1. What is the Non-Habitual Resident (NHR) Status?
The Non-Habitual Resident (NHR) Status is a special tax regime that offers a reduction in personal income tax (IRS) to new foreign residents, or Portuguese citizens who have been emigrated for more than 5 years, on income from skilled work, passives, and pensions.
The RNH regime was launched in 2009 by the Investment Tax Code (Decree-Law No. 249/2009, of September 23) with the intention of attracting qualified professionals and pensioners with purchasing power.
Change to the Non-Habitual Resident Status
It should be noted that in 2020, the Non-Habitual Resident Status underwent a minor change—pensioners who were previously exempt from taxation now have their pensions taxed at 10%.
2. Who is eligible and qualifies as an RNH?
To be eligible and qualify as an NTR, you must meet three requirements:
- Not have resided in Portugal for the past five years;
- Obtain tax residence in Portugal, either through the purchase or rental of a property;
- Register as an NTR with the Tax and Customs Authority (AT);
3. How to obtain RNH status in Portugal?
To become a tax resident in Portugal under Portuguese law, you must:
- Stay in Portugal for more than 183 days;
- Have accommodation available in conditions that are likely to become your habitual residence. You can proceed with the purchase of a property, however, renting is a possible solution to guarantee tax residence.
4. When to apply for RNH status in Portugal?
Non-Habitual Resident status must be obtained:
When you register as a resident in Portugal, directly on the website portaldasfinanças.gov.pt, or at any Tax Office or Citizen's Bureau; or by March 31 of the year following the year in which you registered as a resident in the country.
5. What are the benefits of the RNH regime?
- No wealth tax in Portugal and exemption from declaring any assets to the Portuguese tax authorities (only income);
- Inheritances and gifts between ascendants and descendants (e.g., father to son, grandfather to grandson, or son to mother) and husband and wife are exempt from tax. Other inheritances and gifts (such as uncle to nephew or unrelated persons) are taxed at a flat rate of 10% on assets located in Portugal (other assets will not be subject to tax);
- For citizens of countries that are not members of the EU or the Schengen area, Portugal approved the Golden Visa program in 2012 (although becoming a Portuguese resident for tax purposes and benefiting from the RNH regime does not require a residence permit);
National citizens can benefit from the regime, which makes it particularly attractive to Portuguese emigrants.
6. How long does RNH status last?
Once obtained, RNH status is valid for 10 years from the year of first tax residence in Portugal.
List of high value-added activities under the RNH.
In 2020, a new list of high value-added activities was published.
I – Professional activities (codes from the Portuguese Classification of Professions – CPP):
112. General director and executive manager of companies;
12. Directors of administrative and commercial services;
13. Directors of production and specialized services;
14. Directors of hotels, restaurants, commerce, and other services;
21. Specialists in physical sciences, mathematics, engineering, and related techniques;
221. Doctors;
2261. Dentists and stomatologists;
231. University and higher education teachers;
25. Specialists in information and communication technologies (ICT);
264. Authors, journalists, and linguists;
265. Creative and performing artists;
31. Technicians and professionals in science and engineering, intermediate level;
35. Information and communication technology technicians;
61. Farmers and skilled workers in agriculture and animal production, market-oriented;
62. Skilled workers in forestry, fishing, and hunting, market-oriented;
7. Skilled industrial, construction, and craft workers, including skilled workers in metallurgy, metalworking, food processing, woodworking, clothing, crafts, printing, precision instrument manufacturing, jewelers, artisans, and electrical and electronics workers;
8. Plant and machine operators and assembly workers, including operators of fixed installations and machines;
II – Other professional activities:
Administrators and managers of companies promoting productive investment, provided that they are involved in eligible projects and have tax benefit concession agreements entered into under the Investment Tax Code, approved by Decree-Law No. 162/2014 of October 31.
Activities excluded from the RNH:
Activities such as auditors, tax consultants, psychologists, and archaeologists are no longer included in the list.
However, professionals who applied for status by March 30, 2021, will not be excluded from the tax benefit scheme and will be able to enjoy the benefits until the end of their 10-year period.
Source: GuestReady