Tax regime for non-habitual residents

Competitive Benefits:

  • Taxes linked to the IRS on personal income made in Portugal are at a 20% fixed for a 10-year period of time.
  • There are no double taxes on self-employment, employment or pension income derived abroad.

How can a person gain status as a non-habitual resident?

  • Not being a Portugal resident for the past 5 years;
  • Go to a local tax office and register as a Portugal tax resident. For this to be possible, you have to stay in Portugal for 183 non-consecutive or consecutive days. If less time has passed, you must have a home by December 31st of that year that has been fully lived in as a residence.
  • Request your non-habitual resident status during registration for a Portugal tax resident or at least by March 31st of the following year after becoming a Portugal tax resident.

What is the rate of taxation and how is it applied to domestically obtained income, after the status for non-habitual resident has been granted?

The applicable rate of taxation is 20% for both self-employment and employment cases. However, in 2013 there was also a 3.5% surcharge.

This taxation covers income made through highly skilled fields such as the following scientific, technical or artistic fields:

  • Engineers, architects and related fields
  • Auditors
  • Actors, musicians and fine artists
  • Technicians, liberal professions and other related fields
  • Psychiatrists, dentists and doctors
  • Teachers
  • Directors, managers and investors when connected to companies that are covered by certain rules written in the Investment Tax Code
  • Senior managers

Non-habitual resident registration grants you the right of being taxed over a 10-year period after becoming a Portugal tax resident.

After the status of non-habitual resident has been granted, when is earned foreign income exempt in Portugal from being taxed for non-habitual residents?

Read the following information, as this pertains to retired people and pensioners:

  • The source state taxes the income under an agreement between the state and Portugal to eliminate double taxations.
  • Income could be considered as not attained through a source in Portugal, as stated in the IRS Code for personal income tax.

When the income comes through a source of employment the following could apply:

  • The state source for the income taxes it, according to the rules for eliminating double taxation agreed upon between the state and Portugal.
  • If the income comes from a state that Portugal does not have an agreement with for eliminating double taxation, it will be taxed according to the IRS Code's article 18, if the income was not earned in Portuguese territory.

When the income is gained through self-employment through highly skilled technical, artistic, scientific fields governed by the provision of services or through investment income, industrial or intellectual property, capital gains, equity increases or rental income, the taxation could be as follows:

  • This income could be taxed by the region, territory or country in which it was made in an agreement to stop double taxation.
  • In the event that no agreement was made to stop double taxation, the OECD agreements could be applied after adding any reservations or observations stated by Portugal are taken into account. In addition, the source region, territory or country is lacking its own privileged tax system, and if the income is not obtained on Portuguese territory, according the IRS Tax Code's article 18. All these facts will figure into this taxation.

Taxation of Income of Non-Habitual Residents

For further information on the non-habitual resident scheme contact us at: