The Portugal Non-Habitual Residency (NHR) tax regime is a largely favourable by independent contractors due to its successful scheme that offers lucrative tax breaks for foreign residents.
The NHR seeks to draw in EU self-employed nationals, professionals and citizens of high cultural and economic worth to increase the country’s international competitiveness.
What do I need to apply for the non-habitual resident tax regime in Portugal?
- Be allowed to live in Portugal as an EU/EEA/Swiss citizen
- Able to establish tax residency
- Not have been a Portugal tax resident in the five years prior to taking up residency
Achieving Tax Residency in Portugal
To become a tax resident you need proof of residency which can be achieved by providing a lease or deed of sale for the NHR application that will also prove intention of staying permanently in Portugal.
Benefits of the Non-Habitual Residency Regime
Beneficiaries of the NHR can optionally be taxed at a flat rate of 20% —but the taxpayer can choose to pay usual progressive rates if they are less.
Being Tax-exempt if the beneficiary has an “eligible profession” and comes from a country with a Double Taxation Agreement (DTA). Though the beneficiary will still have to pay tax in the country from where the income originates from.
There is a wide list of eligible professions such as Computer consultants and related services. Contractors with various clients in the EU will benefit immensely from the NHR status and for ten years without a minimum stay period.
(Note: Anyone who relocated to Portugal under the NHR after the end of March 2020, falls under the new change to tax exemption for foreign-sourced income. Pension and social security from foreign-sourced income, will be taxed at 10%, possibly impacting contractors who currently work under the NHR and plan to retire in Portugal.)
How to apply for the NHR in Portugal
It takes a couple of weeks for the application to be processed and you apply for the NHR before the 31st of March of the tax year when you became a tax resident in Portugal.
- Acquire a NIF Number (Portuguese Tax Identity Number)
- After you acquire your NIF, register as a Tax Resident in Portugal
- Then you can register online and follow your application status on the government website.
How Can We Help You With the NHR?
By having a Portuguese sourced income we can assist you by setting you up as a self-employed individual in Portugal, including facilitating payment with your clients, withholding tax, social contributions, and the initial application for the NHR.
Feel free to Contact us and talk to one of our professional team members to see how they can assist you today.