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Changes to the NHR in 2020

20 January, 2020 Legislation

The non habitual residents scheme was launched in 2009 and since then over 27 thousand applicants have benefited from this scheme.

The government is now looking to make slight changes to these benefits. The idea is to keep the benefits for those that already have it and there will be reductions on new applications. Meaning, the full exemption will no longer be available but there will be a minimum tax in its place for foreigners looking to settle in Portugal. They will be asked to pay a 10% fee on their IRS (applicable to private pensions, savings etc) from 7,500€

Currently, foreign pensioners benefit from a double tax exemption, due to the agreements to avoid double taxation, no IRS is required of them, neither here nor in their countries of origin.

Now NHR – 2020 State Budget requires a minimum tax of 10% for foreign pensioners

Foreign pensioners who join the non-habitual residency scheme (NHR) in the future will lose the double tax exemption and will be required to pay a 10% tax rate in Portugal with a minimum assessment of €7,500 per annum. 

The new requirements will only apply to future applicants who request NHR status after the 2020 State Budget becomes passed into law. However, it is also possible for those who have already joined the NHR scheme to opt for this limited taxation, if they wish. 

As of March 2020, Non Habitual Residents in Portugal enjoy the following benefits:

  1. Pay no wealth taxes
  2. Enjoy tax exemption on gifts for family members
  3. Enjoy free remittance of funds to Portugal
  4. Enjoy a tax residency in an EU white listed jurisdiction
  5. Pay only 10% tax on foreign sourced income 
  6. Pay a flat tax of only 20% on a range of Portuguese income types

 

What are the key requirements to qualify for the NHR in 2020 and who can apply for it?
 
As of March 2020, in order to be eligible to apply for Non Habitual Tax Residency in Portugal, you must have, or obtain, the right to reside in Portugal. You are also not allowed to have been a Portuguese resident in the 5 year period prior to applying. You are also required to have a residence in Portugal (either rented for a minimum prescribed monthly amount, or purchased) and you’ll be expected to spend a minimum of 183 days per year in Portugal.
 
People of any nationality and with any type of profession can apply to obtain NHR status in Portugal
 

For further information on the NHR, golden Visa or investment in Portugal please feel free to contact us.

GALLERY