Non-Habitual Resident Status
The non-habitual resident (NHR) regime is available to individuals who transfer their tax residence to Portuguese territory, provided that they have not been taxable as tax residents in Portugal at any time during the 5 years preceding the transfer.
For retirement, this measure concerns private sector pensioners only.
Under the NHR regime, most income from foreign sources is not taxable in Portugal. In addition, domestic business income considered to be of added value will be eligible for a flat tax rate of 20%.
Portugal has become one of the favourite destinations for Expatriates. Retired expatriates are exempt from tax for ten years provided they spend at least 183 days a year in Portugal and have not been a tax resident there for the past five years. This is a very attractive measure that is aimed at both wealthy retirees – the country has no wealth tax or inheritance tax – and the more modest, whose purchasing power is multiplied (+30% in Lisbon, +45% in the rest of the country)
INCOME FROM OTHER COUNTRIES
Will be Taxed in Portugal as Follows:
Income from Real Estate (annuities)
Income from real estate stablished in another country
is not taxable in Portugal.
Pensions
A pension from another country, paid to a beneficiary with NHR status is not taxable in Portugal. If this pension is not related to the exercise of public sector functions, it will not be taxable in the native country either.
Dividends or Profit Distribution
Dividends paid by a company stablished in another country, to a partner with NHR status are not taxable in Portugal.
Income from Wages Earned /Services Provided in Portugal
Income from wages earned or services provided in Portugal is taxable at the rates normally applicable to other tax residents in the national territory, unless it is derived from a value-added activity, in which case it will be taxed at a flat rate of 20%* . In any case, the resident will be liable for social security contributions at the rates normally applicable in Portugal, except in exceptional situations.
* A surcharge may apply, which in 2017 varies between 0 and 3.21%, depending on the range of taxable income.