The Non-Habitual Residence (NHR) regime, also known as NHR Portugal, was created in 2009 to attract qualified professionals and also individuals with passive income to the country. The program grants fiscal benefits to foreigners who meet the requirements set by Decree-Law No. 249/2009. In this article, we will explain what the NHR regime is and who can apply for non-habitual residence status. If you’re considering moving to Portugal, don’t miss reading this article to learn how to obtain this benefit.
What is the RNH Portugal regime?
RNH is a tax regime in Portugal that offers fiscal benefits to individuals who become tax residents in Portugal or Portuguese citizens who have been emigrated for more than 5 years. The RNH regime was created in 2009 under the Fiscal Investment Code (Decree-Law No. 249/2009, September 23) with the aim of attracting qualified professionals engaged in high-value-added activities or intellectual property, as well as retirees, thus encouraging foreign investment in the country.
By meeting the requirements of the Non-Habitual Residence regime, foreigners (or Portuguese citizens who have been emigrated for more than 5 years) can enjoy privileged tax treatment for a consecutive 10-year period.
IMPORTANT: To be approved for the RNH application by Portuguese authorities, the applicant must not have been taxed as a tax resident in Portugal in the five years prior to the request. Additionally, the applicant must spend at least 183 days per year in Portugal or have a permanent residence in Portugal.
Tax Benefits of Non-Habitual Residence
Many may think that the NHR regime brings tax exemption for a 10-year period while residing in Portugal. This information is not accurate.
What exists is an incentive (tax benefit) where the expatriate will pay less taxes during the program’s duration. However, taxes will still need to be paid!
It is important to highlight that once the 10-year regime period is over, the benefit ceases to exist.
The good news is that the tax benefit is considerable, and during the regime period, the foreigner will pay tax rates much lower than those applied to Portuguese citizens.
The tax benefits of the non-habitual residence regime typically include a fixed tax rate of 20% on foreign-source income, including salaries, pensions, and investment income. This rate may vary depending on each situation, so we always recommend seeking the guidance of lawyers and accountants in Portugal.
Portuguese-source income remains subject to the normal income tax rates in Portugal, which can range from 14.5% to 48%. Learn everything about income tax in Portugal in this article.
IMPORTANT: This article is for informational purposes only. Laws in Portugal can change at any time. It is essential to seek the assistance of accountants and lawyers in Portugal to know the best way to apply for the NHR regime. We at CAP International can recommend accountants and lawyers in Portugal to assist you.
You can also directly access the Portal das Finanças in Portugal and download the PDF with the complete explanation
Who is Non-Habitual Residence (NHR) for?
This tax regime is highly attractive to individuals with high incomes who wish to relocate to Portugal. Many foreigners who move to Portugal under this regime choose to invest in luxury properties in the country, as well as local businesses and other business opportunities.
However, it is important to remember that Non-Habitual Residence is not a form of tax evasion, and it is necessary to comply with all tax laws and regulations in Portugal. It is always advisable to seek the guidance of a tax consultant or lawyer before making any investment decisions or relocating to Portugal under this tax regime.
Are you considering moving to Portugal?
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