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Considerations Of A Move To Portugal

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Are you interested in moving to Portugal? Portugal is not generally regarded to be one of most important tax heavens, however the tax system in Portugal is extremely accommodating. individuals who just moved to the country are known as”non-habitual residences” (NHRs) and enjoy the benefit of a flat 20 percent income tax.

The majority of the earnings from foreign sources are tax-free within the nation, contributing to the favorable tax system more.

Financial Climate

Portugal was admitted to in the European Union back in 1986 and ever since there has been a process of economic diversification occurring. Portugal’s economy is competitive at a global level, and, as per the World Bank doing Business Report the country ranks 31st out of all 189 countries on the basis of competitiveness in the economy.

Tourism is among the sectors that contributes significantly to Portugal’s gross national product (GDP). In 2012, the sector contributed 5.7 percent of Portugal’s GDP, as a report from the World Travel and Tourism Council illustrates. It is predicted to rise in the coming years.

Government is investing money in upgrading the infrastructure for tourism and increasing the recognition that the destination is gaining as a top European tourism destination. There are also developments in the areas of technology and information that have helped diversify the economy of the country. These factors are contributing to the growth of real estate sector in addition.

In the last few days, government officials announced an economic development strategy that was completely new. The goal of the strategy is to encourage foreign direct investment as well as improve the exports of Portugal. The program’s efforts are all geared towards Portugal’s stability in the economy, making Portugal into a desirable destination for a lot of NHRs.

The Profil of NHRs

Any person who chooses to change their status to Portuguese tax residents be eligible for the Personal income Tax (PIT) program. When they are accepted NHRs the individuals can have the status for a period that is 10 years. Registration is easy and tax authorities have introduced all of these advantages to draw highly skilled foreigners as well as to encourage their move to Portugal.

NHR regime has proven to be a huge success, with over 1000 people registered. The nation is currently processing applications of 400 people mostly residents of EU member countries as well as Brazil.

A large proportion of these people are self-employed. A lot of NHR applicants earn a substantial retirement income, or additional sources of revenue within their country of the residence.

The Application Process and Tax Requirements for NHR

Anyone who is seeking the NHR status should reside located in Portugal for the minimum of 183 days throughout the year. In addition, they must have an property in Portugal and have plans to make it their permanent residence.

When individuals receive the NHR classification, they are able to benefit from the benefit of a flat 20 percent income tax. This taxation policy is applicable to income from salary, as well as any income earned through the business.

There is no tax on personal income for salaries received from an employer in a nation other than Portugal. The only requirement is those salaries to be tax-paying citizens of the specific country. It’s easy to understand the reasons why businesses could benefit by relocating their operations to Portugal. Portuguese employers can also gain by the hiring of NHRs.

Any kind of income that results from high-value-added products or services with a scientific, artistic, or technical nature in another country is exempt of taxation by Portugal. There is a requirement that the income must be tax-deductible under the dual tax treaty. It is essential that the country from which the income is derived to be able to tax it than taxation itself to occur. NHRs are also exempt from taxation following the selling of their property in another country or in the event that they receive rental income.

If it’s retirement funds from a different country the same rules apply. NHRs benefit from the absence of gift and inheritance taxes, which can be quite useful when making decisions on the transfer of assets to the next generation.

Numerous Other Fantastic Benefits of Moving to Portugal

The tax-related initiatives and the fantastic real estate purchasing possibilities will definitely make a lot of people consider moving and applying to apply for NHR status. Other benefits that are important to be highlighted and also.

The tax burden can be further reduced because of the favorable treatment offered by the government for life insurance.

All businesses that are based in Portugal with a permit to conduct business in the Madeira International Business Centre (MIBC) receive the benefit of a flat five percent company income tax. This tax is in effect until 2020, and covers all sorts of transactions including those with non-residents.

As of now, Portugal has signed double tax treaties with 67 nations. Of those, 61 are in effect. Understanding the potential and conducting a study on the tax policies of the country is essential to this NHR application process, and getting the most of the opportunity.