The NHR tax regime in Portugal

Non-habitual residents” are considered to be individuals who transfer their residence to Portugal and who, at least in the five years prior to registration as a “resident”, have not maintained their tax domicile in Portuguese territory.

Registration as a “non-habitual resident” is requested electronically, in the respective personal area of the Finanças portal.

After registering as a “non-habitual resident”, the tax regime is applicable for 10 years from the year, inclusive, of the registration as a “resident” on Portuguese territory.

The Portuguese non-habitual residents’ tax regime offers the following advantages:
(a) A 20% flat rate, applicable to employment and self-employment income obtained in Portugal;
(b) Application of a 10% tax on foreign pension income; and
(c) An exemption on other foreign source income and earnings, provided they may be taxed outside of Portugal under the applicable tax conventions or the OECD model (if not a tax heaven) or, in case of employment income, that it is effectively taxed in the source country.

The individual who wishes to obtain the NHR status must meet the following requirements:
(a) Not be fiscal resident in Portugal in the five previous years:
(b) Become “resident” for fiscal effects in Portugal: (i) staying in Portuguese territory for more than 183 days, consecutively or cumulatively, during a period of 12 months; (ii) having stayed for less time but having, on December 31 of the same year, a residence in Portugal in conditions that suggest an intention to maintain and occupy it as habitual residence; (iii) having a house, demonstrating the intention to establish in Portugal the usual and permanent residence;
(c) Request the non-habitual resident’s status upon such registration or by March 31 of the following year.

Considering the indicated requirements, the phases and documents for obtaining the NHR status are:

1st phase: Obtaining the Portuguese taxpayer number, for which the following documents must be presented: passport; document proving the address at the state of residence; appointment of a tax representative (for citizens residing outside the UE).

2nd phase: Alteration of statute at the Tax Authority to fiscal resident in Portugal, for which the individual must present: Portuguese taxpayer number; Certified copy of lease contract/purchase and sale contract of property in Portugal for permanent residency; Certificate of residence.

3rd phase:
 After going to the tax office to show your Portugal address and get registered for tax purposes, you must request ( your password on ‘Portal das Finanças’ through the option “Registar-se” and fill the online application form with the requested data. After receiving the password at your address, you are able to submit the registration request on “Portal das Finanças”, following these steps: Aceda aos Serviços Tributários > Entregar Pedido > Inscrição Residente Não Habitual.

In the relevant page, you must fill in the fields with the year of registration pretended, as well as the foreign residence country (the country where you lived in the last year) and declare that you fulfil the conditions to be considered as a non-resident in Portuguese territory in the five years prior to the year of beginning of your status as a non-habitual resident.

If you want, you can consult your status 48 hours after the submission, through the option: Aceda aos Serviços Tributários > Consultar Pedido > Inscrição Residente Não Habitual.

At the end of the procedure, if the request is accepted, you can get the supporting document, in PDF format, using the option above mentioned; if the request is rejected, you will be notified by the Tax Authority of the intention of rejecting the request.

The step-by-step process to get NHR is:
(i) Get a residence permit if you are not an EU, EEA or Swiss national (which you already have);
(ii) Go to a tax office (Repartição de Finanças) and obtain a taxpayer id number as a non-resident, registering your current non-Portugal address, for which you will be required to show your passport and proof of residence;
(iii) Purchase or rent a residential property in Portugal;
(iv) Go back to a tax office and get your record there changed, so as to now show your Portugal address and consequently get registered as a resident for tax purposes. Bring along your passport and the Tax Authority document showing your tax id number and particulars;
(v) Get online and register as a user on the Tax Authority website (Portal das Finanças), as it is through this portal that you will then be able to communicate with them, apply for NHR status, file your tax returns, etc.;
(vi) After you get in the post your password to access the Tax Authority website, log on to it and apply online for NHR status, after which you may also be required to send them some additional documentation by post;
(vii) One week or so later, you should receive your NHR status approval or a request for additional documentation.

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