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Non-Habitual Residents Regime In September 2009, the Portuguese Government approved a new legislation

establishing a tax regime for non-habitual resident (NHR) individuals. The aim of

the scheme is to attract highly-skilled professionals, wealthy individuals and foreign

pensioners to Portugal.

NHR individuals can benefit from the special personal income tax ( PIT ) regime for a 10-year period.

Portuguese Source Income

Employment and self-employment income can be liable to a special 20% flat rate if derived from high value-added activities of a scientific, artistic or technical nature in Portugal, as listed in Ministerial Order nr. 12/2010. Examples of high value-added activities:

Architects, musicians, auditors, doctors, university professors, psychologists, IT

technicians, researchers, investors and managers under certain conditions.

Other types of domestic income received by NHRs are liable to PIT according to the

rules applicable to ordinary tax residents (covered in an earlier section).

Foreign Source Income

Employment income that is derived outside Portugal, can be exempt from PIT. Other

types of foreign sourced income including dividends, interest, capital gains on foreign

real estate and foreign rental income can also be exempt from PIT. However, the capital

gains on the sale of securities shall be taxed at a rate of 28%.

Pension

The NHR status enables those who become tax resident in Portugal to receive pensions

tax free both in Portugal and in the source jurisdiction. Other types of income that

will also benefit from a double tax exemption include dividends, royalties, and interest income.

Qualifying for the NHR status

To qualify as a NHR, an individual must meet the following requirements:

Be a tax resident under Portuguese domestic legislation; and

Not have been taxed as a Portuguese resident in the five years prior to taking up residence in Portugal

An individual is a tax resident in Portugal for any year in which:

They remain in Portugal for more than 183 days, consecutively or not, during a

12-month period, which begins and ends in that tax year; or

They have a residential accommodation available in Portugal in any day of that

12-month period, used as the individual s habitual abode

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