The Non-Habitual Tax regime or NHR is designed to attract wealthy retirees with substantial pensions who will have big spending power in Portugal and Madeira. The NHR tax regime is also aimed at talented qualified working persons who either have technical or scientific skills that will help give Portugal international competitiveness. In July 2019 the NHR high-skilled job list was changed to include business owners or managers considered critical to business activities, thus greatly extending the reach of the NHR appeal. The NHR regime was first implemented in 2009 and allows substantial tax savings or exemptions for those who qualify. The scheme has been highly successful and as a result, there are now over 12,000 NHR status persons living in Portugal and Madeira. Many of these NHR status holders have purchased luxurious properties.
Here is a list of the available benefits for NHR status holders
- A tax exemption on applicable private pensions
- A further tax exemption on royalties, dividends and interest
- 20% flat tax rate for Portuguese source income for professions suitable for NHR status
- Minimum stay requirement of 183 days or owning a real estate property that can be inhabited for the same period in any of those 183 days.
- A white-listed tax jurisdiction located within the European Union
- A tax exemption for financial gifts and inheritance to family members
- No wealth taxes
The NHR tax regime relies upon Portugal and its relationship using double taxation treaties with other countries. The double tax treaty determines in which country taxation should occur, avoiding double taxation for the applicant. Currently Portugal has over 70 double taxation treaties in place including; the UK, Sweden, France, Canada, Germany, Holland, Norway, Austria and South Africa. It should be noted there are also some blacklisted jurisdictions like The Bahamas, The Cayman Islands and The Channel Islands where taxations are heavily applied on capital income.
A Potential applicant to the NHR programme should first enquire with a Portuguese registered accountancy firm, they will then access your income structure and determine if the income qualifies for NHR benefits. We then suggest once you understand the possibilities of your NHR tax and the disposable income available to then discuss your plans with an accountant in your home country of tax residence.
For initial enquiries please contact us for more information and request our comprehensive NHR PDF on how the NHR works and the available benefits, you can also ask to speak to one of our partnership tax advisors. We do advise downloading the 25 page "Madeira Buyers Guide" from our website as a first step, it is full of useful advice on building a new life in Madeira and contains experienced contacts to assist you in a smooth move.