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New table of high value-added activities for NHR in Portugal
Ordinance 230/2019 of 23 July has updated the list of value-added activities that are relevant to the tax regime for non-habitual residents (NHR) of Portugal. This is an in-depth revision of the table that had been in effect since 2010, in order to align the activities listed in it with the needs of the national labour market, due to the demand for specialized skills and the recruiting difficulties that have been experienced, in addition to aligning the table with the codes of the Portuguese Classification of Professions (PCP).
Tax regime for non-habitual residents of Portugal
The tax regime for non-habitual residents was created in 2009, at a time when because of the need to promote Portugal’s growing international profile, the government decided it was the right time to use the international taxation instruments available to it to attract professionals working in high added-value activities to Portugal.
Among other aspects, this regime allows for net income from categories A and B earned in Portuguese territory by non-habitual residents while performing high value-added activities to be taxed at a special rate of 20%, as well as stipulating that category B income earned abroad from those same activities shall be exempt from taxation in Portugal, as long as certain conditions have been met.
List of value-added activities
Accordingly, January 2010 saw the approval of a table with a list of activities that served as the basis for the tax regime for non-habitual residents. This table was based on the economic activities codes (EAC), but did not directly correspond to them. The new Ordinance has now adopted a model that directly corresponds with and is based on the Portuguese Classification of Professions (PCP), which allows for more immediate clarification of interpretive doubts regarding the scope and range of each of the activities listed in the table, given that for each professional code there is a description of the duties that are considered examples of professions that have been included and excluded.
As such, anyone who asks to be registered as a non-habitual resident in Portugal as of 1 January 2020 (except if they make the request by 31 March with reference to 2019) shall be subject to the following activities table:
I - Professional activities (PCP codes):
112 - General director and executive manager of a company;
12 - Directors of administrative and commercial services;
13 - Directors of production and specialized services;
14 - Directors of hotel, restaurant, commercial and other services;
21 - Specialists working in physical sciences, mathematics, engineering and similar technical fields;
221 - Physicians;
2261 - Dentists and stomatologists;
231 - Teachers at universities and higher learning establishments;
25 - Specialists in information and communication technologies (ICT);
264 - Authors, journalists and linguists;
265 - Creative artists and performing artists;
31 - Intermediate level science and engineering technicians and professionals;
35 - Information and communication technologies technicians;
61 - Market oriented farmers and qualified agricultural and livestock workers;
62 - Market oriented qualified forestry, fisheries and hunting workers;
7 - Qualified industrial, construction workers and craftsmen, including qualified workers in the fields of metallurgy, metalworking, food processing, wood manufacturing, clothing production, handicrafts, printing, manufacture of precision instruments, jewellers, artisans, electricity and electronics workers;
8 - Operators of installations and machines and assembly workers, namely fixed installations and machine operators.
The workers included in the aforementioned professional activities shall possess at least a level 4 qualification on the European Qualifications Framework or a level 35 on the International Standard Classification of Education, or they must have five years of duly proven professional experience.
II - Other professional activities:
Administrators and managers of companies that promote production investment, provided they are allocated to eligible projects and have contracts granting tax benefits signed in accordance with the Investment Tax Code approved under Decree-Law no. 162/2014 of 31 October.
For more information regarding the tax regime for non-habitual residents of Portugal, please contact us.