October 8, 2021
According to the Portuguese Chamber of Commerce in the UK, there were 46,238 Britons living in Portugal in 2020, which figure has been acclaimed as the highest ever seen, SchengenVisaInfo.com reports.
“Several factors have played into the increase, from Brexit to Portugal’s non-habitual resident tax scheme, which allows many foreigners (including Britons) who move to Portugal to benefit from huge reductions in their income tax bills,” the Chamber of Commerce noted in the press release.
In the 2020, the Portuguese government introduced a ten per cent tax rate, exempting individuals with certain sources of income from overseas (including pensions) from paying tax on that income.
Under NHR, most income from a foreign source is exempt from Portuguese taxation for ten consecutive years, as is income that is taxable in another country. British expats can potentially receive most UK rental income, capital gains on real estate, interest, dividends and non-Portuguese employment income tax-free.
What is non-habitual residency?
The Portuguese Personal Income Tax (PIT) Code sets a special tax regime for new tax residents provided that same have not been deemed resident therein the previous five years – the non-habitual residents tax regime (NHR).
- Benefit from a special personal income tax treatment over a 10-year period
- Enjoy tax exemption on almost all foreign source income
- 20% flat rate for certain Portuguese source incomes (from specific professions and from self-employment), as opposed to normal Portuguese income tax rates of up to 48%
- A tax exemption for inheritance to direct family members
- No wealth tax
- Free remittance of funds to Portugal
Non-EU/EEA/Swiss citizens who wish to apply for the NHR regime in Portugal can also take advantage of Portugal’s Golden Visa program. Also, investors who acquire residency through the Golden Visa program can then become eligible for the NHR regime in Portugal
Disclaimer: Prior to making any investment, potential investors should consult with their own legal, investment, accounting, regulatory, tax and other advisors in order to make an independent evaluation of those potential investment options and opportunities that best fit their own criteria and investment profile and capacity.