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Currently Europe’s best tax regime for HNWI and UHNWI providing a very favourable tax treatment for the first 10 years of residence.
Best existing tax regime in Europe for individuals?
Yes. The Portuguese NHR is a real alternative, in a favorable tax environment. By becoming a Portuguese non habitual tax resident, an individual will be able to accrue their wealth in a white listed friendly tax environment, to dispose of their assets benefiting from tax exemptions, to
pass on their wealth or estate without inheritance or gift taxes and/or to enjoy their retirement without tax leakage on their pensions.
If an individual is considering working in Portugal under this regime, and provided his employment or self employment income arises from a “high value-added activity of a scientific, artistic or technical nature”, comprised of a list of activities, there will a taxation of only 20% – compared to Portugal’s current top rate of income tax that can easily reach 48%.
The list of high value-added roles is subject to change but currently includes: 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 of companies in certain circumstances.
Tax treatment of foreign source income
In general, if the person coming to Portugal registers as a NHTR, income from a foreign source such as dividends, interest, or capital gains will be exempt from tax in Portugal provided:
– It may be taxed in the source state under double taxation treaty rules,
– It may be taxed in the source state under the terms of the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention, if no double tax treaty exists, and is not regarded as arising in Portugal.
This can originate real tax saving opportunities that
should be taken into consideration when structuring income and assets.
In several cases, there is the real possibility of securing a non-double international taxation of income, thus avoiding tax leakage of income and assets.
The specific case of pensions:
State and Occupational pensions will be liable to a flat 10% tax in Portugal provided they are not deemed sourced from Portugal.
Portugal does not levy inheritance tax, and the Portuguese equivalent – “Stamp Duty” – only applies to assets in Portugal.
Assets and bank accounts balances located outside Portugal are simply not taxed.
On the other hand, there is a tax exemption from Stamp Duty for gifts or inheritances to spouse, descendants or ascendants regarding Portuguese assets.
There is no wealth tax in Portugal.
How to apply?
– The person must not have been tax resident in Portugal for any of the previous five tax (calendar) years;
– The person must meet the criteria to be tax resident in Portugal in the year he/she applies, as well as every other year for the 10-year period;
– The application has to be approved by the Portuguese tax authorities, but it is a straightforward process, currently electronically, and it has no costs, as Portugal does not levy any fee for the application.
Provided all the documentation is in order an approval should be secured within 72 hours from the date of filing of the application, after the person becomes a Portuguese tax resident and obtains a password to have access to the internet portal of the tax authorities.