The special Portuguese Non-Habitual Resident (NHR) benefits include tax exemptions on certain foreign income such as: interests, dividends, rental income, capital gains on real estate, royalties and, the most popular pensions. However, the Non-Habitual Resident regime is still unknown to most of the world. This is the only explanation one can find to explain that since 2009, the date the regime was created, less than 8.000 people have been registered in Portugal. Want to know more about the Non-Habitual Residents regime?
In a snapshot, the regime applies to anyone that becomes Portuguese resident, who have not been resident in any of the 5 complete years before moving and applies within the deadline.
The benefits include exemptions on certain foreign income such as: interest, dividends, rental income, capital gains on real estate, royalties and, the most popular pensions.
Additionally, depending on the country of source, using the domestic legislation of that country or the applicable tax treaties, it may be possible to have income that during the application of the regime will not be taxed at source nor in Portugal (the most popular being pensions, dividends and interest).
So, being so attractive why are the numbers really not very significant?
On the one hand, apart from Sweden and France, there has been very little advertising of this regime across the world so most people do not even know it exists. On the other hand, there is some bureaucracy that needs to be complied with in order to be registered. This may explain why there are more foreigners moving into Portugal then those actually requesting to be registered as Non-Habitual Residents.
The recent political environment in Portugal has also created some buzz among the few that have heard about the regime.
Since it was created, there actually has not been any political party in Portugal challenging the regime. Curiously enough, it was actually the political party currently in Office that created the regime and the former Government merely implemented it.
Moreover, the 2016 Portuguese State Budget included an authorization for the Government to implement an electronic application for each person to request the Non-Habitual Resident regime. The fact that the Government is investing resources with this regime reveals a commitment to continue improving through technology what is a clear sign that the regime is here to stay.
Deloitte | Tax-GES Partner