NHR Portugal Program: All You Need to Know

The Non-Habitual Resident (NHR) Tax program in Portugal is a popular tax scheme that provides foreign residents or investors residing in Portugal with lower tax rates and exemptions on certain taxes. Launched in 2009 and later updated and improved in 2020, the tax regime aims to attract foreign investors from all across the world to become Portuguese tax residents and invest in the country.

Over the years, more than 10,000 citizens from various countries have already applied for this program and are currently enjoying the benefits of the scheme as NHR tax residents. So, if you are looking to optimize your tax planning and investments, you can apply for the Portugal NHR scheme.

NHR October update

The Portuguese Government submitted the State Budget Proposal for 2024, and it includes the changes that determine the end of the Non-Habitual Resident (NHR) regime. 

This is the initial version, which will still be subject to debates and votes, but which, given the majority that the Government party holds in the Assembly, cannot and should not be ignored. In effect, the proposed change has the following consequences from 01/01/2024: 

• Anyone who already has the NHR at the time of entry into force maintains the regime under the same terms until completing ten years of benefiting from the status
• Anyone who meets the conditions for registration as non-habitual residents on 31 December 2023, as well as holders of a residence visa valid on that date, will be able to register within the deadline available (until 31 March 2024) and benefit from the scheme. 

The final vote on the budget law will take place on 29 November 2023. Until then, we will closely monitor the evolution of this topic. You can find more information in this article by Global Citizen Solutions, our residency and citizenship division: Is the Portugal NHR Program Ending?

The NHR Portugal Tax Regime

The Portugal Non-Habitual Resident Tax regime is designed to appeal to individuals across the globe.

The tax scheme aims to boost Portugal’s economy in return for offering reduced tax rates. The regime in Portugal was first initiated in 2009 and ensures considerable tax benefits for eligible applicants.

In certain cases, this scheme grants a 20 percent tax rate on income and also allows tax exemptions for private-sector pensioners. As we mentioned, owing to its benefits and popularity, there are more than 10,000 NHR tax residents in Portugal.

If you are looking to move to Portugal, you can check out our article on the cost of living here: Cost of Living in Portugal.

NHR Portugal benefits

• You become a tax resident in Portugal (a white-listed EU country)
• You enjoy special tax benefits for ten years
• There is no wealth tax
• Free remittance of funds to Portugal
• Tax exemption on all foreign income
• 20 percent flat rate on some Portuguese income
• Tax exemption on gifts for family members
• There is no minimum stay requirement

Portugal NHR and double taxation agreements

Portugal’s NHR relationship with Double Taxation Agreements (DTAs) is one of the key highlights of the Portugal NHR program. Under a Dobule Tax Agreement, most categories of your income are taxed in the country of the source of income. However, in most cases, countries do not levy personal income tax on non-residents as they want to make their jurisdictions open for foreign investments.

Similarly, Portugal, under the NHR tax regime, does not tax foreign-sourced income of non-habitual tax residents as their income is already taxed in the source country. This makes it lucrative for foreign investors to invest in Portugal as they can obtain foreign income tax-free if their country of origin has a Double Tax Agreement with Portugal.

Currently, Portugal has signed a Double Taxation Agreement with 79 countries. In other circumstances, the Organization for Economic Co-operation and Development (OECD) model tax convention can be used to determine the application of taxes.

Here is a list of countries that have Double Tax Agreement (DTA) with Portugal:

NHR Portugal: Eligibility

Non-Habitual Resident Portugal requirements are the following:

• The applicant must be a resident of Portugal. This can be either through the Portugal Golden Visa program or by being an EU/EEA/Swiss citizen, or by having a D7 Visa, amongst other valid visa types.
• The applicant must not have been a Portuguese tax resident in the five years before obtaining a residence permit in Portugal.
• Applicants must note that to maintain their residence permit in Portugal, the individual must have a place to stay in Portugal as of 31 December of that year. The home must also be habitual.

NHR Portugal Tax Rates on Foreign-sourced Income

Owing to DTAs, NHR tax residents in Portugal are fairly tax exempt. If a resident is receiving income from a country that has a double taxation agreement with Portugal, then they will not be taxed in Portugal.

Employment income tax

Under the NHR tax regime in Portugal, foreign source income is tax exempt or is taxed at a low rate of 20 percent if it comes under the list of qualified professions.

Self-employment income tax

• The income is taxed at a normal progressive rate unless it comes under the eligible profession category.
• This income is subjected to social security contributions unless the resident already contributes to another social security system.
• It is optionally taxed at a flat rate of 20 percent. A tax resdient can choose to pay the usual progressive rate if the amount is less than this.
• Tax exempt if the money earned is from an eligible profession and comes from a foreign country with a DTA with Portugal.

Royalties and income from financial assets

• You will be tax exempt if your income source is from a country that has a DTA with Portugal.
• You will be tax exempt if your foreign source income is not from a country with a DTA but is not a blacklisted tax haven.
• If your foreign source income is from a country that is a blacklisted tax haven, then tax will be levied at 28 percent or 35 percent.

Tax on Real estate income and capital gains

Consider the following when it comes to tax on real estate income and capital gains.

• You will be tax exempted if your real estate income or capital gains comes from a country with a DTA.
• You will be exempted from paying tax if your real estate income/capital gains are from a country without a DTA but is not a blacklisted tax haven.

NHR Portugal capital gains from the disposal of securities

• Tax is levied on capital gains from the disposal of securities like shares, bonds, etc., at an optional rate of 28 percent or 35 percent if the source of gain is from a blacklisted tax haven.

Pension income tax

• Since March 2020, pension income is taxed at a flat rate of 10 percent.

Tax on Portuguese Source Income Under the NHR Tax Regime

Employment income Tax

If your employment falls under the eligible professions category, then tax is payable at the usual progressive tax rates.

If your employment is categorized under one of the qualified NHR tax regime professions, then you will need to pay an optional tax rate of 20 percent. Otherwise, you can also pay the usual progressive tax rates, which are less.

Self-employment income tax

If your employment falls under the eligible professions category, then tax is payable at the usual progressive tax rates.

If your employment is one of the qualified NHR tax regime professions, then you need to pay an optional tax rate of 20 percent. Otherwise, you can also pay the usual progressive tax rates.

Real estate income and capital gains

You need to pay a rental income tax charged at an optional rate of 28 percent, or you can pay by the usual progressive tax rates.

Net capital gains are taxed at 50 percent, which is charged per the usual progressive rates.

Pension income tax

Pension income tax is usually taxed at 10 percent.

Portuguese tax table for 2023

Things to Keep in Mind

In order to apply for the NHR regime in Portugal, you need to first register yourself as a resident of Portugal.

• Applicants for the NHR Portugal tax regime must have proof of habitual residence by 31 December, and the application needs to be submitted before 31 March.
• You will need to wait for around two weeks for the approval/rejection of your application.
• The NHR status in Portugal is granted for a period of ten years. You are considered a non-habitual resident from the date on which you become a resident of the country.

NHR Regime for UK Citizens

Since Portugal has a double taxation agreement with the United Kingdom, the taxation for British citizens remains the same under the NHR tax regime. The Portuguese government has mentioned that British citizens living in Portugal as residents will continue to exercise all their rights after Brexit.

NHR Regime for US Citizens

If you are a citizen of the United States, then you can apply for the NHR Tax regime. To obtain NHR tax status, you need to live abroad, you should not have been a resident in Portugal within the last five years, and you should want to live in Portugal. To register yourself as a resident in Portugal, you will need to stay in the country for 183 days a year or should have a primary home there.

Portugal Golden Visa Program

The Portugal Golden Visa program was launched in 2012 and remains one of the most popular and attractive residency-by-investment programs in the world. This five-year residency permit program offers non-EU residents residency in the country in return for an economic investment.

Important note: The Portugal Golden Visa real estate options are coming to an end. If you are interested in applying for this investment pathway, you should begin your application now. You can read our article Portugal Golden Visa Ending to stay updated on the developments. 

Portugal Golden Visa: Benefits

• You can obtain residency in return for a minimum investment of €250,000
• You can qualify for a European passport after five years of residency. With Portuguese citizenship, you can enjoy visa-free travel to 174 countries.
• The country has a thriving economy and offers a lucrative real estate market.
• You have the option to become a non-habitual resident and enjoy tax exemptions.
• The stay requirement is very short
• You can include your family in your Golden Visa application

Benefits for family members

One of the most attractive benefits of the Portugal Golden Visa program is that you can include your family members while applying for a resident permit in Portugal. The Portugal Golden Visa offers a second residency in Portugal and provides an array of benefits to the applicant as well as their family members.

You can include the following family members in your application for the Portugal Golden Visa:

• Your spouse or your legal partner.
• Your children under the age of 18.
• Dependent children under the age of 26 as long as they are single and enrolled as full-time students or can prove that they are financially dependent on their parents.
• Parents of either spouse, if over the age of 66 (or 55 and dependent on the applicant).
• Siblings under the age of 18 from either spouse or the partner if they are legal guardians, as determined by the courts.

Portugal Golden Visa: Requirements

An applicant needs to meet the following criteria to be eligible for the Portugal Visa Program:

• The applicant needs to be either non-EU, non-EEA citizen, or non-Swiss.
• The applicant should make a minimum investment of €250,000. They can choose from the various investment routes that are available.
• The applicant should have no criminal record.
• The applicant should spend a minimum of seven days in Portugal for the first year, then no less than 14 days each subsequent two-year period – this is the minimum stay requirement.

Portugal Golden Visa Processing Time

The processing time for your Portugal Golden Visa application is relatively short.

Year 0 – Portugal Golden Visa is issued, which is valid for two years

Year 2 – The residence permit needs to be renewed. After renewal, it is again valid for two years

Year 4 – The residence permit needs renewal and is valid for the next two years

Year 5 – You can request both permanent residence or citizenship, or you can renew your Golden Visa in year 6

Portugal Golden Visa: Investment Options

To obtain a residence permit in Portugal, you need to make an economic investment in the country. The thriving economy of the country attracts foreign investors from all around the world to invest in Portugal. Investment options include the following:

Residential real estate

You can purchase residential real estate in designated interior areas of Portugal that cost a minimum of €500,00,0 or €350,000 if you are investing in a rehabilitation project. If your residential property is located under the ‘low density’ area category, then a 20 percent discount will apply. You can learn more by reading our article: Low Density & Interior Eligible Areas for the Portugal Golden Visa 2023.

Commercial real estate

You need to invest a minimum of €500,000 if you are planning to purchase a commercial real estate. There are no location restrictions if investing in commercial property. If you are investing in a rehabilitation project, you need to invest a minimum amount of €350,000. If your commercial property is located under the ‘low density’ area category, then a 20 percent discount will be applicable.

Buy real estate in Madeira or the Azores

You can invest a minimum of €500,000 if you are planning to purchase real estate in the islands of Madeira or the Azores. If you are investing in a rehabilitation project, you need to pay a minimum amount of €350,000.

Read our article: How to Buy a Property in Portugal to know more.

Fund subscription

You can make a minimum contribution of at least €500,000 to a qualified investment fund.

Capital transfer

You can choose to make a capital transfer of a minimum amount of €1.5 million.

Scientific research

You can contribute a minimum amount of €500,000 to Science and Technology research.

Job creation

Company incorporation and creation of ten jobs that will amount to the value of at least €500,000.

Donation

You can support the arts or reconstruction of national heritage by making a minimum investment of €250,000. This is reduced to €200,000 if investing in a low-density area.

Important note: Recently, Portugal updated its Golden Visa Program and rolled out certain changes, especially in the investment criteria section. To know more about the changes, you can read our article: Understanding the Portugal Golden Visa Changes 2022

Portugal Golden Visa: Documents Required

• Portuguese Golden Visa application form
• Your copy of a valid passport and travel documents
• Deed or contract of the purchased property or signed promissory contract with proof of your deposit payment
• Declaration from your bank in Portugal authenticating the transfer of funds
• Health Insurance proof in Portugal (only required if you reside in Portugal)
• Certified copy of your criminal certificate or a police clearance letter from your country of origin
• A completed form allowing SEF (Serviço de Estrangeiros e Fronteiras) to get a copy of your Portuguese criminal records
• Declaration from you confirming compliance with the investment requirements
• Documents showing a good relationship with the Portuguese Tax and Customs Authority and Social Security systems. These can be issued 45 days prior to your online application.
• A receipt as proof that you paid the application processing fee

An applicant must note that the certificates of criminal records or police clearance letters should have been issued no more than 90 days before submitting the application. For all other certificates for submission, the timeline is 180 days.

Legalizing Portuguese Golden Visa documents

All your Portugal Golden visa documents and the application form must be legalized and translated into Portuguese with the help of a certified translator. You must note that your documents can be legalized either by the Portuguese Consulate or by the Apostille of The Hague Convention.

Translation of Portugal Golden Visa documents

In addition to your original documents, you also need to submit a copy of your documents translated into Portuguese. This can be done in the following ways:

• It can be translated by a translator who is accredited by the Portuguese Consulate.
• By getting the translation certified by a Portuguese lawyer.
• By the issuing country’s consulate in Portugal.

Non Habitual Resident Portugal Tax Calculator

You can calculate your NHR tax based on your income in our Portugal NHR tax calculator.

Portugal Visa-Free Countries

Goldcrest: How We Can Help You

Goldcrest is a buyer’s agent that is based in Lisbon. We provide expert, impartial advice on real estate investments and how to buy property in Portugal. From scouting out the perfect property through to property acquisition, we have you covered.

If you are looking to purchase property in Portugal, don’t hesitate to get in touch. Our team is here to discuss your needs, assist you with your real estate doubts, and offer insightful expertise and strategic advice. We are focused on securing the best deal for you.

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