Tax Law

Non-Habitual Resident

Tax
Non-Habitual Resident

For whom it is intended:

Foreign or Portuguese citizens who have not been considered tax residents in Portugal in the last five years and who become tax residents in Portugal.

The Non-Habitual Resident Status (NHR) is a special tax scheme that, for ten years, allows the relief of personal income tax (IRS) on income originating in Portugal, from qualified work and taxable income or pensions, as well as the exemption from tax on income generated outside Portugal (except pensions).

NHR holders can also benefit from other tax benefits that Portugal offers, namely inheritances and donations, between ascendants and descendants (e.g. parent to child, or grandparent to grandchildren, or child to parent) and husband and wife, are exempt from said tax. Other inheritances and gifts (such as uncle to a nephew or unrelated persons) are taxed at a flat rate of 10% on assets located in Portugal (other assets will not be subject to tax).

Requirements:

- Not having been considered a tax resident in Portugal in the last 5 years;
- Be considered resident in Portugal, which occurs if:
1. Staying in Portugal for more than 183 days
or
1. Buying or renting a property in Portugal (having available housing in conditions that make it possible to presume that it will become a permanent residence).
- Be an income earner, entitled to:
1. Taxation at the rate of 10 per cent of income earned abroad from pensions (category H)
2. The exemption of income obtained abroad from employment, self-employment, capital, property income and real estate capital gains, intellectual or industrial property
3. Taxation of income obtained in Portugal at reduced rates in the case of high value-added activities* (e.g. 20% for income from dependent or self-employment and 28% for income from capital and property).
* Occupations considered to have high added value are:
- Market-oriented farmers and qualified workers in agriculture and livestock production as well as forestry, fishing and hunting.
- Architects, engineers and similar technicians
- Visual artists, actors and musicians
- Auditors
- Authors, journalists and linguists
- CEOs and executive managers of companies
- Directors of administrative and commercial services
- Directors of production and specialised services
- Directors of hotels, restaurants, shops and other services
- Specialists in physical sciences, mathematics, engineering and related techniques
- Information and Communication Technology Specialists
- Doctors and dentists
- Plant and machine operators and assembly workers, including fixed plant and machine operators
- Teachers in university and higher education;
- Psychologists
- Liberal professions, technicians and asylees
- Qualified industrial, construction and craft workers
- Investors, directors and managers

Transitional regime for 2024

The State Budget for 2024 approved a very significant change to the NHR – NHR 2.0, leaving out many of the potential beneficiaries of this regime, and, because this change was so significant, it provided for a transitional measure that allows citizens who had already started their immigration process before 31 December 2024 to still apply for non-habitual resident status in 2024 and benefit from it for 10 years under the same conditions as indicated above.

The transitional regime maintained the requirement that in order to obtain NHR, the applicant must not have been considered a tax resident in Portugal in the 5 years prior to applying for NHR status.

It also determined that the NHR continues to apply, under the same conditions as the previous regime, in the following situations:

Persons who were already registered as non-habitual residents before 1 January 2024, and for as long as the 10-year period of the tax benefit has not expired;
Taxpayers who, on 31 January 2023, meet the conditions to be considered resident for tax purposes in Portuguese territory:

Stay in Portugal for more than 183 days; or
Buying or renting a property in Portugal (having an available residence in conditions that suggest it will become their habitual residence).

Taxable persons who become resident for tax purposes by 31 December 2024 and who declare, for the purposes of their registration as a non-habitual resident, that they have one of the following:

Promise or contract of employment, promise or secondment agreement signed until 31 December 2023, where the duties are to be carried out in Portuguese territory;
Rental contract or other contract granting the use or possession of real estate in Portuguese territory signed until 10 October 2023;
Reservation contract or promissory contract for the acquisition of a right in rem over real estate in Portuguese territory signed before 10th October 2023;
Enrolment or registration for dependents in an educational establishment domiciled in Portuguese territory, completed by 10 October 2023;
Residence visa or residence permit valid until 31 December 2023;
The procedure for granting a residence visa or residence permit, initiated by 31 December 2023, with the competent authorities, in accordance with the applicable immigration legislation in force, namely by requesting an appointment or actually making an appointment to submit an application for the granting of a residence visa or residence permit, or by submitting an application for the granting of a residence visa or residence permit;
Is a member of the family household of the taxable persons referred to in the previous paragraphs.

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Tax Law

Non-Habitual Resident

For whom it is intended:

Requirements:

Transitional regime for 2024

Get in touch with us for further information.

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