WHO ARE WE?
EDGE International Lawyers is an international law firm with extensive expertise in assisting international private clients with their matters in Portugal. Our experienced team provides legal and tax solutions for both international clients, serving their legal needs whilst also understanding their cultural diversity. Often these solutions need to be individualised and we have the flexibility to blend both traditional and innovative perspectives to provide 360º solutions. In particular, EDGE has a high degree of expertise in dealing with tax and property matters in Portugal for international clients, including purchase and sales, advising on all the safeguards necessary to acquire good title. Click here to obtain further information on buying property in Portugal.
WHY WAS THE REGIME INTRODUCED?
The Non Habitual Resident regime was introduced in Portugal in 2009. One of the principal objectives of this regime was to attract individuals and their families to Portugal by making it beneficial from a tax perspective to become tax resident in Portugal. As a result Portuguese NHRs have the ability to: grow their wealth in a white listed jurisdiction; earn income in a tax friendly environment; dispose of their assets and benefit from tax exemptions; pass on their wealth without inheritance or gift taxes, namely for children or spouse; and to enjoy their retirement without tax on their pensions.
WHAT ARE THE BENEFITS?
A Non-Habitual Resident (“NHR”) will be exempt from personal income tax on certain types of qualifying income if this income is subject to tax in the country of source under an existing Double Tax Treaty that allows for this or, if no Tax Treaty exists, were subject to tax in another jurisdiction and are not considered as Portuguese source income under domestic rules. Certain types of qualifying income under the regime will also benefit from a double tax exemption i.e. an exemption in Portugal and in the source jurisdiction. A special flat rate of 20% is also applicable for certain types of income arising from a number of highly qualified activities.
WHAT TYPES OF INCOME ARE ELIGIBLE FOR EXEMPTION UNDER NHR STATUS?
Pensions, dividends, royalties and interest from non-Portuguese sourced income are exempt from personal income tax in Portugal. Certain types of salaries, provided they are paid from a non-Portuguese source, can also be exempt from tax.
WHO IS ELIGIBLE?
Any individual who becomes Portuguese tax resident in accordance with Portuguese Law i.e. who has his habitual residence in Portugal or who spends more than 183 days in Portugal in the tax year, which runs from 1st January to 31st December or has a dwelling in Portugal at 31 December of that year with the intention to hold it as his habitual residence, and has not been taxed in Portugal, as tax resident, in the previous five years.
HOW DO YOU APPLY?
You may apply when you have become a Portuguese tax resident or before 31st March of the following tax year. If you wish to apply for the NHR regime EDGE can guarantee a prompt consideration of you application. EDGE has a direct channel to the central authorities dealing with the NHR regime and we are confident that we will obtain a decision on your NHR application within 7 days.
HOW LONG DOES IT TAKE?
If you wish to obtain a prompt decision on your NHR application, EDGE can guide you through the process enabling you to obtain a decision within a timeframe of less than a week after the application has been made. The status will be backdated to the date of becoming Portuguese tax resident.
ARE THERE ANY GUARANTEES?
Whilst there are no guarantees that applications will be successful, EDGE has a 100% success rate to date. As long as the NHR applicant fulfils all the legal requirements of Portuguese tax residency and the specific requirements to become a NHR, there is no reason for the registration to be rejected.
HOW MUCH DOES IT COST?
Our fees for processing the application for NHR status are fixed on a case-by-case basis but we can assure that the fees are very competitive, particularly in light of the high level of service given. Prior to making the application we will conduct a due diligence on your income and, where appropriate, suggest any restructuring in order to maximize the benefit under the programme. You will be updated regularly in relation to the process and the NHR team will ensure that your application is processed promptly and efficiently and followed through with the Tax Department regularly.
ARE THERE ANY OTHER BENEFITS?
Successful NHRs will have access to all the benefits of an ordinary Portuguese tax resident including healthcare.
DOES THE TERM NON HABITUAL MEAN THAT I HAVE TO BE TAX RESIDENT OUTSIDE PORTUGAL?
No. The term “non-habitual” often leads to misinterpretations. It means that under the NHR regime you are required to have your tax residency, and are habitually resident, in Portugal. As this regime is valid for each applicant for a period of 10 years tax authorities used the term “non-habitual”.
CAN I RENT INSTEAD OF PURCHASE?
Yes. Rental is an option under the NHR regime. As occurs when you purchase a property, if you are renting a property you may be required from tax authorities to provide evidence of your address in Portugal, which can be done through providing a copy of your rental contract.
DO I HAVE TO MAKE A STATEMENT OF ASSETS
When applying for the NHR regime, you will not need to provide any statement of assets. This will also not be required when filing your first tax return. In each tax return you will only be required to provide information on the value of each category of your annual income.
IS THE NHR REGIME STABLE?
his regime was implemented in 2009 but only became fully operational in 2010. However, the programme is maturing and shows every sign of continuing to form an important part of Portuguese foreign investment programme.
DO I HAVE TO PAY TAX IN THE SOURCE OF INCOME AFTER MY REGISTRATION AS NHR?
After your registration as a NHR in Portugal you are able to request an international certificate of residence to the Portuguese tax authorities. This document then has to be sent to the tax authorities of source of income and that should enable you to be exempt of tax in that jurisdiction, unless a withholding tax applies.
IS IT POSSIBLE TO BACKDATE MY REGISTRATION AS NON HABITUAL RESIDENT?
You can backdate your registration as a NHR in Portugal to the date on which you became tax resident in Portugal, always remembering that the deadline for making the NHR application is 31st March of the tax year after you became tax resident in Portugal.
IS THERE ANYTHING ELSE I SHOULD CONSIDER?
An application for NHR status is, in a large number of cases, preceded by a property investment in Portugal. Prior to making any property investment, you should consider the following issues.
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