NHR Portugal Tax Regime 2024: A Guide to Non Habitual Residency

The Non-Habitual Resident (NHR) program in Portugal has become a popular choice for foreign nationals seeking residency. Launched in 2009, this tax regime offers significant benefits, including reduced tax rates and exemptions for eligible residents, making it an attractive option for those looking to relocate.

Over the years, thousands have taken advantage of the NHR program, enjoying a flat tax rate of 20% on certain income and exemptions on global income. However, recent changes have reshaped the landscape. As of late 2023, the original NHR scheme is ending, prompting the introduction of NHR 2.0, which maintains many benefits but limits eligibility.

This comprehensive guide covers:
– An overview of and updates to the NHR Portugal tax regime
– Non-habitual residency eligibility and requirements
– NHR Portugal benefits
– Timelines and important dates
– The step-by-step NHR Portugal application process

What is the NHR Portugal tax regime?

Non-habitual residence (NHR) refers to the process of establishing tax residency in Portugal. This residency enables individuals to enjoy reduced income tax rates for a period of 10 years. Notably, NHR holders are not subject to any specific minimum or maximum residency requirements.

Portugal’s NHR tax regime aims to attract investors and professionals who could contribute to Portugal’s economy and culture.

This special tax status for new residents can lead to tax exemptions on global income. In contrast, active income from high-value-added activities earned in Portugal is taxed at 20 percent.

NHR status allows substantial tax savings. The scheme was introduced in 2009 to increase Portugal’s global competitiveness by attracting professionals of high cultural and economic worth.

Foreign investors with a Portugal Golden Visa can optimize their taxes by applying for NHR status. Holders of the Portugal Digital Nomad Visa or individuals on the Tech Visa who aim to spend over 183 days a year in Portugal can also apply.

NHR Portugal 2024 Updates

The NHR ended for most applicants in January 2024. The Portuguese government’s State Budget Proposal for 2024 included modifications that determined the end of the non-habitual resident regime.

The ultimate vote on the budget legislation happened on 29 November 2023, introducing the transitional regime before the end of the NHR tax regime in 2025.

It’s possible for some individuals to apply up until March 31, 2025, but the eligibility requirements for this deadline are more stringent. If you’re wondering how to apply for NHR in Portugal now, it’s necessary to meet at least one of the following criteria to qualify:

• Having an employment contract signed/to be signed by December 31, 2023
• Having a lease agreement or other contract for the use/possession of property signed by October 10, 2023
• Having a contract to buy property in Portugal signed by October 10, 2023
• Having children enrolled or registered in a school in Portugal by October 10, 2023
• Having a residence permit or visa valid from December 31, 2023
• Having an application for a residence permit or visa initiated by December 31, 2023
• Being a member of the household of anyone who meets the above criteria

Anyone who qualifies under these conditions will have NHR status from the date they become a tax resident—whether in 2024 or the first quarter of 2025—until December 31, 2033.

New NHR (Non-habitual resident) tax regime: NHR 2.0 (IFICI)

The State Budget proposal has introduced a new program, the Incentivized Tax Status Program (ITS) or the Tax Incentive for Scientific Research and Innovation, replacing the existing NHR tax regime.

Those who qualify will benefit from a flat tax rate of 20 percent on eligible professional income from Portugal and possibly an exemption on professional foreign-sourced income. They will also be exempted from most foreign-sourced income, including passive income, such as dividends, interest, capital gains, and real estate rent outside Portugal. However, unlike under the existing NHR program, this excludes pensions. These benefits will last for ten years.

To qualify for these income tax benefits, individuals must fulfill the following conditions: 

• They become taxable residents in Portugal 
• They have not been taxable residents in the previous five years 
• They earn income in certain professional categories 

Individuals in the following categories will be eligible for the Tax Incentive for Scientific Research and Innovation program: 

• Teachers and scientists 
• People with qualified jobs according to the tax code and members of corporate bodies within the scope of contractual benefits for productive investment, such as:

1. Activities carried out within the scope of the extractive industry and manufacturing industries  
2. Tourism, including activities of interest to tourism 
3. IT and related activities and services 
4. Agricultural, aquaculture, fish farming, farming and forestry activities 
5. Research and development and high technological intensity activities 
6. Information technologies and audiovisual and multimedia production 
7. Defense, environment, energy and telecommunication 
8. Activities of shared service centers 

• Highly qualified professionals, which will be anyone performing one or more of the above activities and carrying them out in a qualifying entity 
• People working for companies recognized by relevant government agencies — AICEP, EPE, IAPMEI, IP — or relevant to the national economy, working with investment etc.  
• Research and development personnel who meet the definitions of the tax code 
• People working for startups, certified by law as such 
• People working in Madeira and Azores who meet the terms set by these regions 

Beneficiaries of the NHR program or the Regressar Program cannot apply. 

Why become a non-habitual tax resident in Portugal?

Some of the significant advantages to applying for NHR status:

• You can benefit from special personal income tax treatment over ten years
• You can enjoy the exemption on almost all foreign-source income
• 20 percent flat rate for certain Portuguese source incomes (from specific professions and self-employment), as opposed to national Portuguese income tax rates of up to 48 percent
• Become part of a white-listed tax environment
• A tax exemption for gifts or inheritance to direct family members
• No wealth tax
• A tax exemption on passive income such as dividends, interest, royalties, capital gains, and rental income from real estate outside Portugal
• Free remittance of funds to Portugal

Portugal NHR and double taxation agreements

A key benefit of Portugal’s NHR tax regime lies in Double-Taxation Agreements (DTAs).

A DTA allows for most categories of income to be taxed in the country from which the source of income is derived. Most countries, however, choose not to apply income tax to any income earned by non-residents as they want to be seen as jurisdictions open to foreign investment.

In turn, under the NHR tax regime, Portugal will not tax most foreign-sourced income NHR individuals earn. This allows NHR residents to receive some foreign income completely free of tax.

Portugal has signed Double-Taxation Agreements with 81 countries, and the OECD model tax convention may be used without a DTA.

Who can apply for the NHR Portugal tax regime?

The main requirement of the NHR is for the applicant to become a tax resident in Portugal.

To this end, it is essential that the applicant be qualified to live in the country from the outset.

Thus, in the year to which the income relates, the applicant must comply with at least one of the following:

1. Stay in the country for more than 183 days, consecutive or interpolated, in any period of 12 months beginning or ending in the year in question
2. Stay for a shorter period of time, on any day during the period referred to in the previous paragraph, and have had access to housing in conditions that suggest a current intention to maintain and occupy it as their habitual residence.
3. On 31 December, being a crew member of a ship or aircraft, as long as they are in the service of entities with residence, headquarters or effective management in that territory;
4. Carrying out public functions or commissions abroad at the service of the Portuguese State.

Furthermore, it is possible to substantiate this residence. It’s important to not only fill these requirements above but also not be a tax resident in another country. You should not spend more than 183 days in another country, as it can then presume tax residence.

The other cumulative requirement is that the applicant has not been a tax resident in Portugal in the previous five years.

NHR Portugal minimum stay

To qualify for NHR status, you must stay for a minimum of 183 days in the country per year or maintain a place of abode residence in Portugal as your habitual residence.

It’s also important to note that to be a tax resident in Portugal, you must meet the country’s tax residency requirements and should not comply with the tax residency requirements of another country.

What will happen to my NHR status after ten years?

NHR status only lasts ten years. After ten years, you lose your NHR status and tax benefits and must pay tax at standard Portuguese rates.

NHR and the Portuguese Golden Visa

Non-EU/EEA/Swiss citizens can apply for the Portuguese NHR scheme through Portugal’s Golden Visa program. Investors who acquire residency through the Golden Visa program can then become eligible for the NHR regime in Portugal.

Global Citizen Solutions can help you take the next step towards investing and securing residency rights in Portugal. As investment and residency program specialists, we can provide personalized advice to help you make the best possible decision.

Tax Residency Requirements for the NHR Scheme

To establish tax residency in Portugal, applicants for the NHR scheme must have a place of residence in Portugal to hold habitual residence and stay in Portugal for a minimum of 183 days.

Do I have to buy or rent property to prove residency in Portugal?

The NHR regime does not require its beneficiaries to purchase property in Portugal. To comply with the regime’s requirements, applicants must have a domicile in Portugal available to them. This must be a place that demonstrates the intention to hold and occupy the space as a habitual place of residence.

Therefore, it can be beneficial for NHR tax residents to purchase property in Portugal; however, a 12-month rental agreement is also sufficient proof of domicile.

What documentation is required to prove domicile?

If you decide to rent a property, you must provide proof of a lease or loan agreement. If you have bought a property, you can provide a purchase deed instead.

Tax Under the Non-Habitual Resident Regime in Portugal

Which professions are considered highly valuable under the NHR tax regime?

Professions of high cultural and economic worth are given generous tax exemptions and tax benefits under the NHR regime.

The following professions are considered of high added value:

Tax treatment of foreign-sourced income under NHR

Beneficiaries of the NHR regime in Portugal with some foreign incomes are largely exempt from taxation in Portugal due to DTAs.

If income is sourced in a country with a double taxation treaty with Portugal, the income will not be taxed in Portugal.

Employment income

• Foreign source income is taxed at a flat rate of 20 percent if it falls under the list of eligible professions.

Self-employment:

• Foreign source income is taxed at a flat rate of 20 percent if it falls under the list of eligible professions.
• This income is also subject to social security contributions (after one year of social security contribution exemptions) unless the individual in question already pays social security contributions into another system.
• Royalties, Dividends and Interests
• Typically exempt between countries that have DTAs between them
• In the absence of DTA, the OECD model convention must still be used
• If they are not exempt, they will be taxed at 28% in Portugal
• Otherwise taxed at 35 percent if the origin country is a blacklisted tax haven

Real estate income and capital gains 

Real estate income is typically taxed at source, meaning it should be taxed in the country where it is earned.

Capital gains from the disposal of securities (shares, bonds, etc.) will be subject to a rate of 28 percent.

Pension income: Taxed at a flat rate of 10 percent (since March 2020).  Typically, pension income is subject to withholding tax in the country of origin.  After paying tax in Portugal, it is necessary to recover the tax withheld in the country of origin. You would typically need to apply for a tax refund or credit in the country where the pension income was originally taxed.

Tax treatment of Portugal-sourced income under the NHR regime

Employment and self-employment income

• Usual progressive tax rates apply if employment does not fall under the list of eligible professions.
• If employment falls under eligible NHR professions or the income comes from a high-value-added activity, a flat tax rate of 20 percent applies.

Real estate income and capital gains 

• Rental income is taxed at an optional rate of 28 percent or otherwise at standard progressive rates.
• Net capital gains are taxed at 50 percent at standard progressive rates.

Pension income

• Under the NHR, pensions are taxed at the usual rates (10 percent)

Portuguese tax table for 2024

Timeline and Important Dates for NHR Applications

Applicants must be registered as Portuguese tax residents in order to register for the NHR regime in Portugal.

NHR applicants must prove tax residency and enroll with the tax authorities as such. The NHR application must then be made before 31 March to start the tax residency year. It usually takes about two days for an application for the NHR regime to be accepted or declined.

NHR status is granted for ten years, retroactively effective from the date the applicant became a resident.

Step-by-Step Application Guide: Non-Habitual Resident Tax Regime in Portugal

Step 1 – Proof of residency

The first step towards applying for the non-habitual resident regime in Portugal is securing residency status there. To do so, you must have the legal right to reside in Portugal.

EU/EEA/Swiss citizens

EU/EEA/Swiss are allowed to register for residency without a visa. You will need certain documents depending on the municipality you are applying to/from. All that is needed to register citizens can register for residency at their local town hall (Câmara Municipal). Be sure to take the following with you:

• Passport
• Proof of address (You will need to give a current address, but will not require proof of residency)

You must find the correct ticket at the town hall to register as a “Cidadão Europeu”. The process is fairly straightforward, and the attendant should fill out the form for you. You will then have to pay a fee of around €15.

Non-EU citizens

Non-EU citizens who wish to apply for the NHR regime must first obtain a residence permit to settle in Portugal. This can be granted through a number of different methods, but the most common is the Golden Visa or the Portugal D7 Visa program.

The process occurs through the “Serviço de Estrangeiros e Fronteiras” (SEF) or at your closest Portuguese Embassy or Consulate.

Step 2 – Find a specialist accountant for professional advice

The safest way to apply for NHR status in Portugal is with the help of a specialist. This way, you can ensure that you understand Portuguese tax law and find the best solution for your needs. However, if you wish to apply independently, follow the steps below.

Step 3 – Obtain a Portuguese tax number (NIF)

Everyone who intends to reside or do business in Portugal must have a Portugal tax identification number (Numero de Identificação Fiscal). This is a 9-digit number that serves as identification for tax purposes.

There are several different ways to acquire an NIF. You can visit your local government finance office (finanças) if you are already in Portugal. To get an NIF at a finanças, you will need proof of residence (such as a utility bill or rental contract), your residency certificate or visa, and your passport.

Step 4 – Register as a tax resident in Portugal

After your NIF, you must register as a tax resident in Portugal. This can also be done at finanças provided that you show you are allowed to live in Portugal (meaning you are previously registered as a European Citizen or holder of a Residence Permit.

Step 5 – Apply for your NHR status

If you choose to apply for the NHR on your own, the easiest way is online through the government’s financial portal. To use the online service.

You will need your NIF, fiscal address, email address, and phone number—the same details you used to register for your NIF. You will also be asked to provide an answer to a security question.

Once you have registered, a password will be sent to you by post. It should take at most two weeks to arrive.

When your password arrives, you can log into the finanças portal and register your application for the NHR regime. You can do this by accessing Aceda aos Serviços Tributários, clicking on Entregar Pedido, and then finally Inscrição Residente Não Habitual.

To complete your application, you may be required to submit the following documents:

• A declaration stating that you have not been a tax resident in Portugal for the previous 5 years
• Tax returns for the past 5 years
• Proof of purchase of property in Portugal or a rental contract

Request for further evidence

The most common reason behind NHR rejections is a failure to provide enough supporting evidence. You might be required to prove that you have not been a tax resident in Portugal within the past five years. This means submitting further evidence proving that you have been a tax resident in another country.

NHR Regime for US Citizens

US citizens can certainly apply for the scheme. Anyone who meets the requirements can request NHR status. You must live abroad, not have been a resident in Portugal within the last five years and want to move to Portugal.

To be considered a tax resident and benefit from the NHR Scheme in Portugal, applicants must have a place of residence in Portugal on 31 December of that year and intend to hold habitual residence.

NHR status can also hugely benefit US citizens retiring in Portugal due to its exemptions around income related to pensions.

NHR Regime for UK Citizens

Following the UK’s departure from the EU due to Brexit, obtaining NHR status has become slightly more complicated for UK citizens. We recommend that UK citizens apply for a D7 Visa or Golden Visa. Upon securing an appropriate visa, the steps to NHR status are the same as outlined above.

Frequenty Asked Questions about Portugal's NHR Tax Regime

What if my income is paid in another country?

If you are being taxed by a country that has a double taxation agreement with Portugal, you will be exempt from having to pay tax in Portugal.

What if my income is earned in Portugal?

Depending on your profession or source of income, you could still be eligible for significant tax breaks. That being said, if your income is being earned in Portugal and you are a tax resident in Portugal, you’ll be subject to Portuguese taxes.

Can applications for non-habitual residency in Portugal be tracked?

If you are registered online at the Portal das Finanças, you can track the progress of your NHR application.

How do you know if registration as a Portuguese non-habitual resident has been accepted?

You can consult the status of your application through the finanças portal. On the website, click Aceda aos Serviços Tributários, then Consultar Pedido, and then finally Inscrição Residente Não Habitual.

How long does it take to apply for the Non Habitual Resident NHR tax regime in Portugal?

You should know within a couple of weeks whether your application has been accepted or declined.

Generally, it takes about two weeks to hear back. If your NIF was recently obtained, then it may take as little as two days.

Do I have to be resident outside of Portugal to be a non-habitual tax resident NHR?

No, you can live in Portugal, but the key part is that you must not have been a taxable resident for five years prior to application. Then, it is necessary to become a taxable resident in order to become a non-habitual resident.

Do I have to make a statement of assets to apply for the NHR regime?

No, you will only have to state your income on your tax returns. In your tax returns, you should report your worldwide income and any foreign bank account you own to Portuguese Tax and Customs Authorities.

How long has the Non Habitual Resident NHR regime in Portugal been available?

The Non Habitual Resident NHR scheme has been in place since 2009 and has been growing more popular every year, though it is now ending, and there’s a deadline of 31 March, 2025, for those who still qualify.

Is it possible to backdate my registration as a non-habitual tax resident?

Once your application is successful, your status as a non-habitual tax resident will automatically be backdated to when you first registered as a taxable resident in Portugal.

When is the best time to apply for the Portuguese NHR tax regime?

You must apply for the NHR regime before 31 March of the year following the one in which you became a taxable resident in Portugal. If you meet the conditions to apply during the grace period, you must apply by 31 March, 2025.

Who qualifies for NHR in Portugal?

In 2024, you can qualify for NHR in Portugal by signing an employment contract, lease, or property purchase by specified dates, enrolling children in school, or holding a valid residence visa.

You can also qualify if you initiate a visa or permit application or are part of a qualifying household. NHR status lasts from your taxable residency date until December 31, 2033.

Is Portugal getting rid of NHR?

Yes, Portugal is discontinuing the NHR program, but you can apply until March 31, 2025, if you meet certain conditions. The NHR program will be replaced by the Incentivised Tax Status Program (ITS), which offers similar benefits.

However, unlike the NHR, the new system does not include a pension exemption.

What is the NHR tax benefit in Portugal?

The Non-Habitual Resident (NHR) in Portugal is a special tax status for new residents of Portugal. Those with this status are exempt from paying taxes on global income in Portugal for ten years. The income they earn in Portugal is taxed at a flat rate of 20 percent.

As well as the income benefits, there are also advantageous policies for inheritance tax, gift tax, rental income from real estate outside Portugal, and capital gains.

What happens after 10 years of NHR in Portugal?

After a 10-year period with NHR status, you will no longer be tax exempt on certain income, and you will pay taxes on the same basis as Portuguese citizens if you remain a Portuguese resident.

Can remote workers and digital nomads benefit from NHR?

Remote workers and digital nomads might benefit from Portugal’s NHR program if their income comes from abroad and they meet residency requirements.

The NHR offers reduced taxes on foreign source income, potentially leading to significant savings. However, recent changes have made it less applicable to some remote work professions.

What is the Investment Promotion Tax Regime (RFAI)?

The Investment Promotion Tax Regime (RFAI) focuses on incentivizing companies to invest in Portugal by offering tax benefits on the investment itself, such as tax exemptions or credits. It’s designed to stimulate economic growth and job creation.

What is the R&D tax incentive system (SIFIDE)?

SIFIDE (Tax Incentive System for Business R&D) is a program in Portugal that encourages companies to invest in research and development (R&D) by offering tax benefits. It allows companies to deduct a significant portion of their R&D expenses from their corporate income tax (IRC).