of the Portuguese non-habitual tax residents. Let us list them here:

  • Transfer of money to Portugal without being charged for it;
  • No wealth tax;
  • A personal tax income treatment that is about to persist for 10 years;
  • Absence of minimum stay requirement;
  • A tax exemption for presents or succession to family members (the direct ones only);
  • 20% flat rate for some Portuguese source incomes (self-employment or specific occupations). It is extremely profitable as long as the regular tax rates can reach 48%.

Here is one more thing to realize: you get to a white-listed tax environment within the EU. Isn’t it awesome?

Portugal NHR and double taxation agreements

It is also essential to contemplate the fact that the NHR Portugal tax system is connected with the double taxation agreements (DTAs). Thanks to them, most groups of income are taxed in the country are thought to be the source of income. It is not typical for most countries though. They do not tax proceeds earned by non-residents as they intend to be open for investment from other countries.

Portugal is not going to tax the majority of foreign source income gained by the NHRs because the revenue can be taxed abroad. Accordingly, the NHRs can get income that will be free of taxation.

By the foreign source income, we mean the funds obtained from:

  • Employment;
  • Self-employment;
  • Real estate;
  • Financial assets;
  • Pension;

Also, capital gains from Securities Disposal and royalties are in this group too.

Today, Portugal has agreed on double taxation with 79 countries. Here are some of them to familiarize yourself with:

  • Austria;
  • Belgium;
  • Cyprus;
  • Croatia;
  • Czech Republic;
  • Estonia;
  • France;
  • Greece;
  • Hungary;
  • India;
  • Italy;
  • Japan;
  • Mexico;
  • Norway, etc.

Who can apply for the non-habitual tax regime in Portugal?

In fact, there are two basic requirements you should follow in order to apply for the NHR Portugal. We are about to list them below:

  • First, you ought to have a right to reside in Portugal. There are three variants you can stick to. They are as follows: belonging to EU, EEA, or Swiss citizens. Besides, going through a Golden Visa program is a nice idea too;
  • Second, you shouldn’t have been a Portuguese resident for five previous years.

Also, to hold a residency status, you should have a habitual home (the place of residency has to be held on the 31stst of December of that year). By the way, you are not obliged to purchase the property!

NHR and the Golden Visa

We have already touched upon the Golden Visa above. Sticking to it is going to be the perfect solution for those who are not in the categories of EU, EEA, and Swiss residents. Portugal Golden Visa is considered to be one of the most widespread residency-by-investment programs all over the world.

The program lasts for five years. Those who received a Golden Visa have a full right to live, study, and work in Portugal which is an exceptional opportunity today. Once you get it, you can apply for NHR status Portugal too. 

Which professions can qualify as a non-habitual resident in Portugal?

Well, there are quite a few of them today! It means that a lot of really good experts can expect to take advantage of the NHR tax regime. Feel free to get acquainted with the majority of them below:

  • Doctors and dentists;
  • Service managers such as hospitality, restaurant, and retail ones;
  • Executive and general managers;
  • ICT technologists;
  • Engineers, mathematicians, architects, and physicists;
  • Journalists, linguists, and authors;
  • Production and administrative managers;
  • High education and university teachers;
  • Performance and creative artists;
  • Researchers of various areas;
  • Designers;
  • Workers of different areas: for instance, industry, construction, fisheries, etc.

As you can see, the list of occupations is rather impressive.

The most recent changes linked to the professions were approved in January 2020. By the way, you do not only have to belong to the representatives of a certain profession or occupation. The matter is that it is also important to have at least 5 years of proven experience in a particular area.

Also, it is vital to know that apart from having the experience of such relevance, you can also hold at least a level 4 qualification according to the European Qualifications Framework or a level 35 of the International Standard Classification of Education.

How to apply for NHR

We bet that this part of the article interests you the most! We have decided to highlight the most significant steps of this process so that you could facilitate it greatly. So, let us begin then.

The first step is all about proving your residency. We have already mentioned that if you are an EU, EEA, or Swiss citizen, no problems should take place. You can register for a residency in Portugal and the visa is not going to be necessary in this case. You can proceed with registering in the local town hall. Here is the list of the documents you shouldn’t forget to take with you when going on an appointment:

  • A passport;
  • EHIC card.

Also, you will be asked to state where you currently live. Once you come there, the attendant will assist you with filling out the necessary form. And, everyone completing such a procedure has to pay a fee of 16 euros.

If you are not considered to be an EU citizen, in this case, you should receive a residence permit first of all, it will give you the right to reside in Portugal. One of the best options to do this is dealing with the Golden Visa or Passive Income.

The second step can be described as finding the proper expert who will help you to apply for the NHR. Naturally, you can do all this on your own but this way is not the most secure one though. Also, in each case, the request is different. The matter is that the person applying for NHR may have various goals of doing so, and. To find the most optional solution, it is better to stick to the assistance of real professionals.

Step three is about getting a NIF. It is a tax identification number that has to be obtained by everyone planning to work and live in Portugal. It consists of 9 digits and is used in order to fulfill the tax purposes.

To receive NIF, you should go to the local government finance office. In this case, you ought to present proof of residence (it may be a rental contract or a utility bill), and a visa/residency certificate. And, do not forget to take a passport with you!

Step four is registering as a Portuguese tax resident. It can be done in the local government finance office too.

The fifth step is actual applying for the NHR status. In case you make a decision to do so without anybody’s help, the wisest idea is to follow the government’s financial portal. Registration on the portal has to be completed first because without it, you won’t be able to start.

In its turn, to do this, you should have the following stuff ready:

  • Your NIF number;
  • A fiscal and email address;
  • A phone number.

Do not forget that this info has to be just the same as the one you stated when applying for NIF. Providing a secret question and answer is also going to be vital.

Once the procedure is over, you are about to receive a password that will be sent to your email address. Then, you will be able to enter the portal using it. After this, registering the application for the NHR regime will be real!

This process is linked to completing the special application. Here are the documents that should be used for this:

  • Tax returns for the past 5 years;
  • A rental contract or proof of the property’s buying in Portugal;
  • A declaration that will indicate that you haven’t been a tax resident in Portugal speaking of the five previous years.

This is it! As you can see, not that much is required here. That is why we strongly believe that you will manage to do everything without any problems.

Here is one more important note: we have already stated that you need to provide proof of habitual abode by the 31st of December. And, it will be necessary to apply for NHR before March 31stst.

Your application is about to be considered within two weeks. This is the average time. After this period, you will receive a notification of whether it was accepted or declined.

NHR regime for UK residents

The first thing you should be aware of is as follows: Portugal has a double tax agreement with Great Britain. Therefore, the taxation is not about to change for the British citizens if we speak about the NHR regime. 

The potential problems you may face can be linked to the residency. Anyway, those who have already secured it will be fine. The government of Portugal has stated that even after Brexit, the British who live in Portugal legally, are about to retain all of the rights they have at this very moment.

NHR regime for the US citizens

If you are a citizen of the USA, you can apply for NHR without any major issues. These are the requirements that have to be met in order to complete the process successfully:

  • You haven’t been a resident of Portugal for the past five years;
  • You live abroad;
  • You want to move to Portugal.

You will be considered a resident in case you stay in Portugal for 183 days a year (or there is an alternative: you have a primary home here).

How to get NHR with E-residence?

We have already mentioned that you can stick to professional assistance when trying to apply for NHR. One of the ways to do so is ordering the services of E-residence. In this case, an experienced legal team will take proper care of getting your application ready which will increase your chances to succeed greatly. By the way, with E-residence lawyers, you will be able to save a lot of money and time which is the most precious and incomparable resource!

The first step you should take if you would like to receive such assistance is arranging a consultation with the expert. All of them have very relevant experience and are well aware of the IRS, personal income taxes, and non-habitual residence peculiarities. The cost of consulting is 350 euros.

In order to apply for NHR online with the help of E-residence, you will need the following stuff:

  • A residence permit in Portugal or an EU passport;
  • NIF (a Portuguese tax identification number);
  • A proof of fiscal address in the country (it might be your own property or you can also suggest a rental contract that is registered in Tax Authorities of Portugal);
  • Bank statement (the smallest sum here is 9500 euros) that will be relevant for the appointment day (one or two days before).

It is going to cost you 500 euros to receive the E-residence services that will include an actual request for NHR status and the professional support of the legal department. Also, if you proceed with the whole process with the team, handling the request will take from two to three weeks.

We wish you the best of luck with applying for NHR! Hope you won’t face any major difficulties and will be able to benefit from the regime soon!