A country attracts expats and foreigners only when it has the ability to do so. Attracting foreigners requires suitable plans to provide them with the utmost feasibility and easiness. Expats and foreigners will only switch and move to a country that offers facilities to them such as education, healthcare, transportation, income, and a proper livelihood. But all such things are connected to the money and income you gain while you reside in the country.
To ease foreign residents living in Portugal, the country introduced the NHR or Non-Habitual Resident Tax Regime in 2009. OK. The Portuguese Government has announced that the NHR program is going to be terminated by the end of 2023; hence, people interested in relocating to Portugal should seek professional advice from Tax Rebate Services soon. We will explain everything associated with this tax system.
Benefits of Moving to Portugal
Portugal is not all about a holiday destination but a place where you can find the actual meaning of a happy life. And you can expect a lot of spectacular options when you move to Portugal.
· Quality Life
Portugal is known for its pleasant climate and atmosphere. With beautiful beaches and landscapes, it provides a splendid quality of life.
· Low Cost of Living
An affordable lifestyle is one of the best trademarks of Portugal. This is why expats love and enjoy living in Portugal since living there does not force them to break the bank.
· Atmosphere and Environment
Regarded as one of the safest places in the world., Portugal offers its residents the best environment to thrive. Also being one of the safest countries in the world, you can enjoy a comfortable life here.
- Citizenship
Portugal offers residential options and freedom to its expats. It further improves the pathways to citizenship alongside its Golden Visa program with other immigration sources.
- Education and Healthcare
For families and retirees, good education and affordable and quality healthcare is essential. Thanks to Portugal, it is all an accessible reality with ease.
- Exploration Opportunities
Given Portugal’s geographical location, it sets you at the perfect place to begin further exploration into other countries and cities of Europe.
What is the NHR Program?
You might know that everything earned is taxable and your income earned both in the country of residence and abroad is liable for tax. Income tax is charged based on percentage calculations as per the country’s law. Hence, for foreigners and expats, it can be a tiring thing to give away a good chunk of their income.
The Non-Habitual Resident Tax Regime was introduced with the purpose of attracting working people with a stable income to move to Portugal. The ideal purpose was to uplift the economy by attracting valuable and hardworking professionals and individuals to Portugal. And when you intend to bring people into your system, you need to give them benefits and privileges.
The NHR program offers foreigners:
- Pay taxes at 20% of the income earned in Portugal
- 0% of the income earned elsewhere
Also, the NHR scheme has added benefits. In some cases, it even clears or removes any tax at all, thus providing the best outcome to foreigners. However, it is advisable for people applying for the NHR program to also apply for tax residency and have a valid Portugal residency permit.
Who is Eligible for the NHR Program?
To apply or appear for the Non-Habitual Resident Tax Regime program, a candidate must ensure the following points:
- Should be over the age of 18
- Have a legal residence in Portugal
- Not have been a tax resident for the past 5 years at the time of submitting the application
Portugal Residency
A key factor in achieving and successfully receiving the NHR scheme is to have a legal residence in Portugal. For non-EU nationals, this can happen through a D7 visa and the Golden Visa whereas EU citizens can easily avail this program through their right of free movement within the EU countries.
Tax Residency
Tax residency is also a key and critical factor in obtaining the NHR scheme or program. You can become a tax resident in Portugal through any of the following criteria:
- Stay in Portugal consecutively or immediately for at least 183 days per year
- If your residence period is short, you must have a house as a permanent residence with the intention to permanently stay in it in future
- Perform public functions and gatherings abroad for the state of Portugal
Why work with Portugal Residency Advisors?
- Local Expertise
We know Portugal. Due to our extensive local knowledge, we believe that concentrating our services in a single country destination is the best way to give you the most thorough and useful information.
- Holistic Approach
One single channel of communication for the entire process. We provide you with a comprehensive service that covers all aspects of your move, from identifying the ideal residency visa to finding your new home or helping you to settle.
- Transparent Service
We recommend what’s best for you based on an extensive process experience that saves time and money for clients. Our pricing is clear and competitive, and we don’t sell services that make us more money.
- Simple Process
Technology plays a very important role in our company. We minimize our clients’ involvement in paperwork. We are customers ourselves and we know how to serve you.
Frequently Asked Questions About NHR Tax Regime Portugal
- What is the duration of the NHR program?
The NHR program lasts for 10 years, is non-renewable and comes with all benefits.
- What is the tax on income from employment in Portugal?
Income gained from employment in Portugal is taxed from a scale of 14.5% to 45% whereas NHR program beneficiaries are entitled to only pay 20% of the tax.
