Non-habitual resident status Portugal 2024
General note: the non-habitual tax resident (“NHR”) status was revoked from January 1st, 2024 onwards, remaining however applicable under some exceptional circumstances (grandfather clause), namely:
- For those already benefitting from it;
- For those who have become Portuguese tax residents until December 31st, 2023;
- For those becoming Portuguese tax residents until December 31st, 2024, provided they also hold one of the following elements:
- A promissory work contract or a work contract, or a promissory secondment contract or a secondment contract, whose functions are to be performed in Portugal, signed until December 31st, 2023;
- A lease contract or any other contract granting the use or possession of a Portuguese property, signed until October 10th, 2023;
- A reservation contract or a promissory contract for the acquisition of a right over a Portuguese property, signed before October 10th, 2023;
- An enrolment or registration for dependents in an educational establishment located in Portugal, completed until October 10th, 2023;
- A residence visa or permit valid until December 31st, 2023;
- An application procedure for a residence visa or permit which started until December 31st, 2023, before the Portuguese competent authorities (SEF), namely through a request for appointment before the same or an actual appointment for submission of the application for a residence visa or permit, or through the submission of such application; and
- For those who are members of the household of an individual complying with any of the above.
In addition, a new program was created and applies from January 1st, 2024, related to scientific research and innovation (called tax incentive for scientific research and innovation), however, being available only for those performing an eligible activity and under the approval of some specific Portuguese public agencies.
The below article refers to the NHR status, namely, for those who are covered by the above-mentioned grandfather clause.
1. What is the NHR status?
The NHR is a special tax regime that offers personal income tax exemptions or reductions for those who have not resided in Portugal in the previous 5 years, applying to employment income from eligible activities, passive income and pensions, from foreign sources (or even Portuguese, in the case of employment income from eligible activities) under specific conditions.
Note that in 2020, the NHR regime underwent a minor change – namely, pensions became no longer tax exempt, becoming subject to a 10% instead.
2. Who is eligible and can qualify as NHR?
To be eligible and qualify for the NHR status you will have to fulfil 3 requirements:
- Not having resided in Portugal in the previous 5 years;
- Obtaining Portuguese tax residence, either through the purchase or rental of property;
- Register as NHR before the Portuguese tax authorities.
3. How to obtain NHR status in Portugal?
To become a Portuguese tax resident, you must:
- Stay in Portugal for more than 183 days; or
- Have available housing in conditions that is assumed to be used as your main permanent residence. You can proceed with the purchase of a property, however, renting is a possible solution to ensure tax residence.
4. When to apply for NHR status in Portugal
You may apply for the NHR status after obtaining Portuguese tax residence, until March 31st of the year following that in which such Portuguese tax residence was obtained.
5. What are the tax exemptions and benefits of the NHR regime in Portugal?
Firstly, under the NHR regime, foreign employment income may be tax exempt in Portugal, provided some conditions are met. Furthermore, domestic employment income and services income earned by qualified professionals moving to Portugal may be taxed at a reduced 20% rate, provided that their professional activity is one of those listed as high value-added under Portuguese legislation (Ordinance no. 230/2019, of July 23rd, available in Portuguese at https://dre.pt/home/dre/123407856/details/maximized).
Secondly, NHRs may benefit from tax exemptions on their foreign passive income (e.g., dividends, interest, rental income), under certain conditions, which is especially relevant for individuals living out of this income.
Thirdly, foreign pension income may be taxed at a 10% flat rate.
6. What other benefits exist in Portugal?
- No wealth tax;
- Inheritances and donations, between ascendants and descendants (e.g., father to son, or grandfather to grandson, or son to mother) and between husband and wife or life partners, are tax exempt (except for donations involving real estate, which are subject to a 0.8% stamp duty). Other inheritances and donations (e.g., uncle to nephew or unrelated persons) are taxed at a flat rate of 10% on assets located in Portugal (or 10.8% in the case of those involving real estate);
- For citizens of countries that are not members of the EU or the Schengen area, special visa programs are available.
7. How long does the NHR status last?
Once obtained, the NHR status lasts for 10 tax years counting from the year in which Portuguese tax residence is obtained.
8. List of high value-added activities within the NHR regime
In 2019, a new list of high value-added activities was introduced, and it became effective in 2020.
I – Professional activities (codes of the Portuguese Classification of Professions – CPP):
112 – Managing director and executive manager, of companies;
12 – Directors of administrative and commercial services;
13 – Directors of production and specialized services;
14 – Directors of hotels, restaurants, commerce, and other services;
21 – Specialists in physical sciences, mathematics, engineering, and related techniques;
221 – Doctors;
2261 – Dentists and stomatologists;
231 – University and higher education teachers;
25 – Specialists in information and communication technologies (ICT);
264 – Authors, journalists, and linguists;
265 – Creative and performing arts artists;
31 – Technicians and science and engineering professions, of intermediate level;
35 – Information and communication technologies technicians;
61 – Market-oriented skilled agricultural and animal production workers;
62 – Market-oriented skilled forestry, fishery, and hunting workers;
7 – Skilled industrial, construction, and crafts workers, including particularly skilled metalworkers, metalworkers, food processing, woodworkers, garment workers, handicraft workers, printing workers, precision instrument makers, jewellers, craftsmen, electrical and electronics workers;
8 – Plant and machine operators and assembly workers, in particular, fixed plant and machine operators;
II – Other professional activities:
- Directors and managers of companies promoting productive investment provided that they are assigned to eligible projects and have contracts for granting tax benefits concluded under the Investment Tax Code, approved by Decree-Law No. 162/2014, of October 31st.
In this article, we’ve asked Lisbon-based tax lawyer Rita Botelho Moniz to shed some light on the frequent questions we (and she) receive about the Portuguese tax system and more specifically the NHR regime.
9. How can GuestReady help me?
At GuestReady, we are in contact with people who have chosen Portugal to set their primary home address daily and have the need to sometime in our portfolio of furnished apartments as a temporary residence before they find their dream homes.
Making a quick decision about buying or renting a property for the long term can have negative consequences. By taking the time to explore the area of interest and the surrounding areas, you can ensure that you make a good decision.
GuestReady is available to help you find a property for you and your family. We guarantee your maximum comfort while looking for the ideal property for a prosperous long-term investment. Our properties in Lisbon, Porto, Braga, Setúbal, and the Algarve are fully furnished and ready to welcome you.
We rely on our partners to provide you with the best possible assistance in legal and fiscal matters. If you have more questions, feel free to contact Rita Botelho Moniz directly via Linkedin or email, who will be happy to assist you.
