Sovereign Consultoria – Lda in Lagoa has, since 1999, been assisting clients regarding residency and property ownership in Portugal and Sovereign is now helping many clients register as residents under the Non-Habitual Residency scheme (NHR) so that they can enjoy tax benefits for ten consecutive years. Despite its name, NHR is for permanent residency status.
Applicants must not have been registered as a Portuguese tax resident in any of the five years preceding the application. Many individuals are not aware that they were automatically registered as residents of Portugal if they applied for their fiscal numbers prior to 2002. If their IMI property tax bills are sent to their Portuguese property address, they are definitely registered as a resident and they should, ask Sovereign, to review this situation, if they are in reality non-residents.
As a Non-Habitual Resident, individuals receiving any Portuguese source salary or self-employed income derived from one of the eligible professions would be subject to a final flat rate tax of 20%. On foreign pension income, NHR individuals pay a 10% rate.
Non-Portuguese income of most categories including self-employed income, real estate income (rentals), capital income (interest & dividends) and capital gains on property, will be exempt from Portuguese personal income tax if the source country has the right to tax that income under the terms of a Double Tax Treaty (DTT) signed between Portugal and that country, or the income is taxed in the other country and is not considered as obtained in Portugal, or the income is taxable in any other country following the OECD Model of Taxation.
Income earned in the territories listed on the Finance Department list of preferential tax regimes – the so called “blacklist” might not be qualified for this regime.
The right tax advice is essential to benefit from tax savings and most importantly to avoid falling foul of the Portuguese tax department!
Contact Sovereign today on for more information on NHR applications or for any fiscal queries.