Non-habitual Residents Tax Regime

In 2012 Portugal simplified the tax regime of so-called Non-Habitual Residents (introduced in 2009) to attract non-resident citizens to our country.

The regime is now fully operational and offers relevant tax benefits for those wishing to establish their residence in Portugal, including citizens of other EU member countries.

The main requirement is to become a Portuguese Non-Habitual Resident.

The Non Habitual Resident Regime is applicable to taxable persons who have not been resident in Portugal for the last five years and who stay in Portugal for more than 183 days a year, either consecutive or interpolated or have, by December 31st of that year, housing that they intend to use as their habitual residence.

Tax benefits include:

. Exemption from taxation in Portugal of foreign income, originated from dependent labor or pension income.

• Taxation at 20% flat rate of proceeds from Portuguese origin, that result from added value activities, considered strategic for Portugal as architects and engineers, fine artists, actors and musicians, auditors and tax consultants, doctors and dentists, university professors, investors, directors and senior managers, as specified in Portaria 12/2010 of 7 January.

Tax benefits are granted to Non-Habitual Residents for a period of 10 years.

Having a tax residence in Portugal also offers additional tax advantages, since there is no inheritance tax in Portugal for direct relatives.

The Non-Resident Regime is governed by Decreto-Lei No. 249/2009, of 23 September, with the addition of Article 16 of the IRS Code of paragraphs 6 and following, currently having the wording given by Portaria No. 20/2012 of 14 May.