You Can Live in Portugal Tax Free for 10 Years If You haven’t lived there in the last 5 years
Take Advantage of the Non Habitual Resident’s Scheme (NHR) and Live Tax Free in Portugal
Would you like to live Portugal tax free? If a well developed country in Western Europe with perhaps the best climate in Europe is for you then read on.
What is The Non Habitual Resident Scheme (NHR)?
The Non Habitual Resident scheme is the key to living in Portugal tax free.
The non-habitual resident scheme was introduced by the Portuguese government in 2009 after the financial crisis to attract new high newt worth residents to Portugal.
The non-habitual resident scheme (NHR) exempts most types of passive income from tax in Portugal. If your income is primarily passive from dividends, rental income or royalty income the NHR scheme could be for you. Even if your income doesn’t come from one of those sources it may be possible to create a structure before you relocate to Portugal so that your income qualifies for tax exemption under NHR.
How do I Qualify for NHR?
Qualifying for tax exemption under NHR is possible for anyone who has not been a tax resident of Portugal for the last 5 years. If you want to move to Portugal and take advantage of NHR you have to do 3 things:
- Get a Visa to live in Portugal. If you’re an EU citizen you simply have to register at the nearest town hall after you move to Portugal. If you’re not an EU resident don’t worry. You can either buy a property to qualify for a so called Golden Visa or get a D7 visa. Both of these are amongst the easiest EU visas to obtain. Either one allows you to move to Portugal and stay as long as you want. After 5 years you’ll qualify for Portuguese citizenship.
- Find a place to live. You can either buy or rent a property in Portugal. For a golden visa you must buy in order to move to Portugal. For any other visa you’ll simply have to prove that you have somewhere to live.
- Register with the tax authorities to become a non habitual resident (NHR). You can do this at their online portal or get an adviser to do it for you. Provided you haven’t been a tax resident in Portugal in the last 5 years you’ll qualify. You then get an effective tax exemption for 10 years.
Before you move to Portugal you’ll have to do a bit of planning. Portugal is not a traditional tax haven and has some pretty high tax rates. You must make sure that your income comes from the right sources. It has to be passive income after you move to Portugal. Pension income used to be tax free but it’s now taxed at 10%. Still a good deal compared to most countries. Capital gains are taxed at 28% so you should make sure that any capital gains are dealt with before you move to Portugal.
Consulting income and suchlike are not tax free after you move to Portugal. However it should be possible to structure that type of income as dividend income before you move to Portugal.
Portugal Tax Free for Crypto
Crypto trading is not taxed in Portugal, so if your involved in Bitcoin or other cryptos Portugal could be a perfect place for you to live tax free while you build your crypto wealth.
All in all tax residence in Portugal can work well. You can live in Southern Europe tax free if you plan things properly. You have the advantage of living in one of Europe’s best climates. It’s also one of the least expensive places to live in Europe.
Portugal offers some of the nicest places to live in Europe. From the ancient streets of Lisbon to the fabulous beaches of the Algarve there is something for everyone. Live in Portugal tax free and enjoy a peaceful life in a sunny climate with a low cost of living.
For more information the Portuguese immigration department have a website available in English here. You also have to register with the tax office for NHR to live in Portugal tax free. They don’t appear to have a website available in English
We regularly help clients relocate to Portugal. Get in touch with us here for more information.