MadIntax Newsletter- Tax regime for non-habitual residents

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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