In the recent past, Portugal did not have much tradition on favorable tax regimes, but the country as assumed a positive approach to all non residents and it is leading the best tax regime in Europe with Tax Exemptions for Non-Habitual Residents (NHR) individuals.

Now on top of the Climate, white Beaches, awarded Golf destination, great Food (including the Best Fish in The World) and beautiful cities where you will go shopping around (as Lisbon Amazing Shopping districts) Portugal added to this all-time qualities a regime of Tax Exemptions for Non-Habitual Residents.

This special Tax Exemptions for Non-Habitual Residents regime allows foreign entrepreneurs and pensioners to enjoy Portugal’s sunny climate while benefiting from the most attractive tax regime, that allows many Europeans to avoid their income taxes.

If you have not lived (as a resident) in Portugal in any of the last five tax years and you receive interest or dividends or you planning to retire, you may have a low tax burden by moving to Portugal, a sunny all-year long country where you will be able to live a Golden Retirement.

This Tax Exemptions for Non-Habitual Residents regime applies to everyone that lived abroad in the last 5 tax years, meaning that all foreigners and Portuguese individuals may apply and benefit from it for a maximum period of ten years.

In fact if your income is coming from abroad and your home country has an agreement with portuguese authorities you will not pay any Personal income Tax.

Let us look at the different income sources:

Pensions

Foreign-source occupational pensions may be fully exempt from PIT if:

• Its recipient qualifies for the special Tax Exemptions for Non-Habitual Residents NHR tax regime;
• The pensions are subject to tax in the source country (in accordance with the applicable Tax Treaty) or
• The Pensions are deemed not to be derived in Portugal in accordance with the Portuguese sourcing rules, i.e., not paid by a Portuguese tax resident entity nor attributable to a Portuguese permanent establishment of a non-resident.

If these requirements are met, the pension will not be taxed in Portugal. In addition, the Tax Treaty between the source country and Portugal may preclude that country from taxing the pension, resulting in potential double non-taxation.

If your are a retired civil servant or other former government employees generally you may not benefit form this regime, depending on your country.

Ultra High Net Worth Incomes

At first this Tax Exemptions for Non-Habitual Residents regime was created to attract more Excelence Centres from multinational companies and Research Departments but soon it evolued to a great number of high value professions listed in here.

There are other taxes that you may be interest to know but still comparing everything to other competing countries Portugal is by far the most competitive country for Pensioners and High-Value Entrepeneurs and we will also welcome you.