The What, Why & How of Portugal’s Non-Habitual Resident (NHR) Regime

If you’re someone who was born outside of Portugal and now lives there or someone who is considering moving to Portugal, there are some pretty big tax breaks available to foreign residents of Portugal. The following will explore everything you need to know about these tax breaks and qualifying for them. Of course, everyone’s financial standing and needs are going to be different. It’s a good idea to take this information to your preferred accountant or immigration lawyer to receive a breakdown that’s specific to you and your current situation.

Why Portugal?

You might be wondering why a person would want to live in Portugal. It’s a country that has laid low in the news as of late, so it might be a nation you’re unfamiliar with outside of your grade ten history class.

Portugal is a country on the smaller side that sits on the Liberian Peninsula, in southwestern Europe, just to the west of Spain. It’s one of Europe’s oldest countries, having been continuously inhabited since prehistoric times. Portugal has a long history, from its Celtic peoples to the Roman empire, followed by invasions from Germanic peoples and then Islamic rule under the Moors, who were expelled as a result of the Reconquista. It became a maritime and commercial empire during the 15th and 16th centuries, at which time massive colonializing efforts spread the Portuguese language around the world.

Known for its brilliant Mediterranean climate, fantastic food, stellar music, and rich culture, Portugal is a favorite tourist destination for countless people. Gorgeous turquoise beaches and colorful medieval villages built into cliffs make Portugal one of the most charming places you can spend your time.

The country also has some outstanding social services, including its Health Service, which is available to all full-time residents and taxpayers in the country. Public hospitals and inexpensive private clinics, as well as well-stocked pharmacies, is a given in Portugal.

As well, compared to many other European countries, Portugal is fairly affordable. Typically expenses can be expected to be somewhere around $2800 per month. Additional people often cost much less than this per month, as the initial estimate contains $1300 for a furnished two-bedroom apartment. Please note: these prices are anticipating living in one of the major metropolitan areas; this can cost a lot less in smaller cities and villages.

Simple Visa Applications

Portugal is eager for new residents and has made their visa application process smooth. You’re able to spend up to 90 days in the country without a visa, but if you want to stay longer, you’ll be applying for a D-7 Residence Visa. You’ll need to meet a few standards, including:

• proving that you can provide for yourself (generally $1000 per month per person),
• having an international health insurance policy that will provide for you between arrival, and
• qualification for Portugual’s Health Service, and providing a clean criminal background check.

The process usually takes about eight weeks and should be started no less than three weeks before you plan to depart and no more than 90 days before you plan to depart. The cost itself is under $150 plus any courier fees needed.

Why Do Taxes Matter?

Understanding the world of taxes can dramatically alter your take-home pay at the end of each tax season. Every country in the world has its own taxation system, and within those systems, many provinces, territories, and states have additional tax systems. While it might be tempting to simply ignore taxes until the week before tax season, as there’s nothing you can do about them, standard financial wisdom suggests otherwise.

Learning about the tax system you work within can allow you to make minor changes to your work and earnings in order to reap major savings later on. People can save hundreds, thousands, and even tens of thousands of dollars if they understand their tax system.

Beyond this, you have another reason to pay attention to your local taxation system. If you make a mistake, you could end up being fined a fair amount. You could even face jail time if it’s believed you were evading some or all of your taxes. It’s in your best interest to understand what’s expected of you from a legal standpoint so you, your family, and any businesses you run can be properly managed and cared for.

The Portugal NHR Regime

The NHR Regime in Portugal is the non-habitual tax regime. The goal of Portugal’s NHR tax regime is the attraction of foreign residents to the country. Benefits include:

• 0% tax on foreign income (capital gains tax and rental income not included),
• 0% tax on crypto (provided you’re not using crypto as your main source of income and you’re not a trader),
• 0% tax on dividends for foreign companies, and
• 0% tax on wealth.

You can expect a 10% tax on your foreign pension (which in and of itself might be a stellar deal depending on where your pension is from) and a 20% tax on freelancing (note: this is a cap, meaning you can’t be taxed more than 20% on freelancing, but could be taxed less). Basically, on almost all sources of foreign income, you have a tax exception for an entire decade.

Are There Minimum Stay Requirements?

One of the most wonderful parts of this regime is that there’s no minimum stay required. You can live in Portugal as long or as short as you’d like, and you still qualify, provided you meet the other criteria.

Value-Added Jobs

Visa sponsorship in Portugal is particularly straightforward for anyone who has what’s deemed a high-added-value job. While some of these jobs are standard for easy visas, like general practitioners, computer programmers, and biotechnology researchers, many of their most sought-after jobs are not what you’d expect. Singers, sculptors, musicians, painters, architects, archaeologists, designers, and performing and television artists are all on Portugal’s desirable jobs lists.

The above information should have clarified the basic structure of Portugal’s NHR tax regime, why it’s important, and who it might interest. Again, it’s always a good idea to speak to an immigration lawyer and an accountant when making major decisions regarding international residency and foreign taxation options. With a little planning and some wonderful visa and tax regimes, you could find your money going a lot further, all the while surrounding yourself with a beautiful new culture and country to explore.