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Tax Benefits > Non Habitual Resident

Tax Benefits > Non Habitual Resident

The NHR - Non Habitual Resident, enables an exceptional tax treatment for qualifying of revenues received from a Portuguese source for RNH and can still benefit from tax exemptions on income from foreign sources.
The taxation for a period of 10 years, at a fixed rate personal income tax of 20% on labor income earned in Portugal and the absence of double taxation in the case of pensions and labor dependent and independent earned abroad, are some of the advantages .

Who can be considered NHR in Portugal?

To be considered "Non Habitual Resident " one must become a tax resident in Portugal who has not been taxed as such in the last 5 years (before classifying as Portuguese tax resident). Individuals who meet the requirements listed below will be eligible to register as NRH, and have the right to be taxed as such for a period of 10 consecutive years, which may be renewed.

How to get the NHR in Portugal?

For the purpose of acquiring the status of "Non habitual Resident", the Portuguese Tax Authority acknowledges the submission of additional documentation (certificate of tax residence in another country in the previous 5 years), it will only be necessary if there are doubts about the veracity the information provided by the expatriate.
To achieve this status , you must meet the following requirements:

  • Have resided outside the Portuguese territory for the last 5 years
  • The must have become resident for tax purposes in Portugal, according to the rules established under the IRS Code, the year in which the scheme is intended to be applied
  • Request assignment status at the time NHR registers as a tax resident in Portugal in the local tax office (for which he/she should reside in Portugal for more than 183 consecutive or interpolated days, or having stayed for less time, in December of that year, it is assumed that their intention is to maintain and occupy as usual resident)

What rate and incidence of taxation are applicable to income earned in the country?

In the case of dependent or independent work, the applicable tax rate is 20% (which adds, since 2013, a surcharge of 3.5%). The tax levied on the income arising from high value added activities with scientific, artistic or technical information, including:

  • Auditors
  • Architects, engineers and related
  • Artists, actors and musicians
  • Doctors, dentists, teachers and psychologists
  • Professions, technical and similar
  • Senior executives
  • Investors, managers and administrators, when integrated in companies that have been covered by contractual arrangements provided for in the Investment Tax Code

In that case applies to exemption from taxation to income earned abroad by RNH in Portugal?

In the case of Pensioners and Retirees, when income is taxed in the State in accordance with convention to eliminate double taxation concluded between Portugal and the individual's state (these are subject to the criteria provided in the IRS Code) , provided that the proceeds are not considered obtained by Portuguese sources.
In the case of income arising from employment, where such are taxed in the State in accordance with convention to eliminate double taxation concluded by Portugal with that State . Provided that such income is taxed in another country with which Portugal has not signed any agreement to eliminate double taxation , and provided that the proceeds are not considered as obtained in Portuguese territory by the criteria of Article 18 of the IRS Code.
In the case of income from self-employment (from provision of high value-added services, scientific, artistic or technical character, or from intellectual or industrial property , income from capital, income from property or income from capital gains and other capital gains), where income may be taxed in the country, territory or region of origin, in accordance with convention to eliminate double taxation concluded by Portugal with that State. Or when there is no agreement to eliminate double taxation concluded, may be applicable to OECD Model Convention (considering the views and reservations expressed by Portugal) and since the country, territory or region of origin does not have privileged tax regime, and since income are not considered as obtained in Portuguese territory by the criteria of 18th Article IRS Code.

 

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