Non Habitual Resident

Why choose Portugal to become a Non Habitual Resident?

The Non-Habitual Resident regime in Portugal arises from the imposition of attracting foreign investment, in a context of strong international tax competition.

The tax regime for non-habitual residents in Portugal brings fiscal advantages for dependent or self-employed workers who carry out high value-added activities, including members of statutory bodies of legal persons, but also for retirees who wish to temporarily reside in our country.

However, Portugal is not the only country to legislate in this sense, but it has one of the most attractive regimes.

In order to be able to compare the Portuguese non-habitual resident regime with others, allow me to briefly mention some of the conditions and fees applicable in other Legal Orders, namely in Spain, our most direct competitor.

In Spain, the regime emerged in 2004, with the main objective of allowing foreign citizens who wish to reside there to be taxed as non-residents, provided that they meet the requirements imposed by law.

In order to benefit from this regime, nationals of other States cannot have been considered resident in Spain in the 10 years prior to the year in which the move to Spanish territory takes place, thus becoming a much more demanding regime than the resident regime. non-habitual Portuguese, which requires applicants to have a period of 5 years.

Another condition is that the foreign citizen moves to Spanish territory under an employment contract signed with an entity that is resident in Spain or with a non-resident who has a permanent establishment in Spanish territory.

It thus becomes a regime aimed at workers who obtain income from dependent work and also at members of statutory bodies whose travel to Spanish territory is solely due to the exercise of the activity.

In Spain, non-habitual residents are taxed not only on income obtained from dependent work, but also on income obtained abroad, at a rate of 24% or 45%, depending on their value.

In Portugal, the non-habitual resident is taxed on income from high value-added activities from a Portuguese source at a rate of 20%, but income from a foreign source benefits from the exemption method.

As for interest, dividends and royalties, when from a Spanish source, a rate of 19% is applied to income below €6000, 21% to income equal to or greater than €6000 and below €50,000 and a rate of 23% for income above €50,000.

In Portugal, capital income (interest and dividends) and capital gains earned by non-habitual residents from Portuguese sources are taxed at a rate of 28%, and may be included, in general terms, by means of an option exercised by their holders, subject to the application of progressive rates on the same terms as usual residents.

As for capital income earned outside Spanish territory, these are exempt in Spain, as in Portugal.

Another relevant difference between the Spanish regime and the Portuguese regime is the duration of application of this regime.

In Spain, it starts from the year in which the change of residence takes place for a period of 5 years. In Portugal, the duration of application is 10 years.

Generally the Portuguese regime has more fiscal benefits making our country one of the most attractive.