Are you planning on moving to Portugal? If so, then Portugal could be a tax haven for you!
Portugal introduced the Non Habitual Resident Regime also known as NHR in 2009, which provides beneficial tax treatment to attract families to move to Portugal. The Non-Habitual Residence regime is open to those in employment, as well as retirees who could potentially find their foreign pension income tax free for the first 10 years if a Double Taxation Agreement is in place. Portugal has signed double tax treaties with 67 countries so far. Of these 67, 61 are already in force.
The non-habitual resident regime represents a major step forward in making Portugal a tax free jurisdiction for individuals in receipt of pension income. Individuals who declare their foreign income here can also benefit from this preferential regime such as business and professional income, interest, and dividends. This attractive regime also covers income deriving from high value-added activities, which benefit from a special tax rate of 20%. The following activities are regarded as “high value”: Architects, engineers and similar technicians; fine artists, actors and musicians; auditors; doctors and dentists; professors; psychologists; liberal professions, technicians and similar; investors, and directors and managers. The list could change later to allow more activities.
Who Is Eligible?
Any individual who becomes a tax resident in Portugal in accordance with Portuguese Law i.e. who has its habitual domicile 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, and has not been taxed in Portugal, as tax resident, in the previous five years.
Can I Rent Instead Of Purchase?
Yes. Rental is an option under the non habitual resident regime. As occurs when you purchase a property, if you are renting a property you may be required from tax authorities to provide evidence of your address in Portugal, which can be done through providing your rental contract. Do I Have To Make A Statement Of Assets? When applying for the NHR regime, you will not need to provide any statement of assets. This will also not be required when filing your first tax return. In each tax return you will only be required to provide information on your annual income.
Other Tax Benefits of Relocating to Portugal
There are other amazing tax benefits when relocating to Portugal. Your tax burden can be reduced even further because of Portugal's beneficial treatment for life insurances. Companies operating in Portugal and having license to operate in Madeira International Business Centre (MIBC) benefit from a five percent flat corporate income tax. This rule is valid until the end of 2020 and it involves all kinds of transactions, including ones with non-residents.