July 8, 2021
Tax benefits for non-habitual residents in Portugal grew 44% in 2020 compared to the same period last year to 900 million euros.
This is the highest value since these tax benefits for non-habitual residents (NHR) were created in 2009. Entrepreneurs, professionals, pensioners or high net worth individuals may take advantage of Portugal’s non-habitual resident (NHR) tax regime, thereby possibly enjoying a life free of income tax.
The tax expense taxes that the State does not charge or return to taxpayers- was of 1467.9 million euros in 2020. This amount represents an increase of 27.3% compared to 2019.
Non-habitual residents will be taxed at a flat rate of 20% in respect of employment income (Category A) and self-employment income (Category B) arising from high-value activities of a scientific, artistic or technical nature.
The Non-Habitual Residency tax regime is available to all individuals becoming tax resident in Portugal (if they were not Portuguese tax residents in the previous 5 years), and the status is granted for a period of 10 consecutive years.
In addition, non-Portuguese source income may be exempt under some specific conditions (eg, pensions, dividends and interest that may be taxable on the source State).
The advantages of the NHR Program in Portugal include:
- Income tax: special individual tax treatment on incomes for a period of 10 years
- Tax Exemption on almost all foreign sources of income
- Compared to other Portuguese income tax rates up to 48%, this program offers a 20% flat rate on certain Portuguese-source incomes (from determined professions and from self-employment)
- Opportunity to have tax residency within the EU in a white-listed country
- Exemption of tax on gifts or inheritance to family members
- No wealth tax
- Free cash remittance to Portugal