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The non-habitual resident (NHR) regime was revoked in 2023. However, in some cases, it is still possible to register as a NHR, provided that the requirements of the transitional regime are met. Find out more by reading our article.

 

Created in 2009, the non-habitual resident (NHR) regime enshrines a set of benefits in terms of Personal Income Tax (IRS) for so-called "non-habitual residents". This regime was repealed at the end of 2023. However, anyone who becomes a tax resident in Portugal by 31 December 2024 and is covered by one of the transitional provisions listed below can still register as a NHR:

  • Have initiated, by 31 December 2023, a procedure for granting a residence visa or residence permit, with the competent authorities, in accordance with the applicable immigration legislation in force, namely by requesting an appointment or actually making an appointment to submit an application for the granting of a residence visa or residence permit, or by submitting an application for the granting of a residence visa or residence permit; or
  • Have obtained, by 31 December 2023, a valid residence visa or residence permit; or
  • Have signed, by 31 December 2023, a promise or employment contract, promise or secondment agreement, the performance of whose duties is to take place in national territory; or
  • Have, by 10 October 2023, signed a lease or other contract granting the use or possession of real estate in Portuguese territory; or
  • Have, by 10 October 2023, entered into a reservation contract or promissory contract for the acquisition of a right in rem over real estate in Portuguese territory; or
  • Have, by 10 October 2023, enrolled their dependents in an educational establishment domiciled in Portuguese territory.

The change of residence for tax purposes must always be made by 31 December 2024. However, a distinction must be made between two hypotheses for registering as an NHR under the transitional regime:

  • If you register as an NHR by 31 March 2025, the benefits take effect in 2024 and remain valid up to and including 2033;
  •  If registration as a RNH is made after 31 March 2025, the benefits will only take effect from the year of registration and always only until 2033 (i.e. there is no extension of the end date of the regime due to non-compliance with the deadline provided for in the previous point).

 

Non habitual resident in Portugal - Concept

The non-habitual tax regime is available for those who have not been deemed resident on Portuguese territory during the five years prior to the year they intend to change residence to Portugal and be taxed as a non-regular resident taxable person.

An individual should register this status with the Taxpayer Registry of the Tax Services. Under these terms, the non-habitual resident acquires the right to be taxed as a non-habitual resident for the period of 10 consecutive years. For each of those years, the individual is to be considered a resident for fiscal purposes.

However, if during this 10 year period, the taxpayer did not choose to file as a non-habitual resident (or was not considered to be a resident for fiscal purposes) for one or more of the consecutive years, they may resume this status for the remainder of the established period.

 

Regime and Tax Benefits

The net income in categories A (Employees) and B (Self Employed), corresponding to high added value activities, of a scientific, artistic or technical nature (see below), obtained in Portugal by non habitual residents shall be taxed at 20%.

 

Employment Income

Income in category A (Employment) of non habitual residents, obtained abroad, is tax exempt, if alternatively:

  • Such income is taxed by the source State, according to the double taxation treaty in force between Portugal and the source State;
  • Such income is taxed in another country, in cases where there is no double taxation treaty in force between both countries, as long as the income obtained is not considered to have been obtained in Portuguese territory, according to the Personal Income Tax (IRS) Code. 

 

Self Employment, Capital, Real Estate and Increase in Wealth Income

Income in category B (Self Employment), obtained through high added value activities of a scientific, artistic or technical nature (see below), or from intellectual or industrial property, as well as, from providing information regarding an experiment carried out in the commercial, industrial or scientific areas, and those in category E (Capital Income), F (Real Estate Income) and G (Increase in Wealth), obtained abroad by non habitual residents, is exempt if alternatively:

  • It can be taxed by the source State, according to the double taxation treaty signed between Portugal and the source State;
  • It can be taxed in another country, in cases where there is no double tax treaty in force, under the terms defined by the OECD Model Tax Convention on Income and Capital, as long as (i) it is not a territory subject to privileged tax systems (defined by an ordinance) and (ii), as long as the corresponding income, cannot be considered to have been obtained on Portuguese territory, as per the Personal Income Tax (IRS) Code.

 

Pension Income

Regarding category H (Pensions), income obtained by non habitual residents abroad, which is, for the same portion which was considered taxable, not considered tax deductable in Portugal, is taxed at a 10% rate.

 

Notes

Income which is exempt from Personal Income Tax (IRS) under the above stated terms, is mandatorily included for the purposes of determining the taxable amount on remaining income, except in the case of:

  • Capital Gains from Securities;
  • Dividends and interest owed by non-residents, when not subject to withholding at source;
  • Income from employment or self-employment, subject to the above referenced special tax rate of 20%.

Non-habitual residents, whose income is not taxable under the Personal Income Tax, per the above referenced terms, may opt to use the method of tax credit provided for by the international double taxation (in lieu of exemptions), and in this case, income is mandatorily included for the purposes of taxation under the general terms of the Personal Income Tax (IRS) code, except:

  • Gratuities earned for services rendered or due to the performance of work, when not attributed by employer;
  • Capital Gains from Securities;
  • Dividends and interest owed by non-residents, when not subject to automatic withholding;
  • Income from employment or self-employment, subject to the above referenced special tax rate of 20%.

High added value activities, of a scientific, artistic or technical nature


Table applicable for NHR registered up to 2019

Table of activities considered to be of high added value, applicable for non habitual resident regime registered up to the year 2019 (Ordinance no. 12/2010 January 7):

101 - Architects 102 - Engineers 103 - Geologists
201 - Theater, ballet, cinema, radio and television artists 202 - Singers 203 - Sculptors
204 - Musicians 205 - Painters 301 - Auditors
302 – Tax Consultants 401 - Dentists 402 - Medical Analysts
403 - Clinical Surgeons 404 - Ship’s doctor 405 - General Practitioners
406 - Dentists 407 - Clinical dentists 408 - Medical physiatrists
409 - Gastroenterologists 410 - Ophthalmologists 411 – Orthopedic Surgeon
412 - ENT(Ear Nose and Throat) specialists 413 -Pediatricians 404 - Radiologists
405 - Doctors from other specialties 501 - Professors 601 - Psychologists
701 - Archaeologists 702 - Biologists and life sciences experts 703 - Computer Programmers
704 - Software consultant and activities related to information technology and computing 705 – Computer programming activities 706 - Computer consultancy activities
707 - Management and operation of computer equipment 708 – Data services 709 - Data processing, hosting and related activities; Web portals
710 - Data processing, hosting and related activities 711 - Other data service activities 712 – News agencies
713 - Other information service activities 714 - Scientific research and development 715 - Research and experimental development on natural sciences and engineering
716 - Research and development in biotechnology 717 - Designers 801 - Investors, Directors and managers of companies that promote productive investment, as long as they are connected to projects and concession contracts that are eligible for tax benefits per the Investment Tax Code (Código Fiscal)
802 - Upper Management    

Table applicable for NHR registered as of 2020

Non-habitual resident 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 (Ordinance 230/2019 of 23 July ):

 

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.

 

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.


Learn More:


Guide

Guide: Non Habitual Residents in Portugal

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