MadIntax Newsletter- Tax regime for non-habitual residents

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For a 10-year period you can benefit from a series of extremely beneficial fiscal advantages, including full exemption on foreign sourced (outside Portugal) income and a fixed 20% tax rate on inland sourced income.

“The secret of getting ahead,

is getting started.”

The data contained within this Information Note is for general information only. No responsibility can be accepted for inaccuracies. Readers are

also advised that the law and practice may change from time to time.


You’ve made your miles, you crossed your trails and now

you’ve reached your hard-earned destination! Now, let’s have

that well deserved drink at the piano-bar, shall we?

Indeed, Portugal provides for an excellent quality of life for the

modern investor or businessman. The tax regime is one of the

most attractive in all Europe, even being able to surpass many

other regimes in countless ways.

On top of that, Portugal is part of the European Union, the Euro

Zone and the Schengen area. Having a flexible and welcoming

residence permit regime, Portugal offers free movement within

the Schengen territory and the possibility to apply for

Portuguese nationality and, as a result, a EU passport.

February 2016


One particular aspect of its tax regime attractiveness is the nonhabitual

resident status that is accessible to all individuals.

For a 10-year period you can benefit from a series of extremely

beneficial fiscal advantages, including full exemption on

foreign sourced (outside Portugal) income and a fixed 20% tax

rate on inland sourced income.

Here’s what you have to do… it’s pretty simple, actually!

February 2016


1. Become a fiscal resident in Portugal.

Portugal has to offer wonders in terms of quality of life, security and

climate investment.

Just imagine yourself living in a place where you can wake up, take a

peek outside your bedroom window and delight yourself with the flavor

of the sun and smell that sweet aroma of the sea? Or being able to

indulge yourself with the bliss of savoring exceptional delicious food

at basically every restaurant you encounter?

Well, to experience something like this, and for optimum results, we

strongly suggest residing permanently in Portugal, but for now, and in

what concerns what we’re here contemplating, we can safely say that

obtaining fiscal residency in Portugal is a good start and it gets you

going! Here’s why:

In order to become a fiscal resident in Portugal, you must fill one of

these two conditions:

Stay in Portugal for more than 183 days, consecutive or nonconsecutive;

If staying that much time in Portuguese territory is a little

inconvenient, whether you have places to be, or by fate of life, you

ultimately cannot stay the 183 days total, don’t worry! If in one of

those 183 days you acquire housing property in such conditions

that would lead to the assumption that is indeed intended to be

kept and occupied as an habitual resident, the fiscal residency

requirement is met.

Once one of these two conditions are met, you just have to go to the

local tax office and there you can register yourself as a tax resident in

Portugal.

February 2016


2. Request the non-habitual resident status.

At the same time you register yourself as a tax resident in Portugal, or

by the 31 st of March of the following year in relation to which you

became resident, you must request the non-habitual resident status, in

order to formalize your intent of benefiting from the regime.

3. Not reside in Portugal in the last 5 years.

We just hope you haven’t being seeing that much of the Portuguese sun

in the past 5 years (vacations excluded of course).

That is because you must not have been a resident in Portugal for the

last 5 years prior to the year that you intend to become a resident and

register for that end.

February 2016


I obtained the non-habitual resident status! What

happens now?

First of all, congratulations!

Once the non-habitual resident status is obtained, you will be

presented with a number of advantageous fiscal benefits. Here’s what

to expect:

1. Income obtained in Portugal.

In case of employment or self-employment, the taxation rate is fixed at

20% (with an addition surcharge of 3,5% in 2015) to those who obtain

labor income in Portugal.

However, bear in mind that this particular rate does not apply to all

workers.

In fact, taxation applies solely to income derived from high added

value activities of a scientific, artistic or technical nature.

Here are some examples of such activities:

• Architects, engineers and similar;

• Fine artists, actors, musicians;

• Auditors, doctors and dentists;

• Teachers, psychologists, liberal professionals, technicians and

similar;

• Senior managers.

In addition to these, investors, directors and managers are also

considered, but only when part of companies covered by the

contractual regime provided for in the Investment Tax Code.

February 2016


2. Income obtained abroad.

On the other hand, if you are employed, or self-employed, and your

labor income is earned abroad, you will be fully exempt from taxation

in Portugal, whether it’s business and professional income related to

high added value service, salaries of a non-Portuguese source, rental

income or pensions paid abroad.

In other words, you will not pay taxes in Portugal, based on the fact

that you are already being taxed (or potentially taxed) in another

country, or by means of fulfilling any of the other criteria foreseen by

law.

February 2016


!

And for a better experience, how about you just sit back and let us

guide you through the whole process, leaving everything up to us?

We can assist in everything concerning the obtainment of the nonhabitual

resident status, conferring a step-by-step support through all

the said stages and formalities of its obtainment, as well as organizing

any fiscal planning and assistance you may need concomitantly or

further on.

For further information, we’re right where you need us…

Contacts

Nuno Miguel Teixeira Coelho

Director

nuno.coelho@madintax.com

Cláudia Isabel Freitas Nunes

Lawyer

claudia.nunes@madintax.com

Pedro Henrique Vieira Melo

Lawyer

pedro.melo@madintax.com

RUA IVENS, 3 B

D. MECIA BUILDING, 6TH FLOOR

9000-046 FUNCHAL

MADEIRA, PORTUGAL

PHONE +351 291 20 10 10

FAX +351 291 22 06 00

MADINTAX.COM

February 2016

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