The Non-Habitual Residents tax regime

This regime was introduced in 2009 and provides special tax rates and rules for qualifying individuals. The main requirements to qualify are that the applicant must be a Portuguese tax resident, not having been tax resident in the preceding 5 years. The status of non-habitual tax resident has a duration of 10 years.

How is this processed?

A request for non-habitual resident status must be made to the Portuguese tax authorities when you apply for your tax residency or until 31^st March of the year following the year in which you qualify as a tax resident.

You are considered to be tax resident if:

• You have remained in Portugal for more than 183 days in a period of 12 months; OR
• You have remained in Portugal for less than 183 days, but possess a permanent home in Portugal on 31^st December.

What are the benefits?

The benefits of the NHR status depend on the type of income and source of the income.

Income obtained in Portugal

Income relating to Category A (salaries) and Category B (business and professional income) derived from high value added activities which have been considered as such by the Portuguese government, is subject to a 20% flat rate. The remaining Portuguese source income is subject to the general tax rates.

Income obtained abroad

Income obtained abroad is exempt from income tax in the following situations:

• Category A (salaries) – if it is taxed in the source State in accordance with the Tax Treaty (where there is no Treaty, if the income is effectively taxed in the source State and it is not deemed as derived in Portugal).
• Other income (business and professional income derived from high value added activities, rental income, investment income and capital gains) - if the income can be liable to tax in the country of source in accordance with the Tax Treaty or the OECD Model Tax Convention, and it is not derived in Portugal nor obtained from a blacklisted country.
• Category H (pensions) – if they are taxed in the source State in accordance with the Tax Treaty (where there is no Treaty, if the income is not deemed as derived in Portugal).

Frequently Asked Questions (FAQ’s)

Who can apply for the Non-Habitual Residents status?

To be eligible, the applicant must be a Portuguese tax resident, not having been tax resident in the preceding 5 years.

Does the term “Non habitual” mean that I have to be tax resident outside Portugal?

The term used to define this tax status can be confusing. However, to benefit from this regime, you are required to have your tax residency in Portugal and to live in Portugal for more than 183 days per year.

Do I have to purchase a property in Portugal?

You do not need to purchase a property in Portugal in order to apply for non-habitual resident status. It is sufficient to lease a property, for example.

How long does the application take?

The application may take some weeks to be processed by the Portuguese Tax Authorities, but usually it takes only a few days.

How long does this status last?

The status of non-habitual tax resident has a duration of 10 years.

When does the Portuguese tax year run from?

The Portuguese tax year coincides with the calendar year and runs from 1^st January to 31^st December. The application can be made from when you take up residence in Portugal, up until 31^st March of the following calendar year.

Do I need to apply for residency?

EU/EEA/Swiss nationals need to obtain a residence certificate from the local municipality.

Non-EU/EEA/Swiss nationals must obtain a residence authorization from the Border Agency (SEF).