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Portugal, You could qualify for huge Tax benefits

Foreigners bring necessary skills to fill gaps in the job market and they bring much needed capital into the country through property and other investments.

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Besides the fact that foreign nationals have access to the Golden Residency Visa which grants foreigners, who own property in Portugal, permanent residency in the country and access to various state funded benefits, non-habitual residents also qualify for a number of un-equalled tax breaks!

Portugal You Could Qualify For Huge Tax Benefits

In 2009 the government introduced the Non-Habitual Resident (NHR) regime in to encourage foreign nationals and their families to move to Portugal to live and work.

Tax benefits on personal income includes a fixed tax rate of 20% for the first 10 years of residency and the assurance that no double taxation for pensions or for employment and self-employment income obtained abroad will be implemented.

To qualify for this benefit non-habitual residents must;

• Not have been a taxed resident in Portugal for any of the previous five tax (calendar) years.

• Must meet the criteria to be considered a tax resident in Portugal in the year of application, as well as every year for the 10 year period. This means the applicant must spend more than 183 days a year in Portugal, or have a habitual residence in the country.

• Submit an application to the Portuguese Tax Authorities and be approved.

Employment income earned in Portugal

If your employment or self-employment income is derived from a “high value added” activity, the tax rate for this income is 20%. This compares very well to the current top rate of income tax which is 48%.

Professions which may be regarded as “high value added” by the Portuguese government are, architects, engineers and similar technicians, fine artists, actors, musicians, auditors, doctors, dentists, professors, psychologists, liberal professions, investors, directors and managers. It is advisable to consult a New World Immigration professional about the list of occupations considered valuable at the time of your application.

Income arising outside Portugal

The regime provides for tax exemptions for foreign source income, provided certain conditions are met.

Employment income
Employment income from a foreign source may be exempt from tax in Portugal if it is taxed in the state of source under the rules of a double tax treaty, or, if no tax treaty exists, under domestic legislation and is not regarded as arising from a Portuguese source.

Pension income

Foreign pension income, for example from UK pension funds, is exempt from Portuguese tax provided it is taxed in another country under the terms of the tax treaty, or is not regarded as Portuguese source income under domestic legislation. In practice, it may be excluded from taxation in both Portugal and the source country.

Investment income

In general, other types of income earned outside Portugal are exempt from tax here provided it may be taxed in the state of source under a tax treaty, or it may be taxed under the terms of the OECD Model Tax Convention and is not regarded as arising in Portugal.

Other tax benefits to living in Portugal

Outside of the NHR regime, Portugal can still provide tax advantages. Unlike countries like Spain and France there is no wealth tax here and the inheritance tax regime is benign (it only applies to Portugal assets; the tax rate is 10% and spouses and children are exempt). Also, there are arrangements available here which allow you to enjoy extremely favourable tax treatment on your capital investments and pension income.

For an assessment of your specific set of circumstances arrange a meeting with one of the highly experienced and trained NWI consultants. Each client’s individual situation is assessed and recommendations are made for the best possible result in your application. NWI is a registered immigration practice and partners with companies accredited by the Portuguese immigration authorities and as such has unique access to the latest developments, information and legislation regarding Portuguese immigration.

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