REsidency in portugal
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NHR
The Non-Habitual Resident (NHR) regime was first introduced in 2009 to attract individuals in receipt of pension income into a tax-free/ exempt jurisdiction where they can benefit from the double taxation treaty (DTT).
It has since been reformed to offer more attractive tax incentives on Personal Income Tax (PIT) for newly (tax) resident individuals that are not ordinarily domiciled.
This special regime of beneficial residency status for Non-Habitual Residents applies to single persons and provides for the reduction or the exemption from income tax for a period of 10 years.
Individuals with non-habitual residency applications granted up to the 31st March 2020, benefit from a tax-free jurisdiction on their pension income. New applications after 31st March 2020 will be levied at a 10% rate on their pension.
To benefit from NHR status, the individual must become a Portuguese tax resident, not having been a tax resident in Portugal in the previous 5 years, and also requires a minimum stay in Portugal of 183 days per year.
Individuals who can benefit from the double tax treaty, and who declare their foreign income in Portugal, can take advantage from the preferential regime. This attractive tax incentive covers income deriving from high value-added activities.:
– 20% flat tax rate for Portuguese (self) employment income from qualifying activities in Portugal
– Exemptions for qualifying foreign obtained/ source income
– No gift or inheritance tax for assets outside of Portugal. Inheritances or gifts of Portuguese assets to spouse and descendants 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
– Dividends and Capital Gains obtained by Portuguese companies can benefit from a participation exemption regime
– Portuguese companies may take advantage of EU non-discrimination rules and EU directives on mergers, dividends, interest and royalties, as well as Double Taxation Treaties (DTT) signed by Portugal
Conditions of tax resident status in Portugal:
– Stay in Portugal more than 183 days in a period of 12 months;
– Have a house in Portugal;
– Not have been taxed in Portugal in the last 5 years.
Registration Process:
– Register a Portuguese Tax Identification Number (NIF)
– Register as a Tax Resident
– Register as a Non-Habitual Resident
GOLDEN VISA
The Golden Visa (ARI) regime was introduced in 2012 to attract investment activity from foreign nationals in exchange for a temporary residence permit.
The permit allows foreign nationals outside the EU (meaning anyone except Portuguese and EU/ EFTA citizens) to reside in Portugal and travel freely/ work within the Schengen area (26 Countries) without a visa for short periods of time in exchange for completing a suitable investment into Portugal.
The investment can be made as an individual or through a legal entity meeting certain requirements.
There are physical presence requirements that must be met:
– Minimum 7 consecutive or non-consecutive days in the 1st year
– Minimum 14 consecutive or non-consecutive days in the subsequent 2 year periods
Once issued, the Golden Visa residence permit is valid for 5 years and must be renewed after the 1st year and 3rd year.
Residency can be extended to immediate family members who cohabit permanently with the investor (reunification).
It is possible to apply for permanent residency/ Portuguese citizenship after 5 years of residency in Portugal.
Your investment needs to meet at least one of the following requirements:
1. Acquisition of real estate with a minimum value of €500’000
2. Acquisition of real estate, for refurbishment, where construction was completed at least 30 years prior, or is located in an urban rehabilitation/ regeneration area valued at equal to or greater than €350’000
3. Capital Transfer:
– Transfer of capital to Portugal of at least €1 million
– Transfer of capital of at least €350’000 to acquire shares in investment funds or venture capital funds dedicated to the capitalization of companies incorporated under Portuguese law (subject to certain requirements)
– Transfer of capital of at least €350’000 to incorporate or increase the share capital of a commercial activity with a head office in Portugal, combined with the creation of 5 permanent jobs for a minimum of 3 years
– Transfer of capital equal to or above €350’000 invested into research by scientific institutions integrated into the national scientific and technological system
– Transfer of capital of at least €250’000 invested into or supporting artistic production or the recovery and maintenance of national cultural heritage
4. Creation of a company with at least 10 permanent jobs in Portugal
Investors who obtain a Golden Visa may also qualify as potential beneficiaries of the NHR’s tax residence regime.