The tax advantages of the Non-Habitual Resident (NHR) regime in Portugal

Portugal has become a destination of choice for many expatriates and international investors, largely thanks to its non-habitual resident (NHR) regime. Introduced in 2009, this tax regime offers a number of attractive advantages for new residents. This guide outlines the main tax benefits of the NHR regime, which have helped Portugal to establish itself as a tax haven in Europe.

Foreign income tax exemption

One of the most attractive aspects of the NHR regime is the tax exemption on certain types of foreign income. You can have Direct access to this document online for various purposes. For a period of ten years, non-habitual residents can benefit from tax exemption on pensions, dividends, interest and royalties received abroad. Provided that such income is taxed in the country of origin under a tax treaty.

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Fixed rate of tax for qualified professions

The NHR regime offers a flat tax rate of 20% on Portuguese-source income for high value-added professions.  This includes professions such as engineers, doctors, architects, lawyers and artists. This preferential rate is particularly attractive compared with normal tax rates, which can be as high as 48%. As a result, qualified professionals find Portugal a very favourable destination in which to do business.

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Exemption from inheritance and gift tax

The NHR regime also offers considerable advantages in terms of inheritance and gifts. In Portugal, there is no inheritance or gift tax for direct residents (descendants and ascendants). This exemption also applies to non-residents. This makes the transfer of assets to heirs much more financially advantageous.

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Capital gains tax exemption

Capital gains made abroad may be exempt from tax in Portugal under the NHR regime, provided they are taxed in the country where they were generated. For international investors, this represents an opportunity to maximise their after-tax returns. This exemption also encourages cross-border investment and economic activity.

In summary, Portugal's non-habitual resident regime offers considerable tax advantages, making the country a preferred destination for expatriates, retirees and investors. By combining these advantages with a pleasant living environment, Portugal continues to attract a diverse international population, contributing to its economic and cultural dynamism.