The Non-Habitual Residents (RNH) regime allows individuals to benefit from a special Personal Income Tax (IRS) regime for a period of ten consecutive years, provided they haven’t been tax-resident in Portugal in any of the five years preceding the year in which they register as tax-residents in the country.
Income from a foreign source (ie., obtained outside Portugal):
Income from a foreign source (ie., obtained outside Portugal):
- The RNH regime allows certain categories of foreign-sourced income to be exempt from taxation in Portugal, as long as they’re not considered to have been obtained in countries with clearly more favourable tax regimes;
- As a general rule, "passive income" from a non-Portuguese source (i.e. dividends, interest, royalties, income from real estate) should be exempt from IRS in Portugal. However, for this to happen, it is necessary that the State where such foreign income came from has been granted the power to tax it, according to the double taxation treaty signed between Portugal and said State (or according to the rules set out in the OCDE Model Convention, in cases where this tax treaty is non-existent). Additionally, capital gains generated by the disposal of assets (e.g. shareholdings) are subject to tax and taxed, as a rule, at a rate of 28%;
- Regarding income from employment or independent services, the rules differ slightly:
- Foreign-sourced employment income should only be exempt from IRS if taxed in the source State, in accordance with the provisions of the double taxation treaty signed between Portugal and said State. Otherwise, it will be taxed in Portugal at the standard IRS rates or – if resulting from a high value-added activity – at a 20% flat rate;
- Independent services income from a foreign source deriving from a high value-added activity may be exempt if, under the tax treaty between Portugal and the State of source, the latter is allowed to tax that income. Otherwise, it will be taxed in Portugal at the standard progressive IRS rates or, if resulting from a high value-added activity, at a 20% flat rate.
- Since the State Budget Law for 2020 came into force, pensions from non-Portuguese sources are subject to taxation in Portugal at a rate of 10%;
- Exempt income is aggregated for the purpose of determining the rate to be applied to the remaining income.
Portuguese source income:
- The net income earned in Portugal by an individual who qualifies as a Non-Habitual Resident, either from employment or from independent services, is taxed at a special rate of 20%, provided that it is earned in the context of high value-added activities of a scientific, artistic, or technical nature. Otherwise, the income is subject to the general IRS progressive rates;
- Capital income (e.g. interest and dividends), capital gains on securities, and real estate rents obtained in Portugal may be subject to a 28% rate (just like a resident in Portugal without NHR status).
Requirements
To become a Non-Habitual Resident, an individual must be tax-resident in Portugal. To do so, they must remain in Portugal for more than 183 days, consecutive or not, during a period of 12 months beginning or ending in the year in question. In case this criterion doesn’t apply and the individual stayed in Portugal for less than 183 days, they must own a house in the country, in such conditions that reveal the intention to maintain and occupy it as a habitual residence. Additionally, in order to become a Non-Habitual Resident, an individual must not have been considered, for tax purposes, resident in Portugal during the previous five years.
To benefit from this regime throughout the entire 10-year period, the taxpayer must be considered a resident in Portuguese territory in each of those years.
To benefit from this regime throughout the entire 10-year period, the taxpayer must be considered a resident in Portuguese territory in each of those years.
How to obtain
The application to register as a Non-Habitual Resident must be submitted until the 31st of March of the year following that in which the individual becomes resident in Portuguese territory, through the Portal das Finanças.