Portugal’s NHR Status: Tax Benefits and Application Guide
Explore Portugal's NHR status, offering tax advantages and a straightforward application process for eligible individuals.
Portugal’s Non-Habitual Resident (NHR) status offers favorable tax conditions, attracting retirees and professionals in high-value-added fields. Understanding NHR is essential for those considering relocation or investment in Portugal.
Eligibility Criteria for NHR Status
To qualify for NHR status, applicants must not have been tax residents in Portugal for the five years before applying. Establishing tax residency involves spending over 183 days in Portugal within a calendar year or having a permanent residence by December 31st. The NHR status is appealing to professionals in fields like architecture, engineering, arts, and medicine, who must provide evidence of their qualifications. Retirees with foreign pension income can also benefit, provided they show proof of foreign pension sources.
Tax Benefits of NHR in Portugal
The NHR regime offers a flat 20% personal income tax rate on income from high-value-added activities, lower than standard rates. Foreign-sourced pension income may be taxed at a reduced 10% rate. Many types of foreign income, such as dividends and royalties, may be exempt from Portuguese taxation, especially with a double taxation agreement. Portugal does not impose a wealth tax, and inheritance tax is largely avoided for assets passed to immediate relatives.
Application Process for NHR
Obtaining NHR status involves securing residency in Portugal through visas like the D7 or Golden Visa. After establishing residency, applicants must register as tax residents, obtain a Portuguese tax identification number (NIF), and submit their NHR application online. The process requires proof of non-residency for the previous five years and evidence of professional qualifications or pension income. Consulting a tax advisor can help ensure a complete and accurate application.
Duration and Renewal of NHR Status
NHR status is granted for ten consecutive years, providing ample time to benefit from its tax advantages. Maintaining compliance with Portuguese tax regulations is essential. Regular consultations with tax advisors can help navigate changes in personal circumstances or tax laws, ensuring continued eligibility and benefits under the NHR regime.