According to the InterNations Expat Insider 2021, Portugal is the only European destination to make it into the top 10 of the overall ranking of the best countries for expats. From the bustling city streets of Lisbon, to the peaceful and tranquil coast of the Algarve, these are just some of the unique features of a country that has consistently been favoured amongst expats, particularly those in retirement.

In addition, Portugal also provides those looking to move there the opportunity to save money in tax. With schemes such as the Non-Habitual Residence (NHR) regime and the Golden Visa scheme, individuals don’t just get to enjoy the favourable climate and beautiful landscapes, they can also enjoy benefitting from favourable tax treatment on their investments and pensions. Having said that, it is important to seek advice in order to make the most out of your time in Portugal.

Residency | tax rates

You are considered a tax resident in Portugal if:

  • You spend more than 183 days in Portuguese territory in a 12 month period;
  • You have available a permanent home in Portugal. 

If it appears that you intend to keep and occupy the property as your permanent home (even if you do not spend 183 days in Portugal), then you may be deemed to be resident of Portugal for tax purposes.

The golden visa scheme

The Golden Visa Scheme was introduced by the Portuguese government in October 2012 to attract investors from non-EU countries. If you are a Non-EU resident looking to retire in Portugal and wish to take advantage of Portugal’s Golden Visa Scheme, you would need to fulfil at least one of the following requirements:

You can include the following family members on the visa with you:

  • Your spouse
  • Children under the age of 18
  • Dependent adult children who are full-time students (up to age 26)
  • Dependent parents of either yourself or your spouse
  • Any other dependents, such as minor siblings

Advantages of golden visa

More information on how to apply for Portugal’s Golden Visa scheme is available on the SEF website. You can send your application online or by submitting an application to a branch of the SEF.

Benefits of golden visa

Non-habitual residence (nhr)

In 2009, the Portuguese Government introduced the Non-Habitual Residence (NHR) regime. The purpose of this regime is to attract high value-added foreign nationals to Portugal, such as affluent retirees or skilled employees. The regime allows people to have substantial tax exemptions for the first 10 years of tax residence in Portugal, starting from the first year of residence.

If you are considering moving to Portugal, in order to obtain NHR status, you first need to qualify under the conditions of the regime. If deemed qualified, you will need to make sure that you file the complete application with the Portuguese tax authorities by 31 March of the year following the year of registration as a resident. Applications submitted after this date may be denied.

Once NHR status is obtained, this status will be valid for 10 years as long as you continue to meet the residence requirements for Portugal for each of those 10 years. If, during the 10 year period, you leave Portugal for another country and then return, you may resume residence and continue to qualify for NHR. That said, the qualification period is counted from the date the NHR status was granted.

Once NHR is granted, you will benefit from:

  • A special tax rate of 20% (as opposed to marginal rates up to 53%) applicable to employment and self-employment income derived from a “high value-added activity” within Portugal.
  • A tax exemption for foreign-source income, provided certain conditions are met.

Income and Capital Gains Tax

If you are resident in Portugal, and you are not within the Non-Habitual Residence (NHR) regime, you are liable to Portuguese tax on worldwide income and, to some degree, on capital gains.

If you have any income sourced in Portugal, you are liable to income tax in Portugal even if you are not resident in Portugal. Capital gains tax may also apply in respect of assets in Portugal.

Portugal’s income tax rates for 2021 are

ANNUAL INCOMEINCOME TAX RATES

Up to €7,112

€7,112 – €10,732

€10,732 – €20,322

€20,322 – €25,075

€25,075 – €36,967

€36,967 – €80,882

Over €80,882+

14.5%

23.0%

28.5%

35.0%

37.0%

45.0%

48.0%

In 2021, an additional solidarity rate, which varies between 2.5% and 5%, applies to taxpayers with a taxable income exceeding EUR 80,000.

Disclaimer:

The content of this guide is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing in this guide constitutes a solicitation, recommendation, endorsement, or offer by MWC Group or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the laws of such jurisdiction. Please contact your own lawyer, accountant, or tax professional with any specific questions you have related to the information provided that are of legal, accounting or tax nature. The content of this guide is of a general nature and does not address the circumstances of any particular individual or entity. All information of this guide is provided in good faith, however we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information. By reading this guide, you agree not to hold MWC Group, its affiliates or any third party service provider liable for any possible claim for damages arising from any decision you make based on information or other content made available to you by this guide.