Non-habitual Residents Special Tax Regime
Let your tax exemption pay for your stay in the sun
Portugal created a special personal income tax regime for new residents which offers attractive tax opportunities for foreign pensioners. This regime is available to foreigners and Portuguese individuals settling in Portugal after an extended period of living abroad.
Non habitual resident individuals may benefit from the special tax “Personal Income Tax” regime for a ten year period.
A foreign source occupational pension may be fully exempt from tax, providing its recipient qualifies for the special tax regime in Portugal. In addition, depending on the tax treaty between the source country and Portugal, the source country may not tax the pension, avoiding the pensioner double taxation.
A fundamental requirement to gain access to the special regime is that the pensioner be a non-habitual resident for Portuguese income tax purposes. Also, the pension must be an occupational pension, paid from a foreign source.
Some high value added activities also allow individuals to gain access to the special regime.
Other types of income can be tax exempt in Portugal, if it may be taxed in the country of source in accordance with the applicable tax treaty (the income cannot be sourced from a tax haven).
How to qualify for the status
In order to qualify as a non-habitual resident, an individual must meet the following requirements:
To be tax resident under Portuguese domestic legislation, and not have been taxed as a Portuguese resident in the five years prior to taking up residence in Portugal.
An individual is considered to be a tax resident in Portugal when he is physically present in Portugal for more than 183 days in a calendar year or on December 31 of the relevant tax year, he has available accommodation in Portugal as a habitual home.
Documents and requirements
Non-habitual resident status recognition requires attending to the following formalities:
Application for a Portuguese taxpayer number, for which a copy of the individual’s passport and an address in Portugal is required;
Application for the non-habitual resident status – this application includes a written affidavit stating that the individual was not resident for tax purposes in Portugal in the five preceding years to the request.
Portuguese Tax Authorities may require additional documents, such as tax residency certificates and/or any other documents that demonstrate that the individual was in fact personal and economically located in abroad in the five years preceding its arrival in Portugal.
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