Portuguese Non-Habitual Residency Status

The Non Habitual Resident regime was introduced in Portugal in 2009. One of the principal objectives of this regime was to attract individuals and their families to Portugal by making it beneficial from a tax perspective to become tax resident in Portugal.

The Portuguese Non-Habitual Residency status enables those who become tax resident in Portugal, and are accepted as NHR, the opportunity to receive qualifying income tax free both in Portugal and in the country of source of the income.

The NHR regime represents a major step forward in making Portugal a tax free jurisdiction for individuals in receipt of qualifying non-resident income. Qualifying income includes pension, dividend, royalty and interest income. Certain types of salaries, provided they are paid from a non-Portuguese source, can also be exempt from tax.

The NHR regime is aimed primarily at two groups: retirees, receiving pensions from abroad, and employed and self-employed workers, in professions of high added value. Such professions include: architects, engineers, artists, auditors, doctors, university teachers and company managers, among others. But, while retirees are exempt from taxation on pensions obtained abroad, workers in high added value professions pay a tax rate of 20% on earnings in Portugal.

Requirement to benefit from this preferential treatment is to become a Portuguese tax resident in accordance with Portuguese Law i.e. who has his habitual residence in Portugal or who spends more than 183 days in Portugal in the tax year, which runs from 1st January to 31st December or has a dwelling in Portugal at 31 December of that year with the intention to hold it as his habitual residence, not having been a tax resident in Portugal in the previous five years.

This status is granted for 10 years.