Non-Habitual Residency

Non Habitual Residency Update (PT 2024 Annual Budget)

1. Summary
The Portuguese Parliament recently pre approved the State Budget for 2024 that shall terminate the Non Habitual Residency ( Scheme in Portugal.)
These changes will put an end to the tax benefit for persons with High Valued Professions and people with pension income who wish to become tax residents in Portugal.

2. Non Habitual Residency
This approval means that in 2024, the NHR scheme will no longer be in place for new applications meaning that applica tions for the yea r of 2024 will no longer be accepted.

3. Approved applications
This Law does not jeopard ize a pproved applications.

4. Solutions
Although the NHR scheme will come to and end residents may still benefit from the Double Taxation Agreement between Portugal and other States that s hall still be on effect.

5. Conclusions
In order to secure your eligibility applications must be submitted until the 30 th December of 2023 (When approved this under this scheme the benefits will run for 10 years.)
This is information that does not have any other inte ntion b ut to guide and to have a better understanding of the current news. In any event, please feel free to contact us so that we can ascertain
your profile and provide a solution in a more accurate way.

Competitive advantages:

No double taxation for pension incomes or for employment and self-employment income obtained abroad for a period of 10 years. The pension also needs to come from the private sector in the Country of origin.

For a period of 10 years, taxation related to IRS (personal income tax) on labour income in Portugal is at a fixed rate of 20%

Foreign Pensioners  who wish to establish permanent residence in Portugal and did not have tax residence in Portugal in the previous five years, enjoy a total tax exemption for a period of 10 years.
Those who benefit from a pension paid in a country with which Portugal has established adouble taxation agreement, will no longer pay taxes in their country of origin because he is now a Portugal Tax resident and also will not pay taxes in Portugal under the special legal exemption.

Under the regime’s rules, employment and self-employment income derived from “high value-added activities of a scientific, artistic or technical nature” (included in a list of activities published by the Portuguese Government) earned by non-habitual residents in Portugal will be taxed at a flat rate of 20%.

Additionally, the regime also establishes a tax exemption for foreign-sourced income, such as, employment income, self-employment income, rental income, interest, dividends as well as other investment income, under certain specific conditions.

There shall be considered as resident in the Portuguese territory any person who, in the year to which the income relates:

(i) Stays there more than 183 days, with or without interruption;

(ii) Having stayed there for less than 183 days, has at his own disposal on 31 December of that year a dwelling place in such conditions that it may be inferred that there is the intention to keep and occupy it as an habitual address;

(iii) Be a member of a family unit, since whom, the 31 December of the year that the income relates, one of the elements of this family unit is considered a resident for tax purposes in Portugal.

Furthermore, tax wise, Portugal offers extraordinarily comparative advantages, namely:
No gift tax; No inheritance tax (between parents, sons, husband and wife).