Those who are planning to relocate to Portugal are naturally curious to know how much they will have to pay in taxes. In general terms, Portugal is a high-tax country but there are legal ways to reduce your tax burden when you live there. How can you avoid paying taxes on your global income, on royalties, dividends and in addition to that, make use of tax deductions in Portugal? You can acquire the status of a Non-Habitual Resident (NHR) with the help of Q Wealth experts and then you will not have to pay taxes on your global income for 10 years!
The NHR regime has been available since 2009 in Portugal. The NHR status makes you global income tax-free for ten years. Foreign pensions were not originally taxed either but they are now.
You have to be a tax resident of Portugal before you can apply for the NHR status. This means that you have to have a legal residence permit and spend the best part of each year in Portugal.
It must be admitted that the task of acquiring the NHR statues can be rather complicated. Most difficulties arise not at the stage of applying for the status but prior to that: at the stage of acquiring legal residence in Portugal, opening a bank account, and buying/ renting property there.
If you would like to live in Portugal, one of the most beautiful European countries, without paying taxes on your global income, please request our assistance! We will be happy to offer complex services to you.
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Who can qualify for the HNR status?
You have to meet the following requirements if you are to be eligible for non-habitual residence in Portugal:
- You have to spend more than 183 days per year in Portugal and pay nothing in taxes there for 5 years prior to applying for the NHR status.
- You have to have residential accommodations in Portugal (you can own them or rent them);
- File an application for the NHR status to the local fiscal and customs authorities.
Please bear in mind that our Portuguese partners can help you sign a 1-year rent agreement with the property owner in Portugal. Such an agreement will give you the legal grounds for applying for non-habitual residence but you will not have to use the property if you don’t want to do so.
What tax reductions do Non-Habitual Residents enjoy in Portugal?
Non-Habitual Resident is a status that gives you access to the following tax exemptions and deductions in 2023:
- The NHR status holder does not pay taxes on his/ her income from sources in other countries unless these counties are on international or Portuguese ‘black lists’.
- Income obtained in Portugal is taxed at 20% while the maximum income tax can be as high as 48% in Portugal.
- Foreign pensions are taxed at 10%.
- Royalties, rent income, interests and dividends from foreign sources are not taxed in Portugal.
Please note that in case your home country does not have a double taxation avoidance agreement with Portugal, the standard OECD tax convention.
Please follow the link if you would like to find out how you can live in Portugal without paying taxes.
How can you acquire NHR status in Portugal?
To become a non-habitual resident of Portugal, you first have to become a tax resident of the country without paying anything in taxes for 5 years. You have to do the following to acquire the tax resident status:
- Live in the country for more than 183 days per year;
- Acquire a NIF (local tax identification number);
- Have a place to stay in Portugal (a long-tern rental agreement will suffice).
The same requirements apply to obtaining a legal residence permit in Portugal.
How can a foreign national become a legal resident in Portugal?
The following methods of acquiring legal residence in Portugal are available to foreigners in 2023:
- Registration of a business company or a sole proprietorship in Portugal (including Madeira, a low-tax region of the country) allows acquiring residence permits for the company founder and his/ her family members. A D2 visa would be a good option for freelancers, the self-employed and medium- and large-scale business owners who would like to reside in Europe.
- A job contract with a Portuguese employer.
- A digital nomad visa is a short-term residence permit (up to one year) for those working remotely.
- D7 visa for financially independent persons. A D7 visa is valid for two years and it can be extended when the period expires.
- Legal residence in Portugal for outstanding artists, scientists, scholars, top-managers, and highly qualified specialists.
- A student visa for those you attend schools and universities in Portugal.
- Legal residence permit for family reunification. This type of residence permit is also available to spouses and children of those residing in Portugal on D2 visas.
You can file an application for Portuguese citizenship after you have legally resided in the country for 5 years. Please use our professional assistance in acquiring foreign citizenship by investment!
Documents required for obtaining the NHR status in Portugal
Q Wealth experts in cooperation with our Portuguese partners will gladly help you meet all the requirements mentioned above if moving to Portugal is on your mind. You will have to collect the following documents if you would like to obtain the status of a Non-Habitual Resident in the country:
- Tax identification number (NIF);
- Proof of having residential accommodations in Portugal (the property ownership certificate or a long-term rent agreement (at least for one year);
- Contact information – email address and phone number;
- Confirmation of the fact that you have been paying nothing in taxes in Portugal over the last five years;
- Tax declarations from other countries for the last five years.
We have to note that not every foreign national living in Portugal can qualify for the NHR status. If you have moved to Portugal, opened a company there, and made a profit, you will have already paid some taxes in Portugal. This means that you are not eligible to apply for the NHR status in the nearest five years. Pay the tax only once in Portugal and you will cease to be qualified for the status for five years.
How can Q Wealth experts help you in the matter?
Q Wealth maintains close working contacts with partners in Portugal. We also have back offices in several jurisdictions and we provide support to those clients who would like to register a company in a foreign country, open a foreign bank account, buy foreign property, or obtain legal residence/citizenship of a foreign country.
We will gladly provide the following services to you to help you acquire legal residence in Portugal and become a non-habitual resident of the country:
- Company registration in Madeira and the Azores.
- Legal residence in Portugal for those registering companies and sole proprietorships in the country.
- Purchase of real property in Portugal to qualify for a long-term visa and open a bank account in the country.
- Bank account opening in Portugal.
- Notary services, apostille, tax number acquisition, and many other things.
Our expert consultations are free of charge!
For our assistance in acquiring the HNR status in Portugal, we charge 5,500 EUR.
For our assistance in acquiring a NIF (Portuguese tax number), we charge 250 EUR.
For our assistance in opening a bank account in Portugal, we charge 4,000 EUR.
If you would like to use any of our services, please do not hesitate to contact us in any way that you prefer.
How long does the NHR status remain valid?
The NHR status is valid for 10 years. It is impossible to extend it, in accordance with the Portuguese legislation.
At what rate does a freelancer have to pay the income tax if he/ she is a NHR status holder?
If you work for foreign employers, no taxes are payable in Portugal. If you work for local clients, the tax is 20% (which is 28% less than what a habitual resident may have to pay).
Who can benefit from obtaining the NHR status in Portugal?
— Highly-qualified specialists working in Portugal: their tax on local income is going to be 20% and their tax on global income is going to be 0%.
— Company managers and independent IT specialists pay the taxes at the same rates.
— Pensioners living in Portugal but receiving their pensions from abroad pay the tax at a reduced rate of 10%.
— Self-employed persons and freelancers whose sources of income are located outside Portugal can pay nothing in taxes there for 10 years. However, they will be taxed in the countries where the income is made in most cases.
— Residents of Portugal who receive dividends, royalties, interests, or income from rent in countries other than Portugal.
