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July 02, 2021 - Articles
Portugal is a very attractive option for individuals who become Non-Habitual Residents (NHRs).
As a beneficial Personal Income Tax (PIT) regime, NHR is available to individuals who wish to become tax-resident in Portugal, provided they were not a Portuguese tax resident in any of the previous 5 years. NHR status is granted for 10 years. Over recent years, many of our clients have become Non-Habitual Residents.
“The NHR is an interesting option in itself. However, it may be further enhanced, where applicable, when coupled with an adequate international investment corporate structure.”
The Benefits of the NHR tax regime:
- Reduced 20% flat rate for Portuguese (self) employment income from qualifying activities in Portugal;
- Exemption for almost all foreign source income;
- 10% final tax on foreign pensions;
- No gift and inheritance tax for assets outside of Portugal. Inheritances or gifts of Portuguese assets to spouse, descendants or ascendants are tax exempt. Inheritances or gifts to other individuals are subject to a flat 10% stamp tax rate;
- No wealth tax and free remittance of funds either to Portugal or abroad;
- No exit tax for individuals upon leaving Portugal (e.g., at the end of NHR tax regime).
The NHR is an interesting option in itself. However, it may be further enhanced, where applicable, when coupled with an adequate international investment corporate structure, for holding real estate and/or other assets, through which foreign income may be derived. Professional legal and tax advice should be sought on this topic.
