Non-Habitual Residency Program Portugal (NHR)
The Portuguese Non-Habitual Resident (NHR) tax regime is an extremely successful program that offers lucrative tax incentives to foreign residents. The NHR regime was initiated in 2009, updated in 2020, and is a fantastic initiative for those looking to optimize their tax planning and reside in Portugal.
Essentially, the non-habitual resident regime in Portugal grants eligible applicants a flat tax rate of 20% on income of Portuguese origin (as opposed to the usual Portuguese taxes with a maximum rate of 48%).
A key feature of the Portuguese non-habitual resident tax regime lies in its relationship with Double Taxation Agreements (DTAs). DTAs allow most categories of income to be taxed in the country of income source, and under the NHR tax regime in Portugal, most foreign-source income earned by non-resident individuals will not be taxed in Portugal because the income can be taxed abroad. This allows non-habitual residents to receive foreign income completely tax-free.
The main objective of the non-habitual resident regime in Portugal is to attract high-value residents to Portugal, whether they receive pension income or work in qualified professions. Professions of high cultural and economic value benefit from generous tax exemptions under the non-habitual resident regime (they are considered to bring added value to Portugal).
Important note on the NHR 2024:
Prime Minister António Costa recently announced that the state intends to end the
Non-Habitual Residents Programme (NHR) in 2024 and will no longer accept
taxpayer registrations from next year.
However, the Prime Minister wasn’t clear on whether he intended to put an end to
the whole scheme and how the new guidelines would be applied, and he
guaranteed that those who already benefit from the scheme would not be
affected.
Likewise, anyone who registers by the end of 2023 will be able to take advantage
of the scheme for the following 10 years under the conditions that currently apply.
If you want to take advantage of the NHR programme, it is advisable to consider
registering as early as possible.
