Are you planning to move to Portugal? What if we told you that there is a scheme for new residents that can provide substantial tax benefits, including a total tax exemption on your pension?
The NHR scheme is one of Portugal’s best kept secrets and can make Portugal a tax haven for you and your family.
WHAT IS THE NON HABITUAL RESIDENCY TAX REGIME?
The NHR scheme was approved in 2009 and assigns certain tax advantages over a period of 10 years. It was designed to promote Portugal and attract foreign pensioners to live here, but also to promote the transfer of residence of entrepreneurs, investors and specialized professionals.
WHO CAN APPLY FOR THIS REGIME?
All citizens who become tax resident in Portugal and that have not been considered resident in Portuguese territory during the last five years preceding the year of application. This applies to both foreigners and to Portuguese citizens who are living abroad and wish to return to their country.
The Browns have moved to the Algarve last year, they rented a property in Tavira and applied for the NHR regime.
Linda is retired so her pension is now exempt of taxation in Portugal, during the next ten years. In a single year the tax she saved was greater than 5.000€, over ten years this will be over 50.000€. Linda is now receiving her gross pension!
Peter is not reired yet, he is a high skilled professional and decided to relocate his residency to Portugal. Although he still travels in business to his country he is taxed just in Portugal. All his income is taxed at a flat rate of 20%, because it is derived from high value added activities of scientific, artistic or technical character performed in Portugal, as listed in a Ministerial Order.
Examples of high value added activities: Architects, doctors, university teachers, designers, IT technicians, engineers, researchers, liberal professions, investors and managers under certain conditions.
Other Aspects to be considered, when thinking about relocating to Portugal:
- Wealth Taxes:
Portugal does not have wealth taxes.
- Municipal Property Transfer Tax:
Portugal levies a municipal tax on the acquisition of Portuguese properties at rates
between 0% and 6%.
- Municipal Property Annual Tax
Portugal levies a municipal tax annually based on the registered value of Portuguese real estate at rates between 0.3% and 0.8% (depending on the municipality and the type of real estate –buildings or land).
- Inheritance tax
There is no inheritance tax for direct inheritors (spouses, descendants and ascendants) who are exempt. Others will pay Stamp Duty at a 10% rate.
AFM can help you
Many people are unaware of the tax savings available, until they seek for professional advice. Please feel free to contact us today to discuss your personal situation and see whether you qualify for the Non Habitual Residency Regime. We can guide you through the whole process and make the application on your behalf. We will also prepare and submit the tax returns on your behalf.