On September 23, 2009, Decree-Law 249/2009 was published, establishing a new tax regime, in respect of the Personal Income Tax (IRS), applicable to non-habitual residents. Such Decree-Law has been in effect since January 1, 2009.
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.
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%.
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 can be 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, are exempt if alternatively:
- They are taxed by the source State, according to the double taxation treaty signed between Portugal and the source State;
- They can be taxed in another country, in cases where the double tax treaty has not been entered into 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.
Regarding category H (Pensions) income obtained by non habitual residents abroad, which were, for the same portion which was considered taxable, not considered tax deductable in Portugal, is exempt if alternatively:
- They are taxed by the source State, according to the convention to avoid double taxation entered into by Portugal and the source State;
- They cannot be considered to have been obtained on Portuguese territory as per the Personal Income Tax (IRS) Code.
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 ):
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.
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