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Portugal’s 0% Non-Habitual Tax Residency: A Complete Q&A Guide

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Share This Post had a session with Lexidy’s verified Immigration & Tax Experts: Gabriel and Joana. They delivered highly valuable and incredible information about Portugal’s Non-Habitual Tax Residency.

What is Portugal’s Non-Habitual Tax Residency?

It is a special tax regime created by the Portuguese government mostly to attract new residents to Portugal. It foresees several tax benefits, from 0% tax to exemptions on income and some reduced rates. 

What is the Portuguese government’s motivation for this program? What are they trying to achieve by offering this program?

It was actually created when Portugal was in an economic crisis, so it was created to attract capital, people, and investments to the country. It became a success and the government decided to maintain it as it is also attracting talent, especially in terms of tech. 

Who is the target audience for Portugal’s NHR Regime? 

There are two profiles for the Non-Habitual Tax Residency in Portugal: passive income earners like passive investments, and high-level professionals, to say, artists and people who are athletes and receive a lot of income due to their image. Also tech talents and people who have high-added value like engineers or doctors. 

Is Portugal’s NHR Regime for certain citizens or for anyone? 

The main requirement is actually to transfer the tax residence to the courtroom, so it is for anyone who can come to Portugal and become a real tax resident. 

Are there any minimum income requirements you must have before you apply for the NHR Regime in Portugal?

No, the benefits will depend on the type and the source of the income, so with these two pieces of information a tax advisor can go to the list of benefits, and see if it is applicable for you. 

Basically, there are no restrictions on applying and getting the status, but the benefits you can get from the program vary according to your income source. 

What are the main benefits of Portugal’s NHR? 

  • You have an exemption (zero percent tax) on all foreign passive income.
  • Zero percent tax on dividends and interest; for example, if you come to Portugal and have houses in the US, or if you receive dividends from shares. 
  • You could also have exemptions on active income. 
  • If you only get pensions, you get a reduced rate of 10%. 

What types of income are exempt on Portugal’s NHR? Where do I not have to pay any taxes?

0% tax rate on dividends, royalties, rents. However, it is important to consider that a tax advisor needs to analyze the treaty between countries. (In 90% of cases, people are exempt). 

What is the process if I decide to apply for the Non-Habitual Tax Residency in Portugal? 

Since you need to be a tax resident, you first need to be allowed to live in Portugal. You need to revise your visa options unless you are an EU citizen for which you do not have any problems. Otherwise, you can apply for the D7 visa, or the D2 visa. 

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