How to Get NHR tax Status in Portugal and What Are the Benefits

Non-Habitual Resident is a unique tax category for new tax residents in Portugal (NHR). The new tax residents are not required to pay taxes on their worldwide income after they have been granted NHR status. The tax rate for income generated in Portugal is a flat 20%. By obtaining NHR status, foreign investors can minimize their tax obligations and get a Portugal Golden Visa.

What is Non-Habitual Resident tax status in Portugal?

The NHR programme assists foreigners in reducing their tax obligations in Portugal. For a period of ten years, this favorable tax status is granted. The Portugal NHR programme, which has been in operation since 2009, allows new tax residents the choice to pay less in taxes.

You must first get a Portuguese residence permit and spend 183 days there each year in order to be eligible to apply for NHR status.

Wealthy people can potentially get a residence visa under the Portugal Golden Visa Program by making investments in the country’s economy. The programme provides eight investment alternatives, one of which is purchasing real estate. In Portugal, those who obtain a residency permit are free to live there, work there, do business there, and pursue their education there.

Benefits of the NHR in Portugal

1. Pensions received from foreign nations are subject to a 10% flat tax. If the receiver relocated his tax residence to Portugal and obtained non-habitual resident status after April 1, 2020, the rule is applicable. Portuguese tax people who do not have non-habitual resident status pay pension tax at a progressive rate that can reach 48% as income tax.
2. The fixed tax rate on work income. Professionals with advanced degrees who operate as independent contractors or get salaries from Portuguese corporations may be subject to a 20% income tax. Income tax is often assessed on a progressive system, with rates ranging from 0% to 48%.
3. No taxes on gifts, inheritance, and wealth are paid by non-habitual residents in Portugal.
4. If income from a foreign source is produced in a nation that has a Double Taxation Agreement (DTA) with Portugal, there is no tax on such income. Income from foreign sources that is already subject to tax in the nation of origin is excluded from income tax. Non-habitual residents are exempt from paying tax in Portugal on dividends, interest, royalties, capital gains, rental income from properties outside of Portugal, and wages earned abroad. If taxes are paid in the country of origin, international income and retirement benefits are not subject to taxation in Portugal.

Who can benefit from the NHR program

The Non-Habitual Resident tax status is only available to new tax residents of Portugal. In order to do so, the candidate must meet at least one of the requirements:

• Have lived in Portugal for more than 183 days in the past year;
• Purchase residential real estate in Portugal, which is used as a permanent residence;
• Should have worked for a corporation with a Portuguese registration on its aircraft or ship as of December 31 of the reporting year;
• Have worked for the Portuguese government in the previous 12 months at one of its foreign missions.
• Highly qualified professionals like architects, engineers, geologists, artists, top managers, etc.

How to get the Non-Habitual Resident tax status

1. Registration of the NIF taxpayer number: It can be done in person by going to the tax office in Portugal, through email, or through a representative. Depending on how the application is submitted, the process to register a taxpayer number might take anywhere from 30 minutes to 5 working days. A tax representative distributes an NIF to citizens and residents of nations outside the European Union.
2. A change of tax residence: This happens when a person spends more than 183 days a year in Portugal. It is not required to stay in the nation for six consecutive months; rather, the entire time of stay is taken into account, allowing you to extend your 183-day limit over the entire reporting year. A person also qualifies as a tax resident if Portugal is his primary residence and he owns a residential property there. You must get in touch with the Portuguese tax authority to formally alter your tax residence.
3. Obtaining the preferential tax status: By March 31st of the year following the year you change your tax residency to Portugal, you must apply for favorable tax status. Both the prior tax residence nation and the year that the tax residency certificate in Portugal was obtained are specified in the application.
4. Contact FlyingColour Immigration for professional guidance on citizenship/residency programmes and which nation is best for you. We provide assistance with global residency, citizenship, and investment migration programmes. for more information, contact our experts at +971 529933135, send an email at op2@flyingcolour.com, or visit our website at https://flyingcolourimmigration.com/