The Portuguese Non-Habitual Residents Tax Regime

At the risk at sounding like a complete ignoramus: is there also such a thing as a "Habitual resident" status (a "standard" residency status)? Or do expatriates by default fall under the NHR status?

In my case, our plan would be to move with our family, my wife and i have both have freelance jobs and would declare income and pay social security in Portugal, send our kid to a local school. We are not high net worth individuals or anything like that and I don't have the faintest idea about tax optimisation ...

So, NHR or something else?

The Non-Habitual Resident regime in Portugal is for expats who intend to live in Portugal, or for Portuguese emigrants who want to return to Portugal.

In case of expats, this regime is used when:
- you are an EU citizen and want to have tax benefits, whether you are a pensioner or a highly qualified worker;
or
- you are a non EU citizen, and want to have tax benefits and be able to move within the Schengen countries without any kind of visa;


In your case:
You can live in Portugal without applying for this status. As you are an EU citizen, you can live in Portugal as long as you want:

https://www.expat.com/forum/viewtopic.p … 33#5088039
(Post #7)


But if your profession falls under the list of value-added professions you have all the advantages of applying for this status, because it has tax benefits:

Tax Benefits:

- Flat rate of 20% for income from dependent work (category A) and independent work (category B) obtained in Portugal, derived from high added value activities.

- Employment income obtained outside Portugal is not subject to taxation in Portugal if taxed in the country of origin;

- Self employment income, obtained outside Portugal, derived from a high added value activity, is not subject to taxation in Portugal, provided that the income may be taxed in the country of origin under a tax agreement signed between Portugal and the source income country;

- 0% tax on interest, dividends and royalties obtained outside Portugal, and if taxed in the country of origin, the respective taxation must not exceed the reduced rates established in the tax agreements signed between Portugal and the respective countries, which vary between 5% and 15%;

- Foreign pensions are taxable at a flat rate of 10%;

- The tax regime is granted for a period of 10 years with the possibility of suspension and restart of the regime.


Other Tax Benefits:

- The sale of foreign assets is not subject to Stamp Duty;

- Exemption from taxation of capital gains arising from the sale of own and permanent residence provided that the income is reinvested in another own and permanent residence in Portugal or in the EU countries or EEA countries;

- Tax exemption on income or gains derived from cryptocurrencies;

- Tax exempt from capital gains tax on the sale of second-hand valuables: art, cars and other collector's items.

(...)



Who can apply:

- Individuals, foreign or portuguese, who have not been tax resident in Portugal during the last 5 years;

- Individuals who are considered tax resident in Portugal in the year in which they intend to apply for NHR status. For tax purposes, the following are considered resident in Portuguese territory:

      - the individual who has stayed in Portuguese territory for more than 183 days;
       
        or

      - having stayed less time, has in Portuguese territory, on the 31st of December
        of that year, a dwelling in conditions that make the intention to maintain and
        occupy it as habitual residence.


Application Period:

The tax status of Non-Habitual Resident (NHR), must be applied for to the Portuguese tax authorities at the time of registration as a tax resident in Portuguese territory, or by March 31 of the following year.

- Employment income obtained outside Portugal is not subject to taxation in Portugal if taxed in the country of origin;

This is not entirely correct - please see original law:

81  4 - Aos residentes não habituais em território português que obtenham, no estrangeiro, rendimentos da categoria A aplica-se o método da isenção, bastando que se verifique qualquer das condições previstas nas alíneas seguintes:

a) Sejam tributados no outro Estado contratante, [u]em conformidade com convenção para eliminar a dupla tributação celebrada por Portugal com esse Estado;[/u] ou

b) Sejam tributados no outro país, território ou região, nos casos em que não exista convenção para eliminar a dupla tributação celebrada por Portugal, desde que os rendimentos, pelos critérios previstos no n.º 1 do artigo 18.º, não sejam de considerar obtidos em território português.

This needs to be read carefully - only tax free in Portugal - if the other country is entitled to tax such income if there is a double tax treaty - will find that this condition almost never applies (though it works very well with aircrew employed by UK aviation companies). In the case of where there is no double tax treaty, and the services are undertaken in the respective country - it should work (condition b)). Though, in respect of remote work (nowdays very popular), if the work is undertaken in Portuguese territory -  then this will not work - even if paid from abroad as such income will be considered earned in the Portuguese territory

nilonilonilo wrote:

At the risk at sounding like a complete ignoramus: is there also such a thing as a "Habitual resident" status (a "standard" residency status)? Or do expatriates by default fall under the NHR status?

In my case, our plan would be to move with our family, my wife and i have both have freelance jobs and would declare income and pay social security in Portugal, send our kid to a local school. We are not high net worth individuals or anything like that and I don't have the faintest idea about tax optimisation ...

So, NHR or something else?

This is a tax status, and has to be specifically requested (will be granted if taxpayer qualifies)

You guys are champs, thanks!

(It's funny, I had never thought about possible double taxation, it has never been an issue. I've been working freelance for 15 years and always paid taxes where i live, even if most clients are from other countries. But last week my wife got a job from Slovenia (which neither of us had ever worked for), and they made all this fuss and sent tons of paperwork and they want her to go to the local tax office here to prove that she will be taxed where she lives and blablabla, endless bureaucracy for a simple job, never seen this before ... But I digress ...)

nilonilonilo wrote:

You guys are champs, thanks!

(It's funny, I had never thought about possible double taxation, it has never been an issue. I've been working freelance for 15 years and always paid taxes where i live, even if most clients are from other countries. But last week my wife got a job from Slovenia (which neither of us had ever worked for), and they made all this fuss and sent tons of paperwork and they want her to go to the local tax office here to prove that she will be taxed where she lives and blablabla, endless bureaucracy for a simple job, never seen this before ... But I digress ...)

Everywhere governments are looking for extra revenues - so they tighten up for possible tax avoiders. If you are resident in Portugal you can obtain documents to satisfy the Slovak authorities

Currently Portugal has double tax treaties with 91 countries to avoid double taxation, so the vast majority of expats in Portugal are safeguarded from this double taxation (see list B).

__________

Article 81: Elimination of international double taxation (CDT)

https://info.portaldasfinancas.gov.pt/p … irs81.aspx

According to Article 81(4), employment income obtained outside the Portuguese territory will be exempt in Portugal if:
(i) the worker is effectively taxed by the source state under the applicable CDT; or
(ii) if no CDT is applicable, the income is effectively taxed by the source State.

__________

Article 72: Special Tax Rates

https://info.portaldasfinancas.gov.pt/p … irs72.aspx

According to Article 72(10), employment income obtained in Portugal in high value added activities is taxed at a flat rate of 20% on the gross value.

This applies to, for example:
- Digital Nomads working in Portugal, regardless of their country of origin, and
- Non-Habitual Residents (NHR) in Portugal

with income from dependent employment (category A) or self-employment (category B) in the exercise of high value-added activities mentioned in list (A);

_____________

(A) List of Portuguese Value-Added Activities (2020)

I - Professional activities (Portuguese Classification of Professions, PCP Codes):

112 - General director and executive manager of a company;
12 - Directors of administrative and commercial services;
13 - Directors of production and specialized services;
14 - Directors of hotel, restaurant, commercial and other services;

21 - Specialists working in physical sciences, mathematics, engineering and similar technical fields;
221 - Medical doctors;
2261 - Dentists and stomatologists;
231 - Teachers at universities and higher learning establishments;
25 - Specialists in information and communication technologies (ICT);
264 - Authors, journalists and linguists;
265 - Creative artists and performing artists;

31 - Intermediate level science and engineering technicians and professionals;
35 - Information and communication technologies technicians;

61 - Market oriented farmers and qualified agricultural and livestock workers;
62 - Market oriented qualified forestry, fisheries and hunting workers;

7 - Qualified industrial, construction workers and craftsmen, including qualified workers in the fields of metallurgy, metalworking, food processing, wood manufacturing, clothing production, handicrafts, printing, manufacture of precision instruments, jewellers, artisans, electricity and electronics workers;

8 - Operators of installations and machines and assembly workers, namely fixed installations and machine operators.

The workers included in the aforementioned professional activities shall possess at least a level 4 qualification on the EU Qualifications Framework or a level 35 on the International Standard Classification of Education, or they must have five years of duly proven professional experience.


II - Other professional activities:
Administrators and managers of companies that promote production investment, provided they are allocated to eligible projects and have contracts granting tax benefits signed in accordance with the Investment Tax Code approved under Decree-Law no. 162/2014 of 31 October.

_____________

(B) Currently Portugal has agreements with 91 countries to avoid double taxation (CDT):

Algeria; Andorra; Angola; Arábia Saudita; Austria; Bahrain; Barbados; Belgium;
Brazil; Bulgaria; Canada; Cape Verde; Chile; China; Colombia; Côte d'Ivoire;
Croatia; Cuba; Cyprus; Czech Republic; Denmark; East Timor; Estonia; Ethiopia;
Finland; France; Georgia; Germany; Greece; Guinea-Bissau; Hong Kong; Hungary;
Iceland; India; Indonesia; Ireland; Israel; Italy; Japan; Kenya; Kuwait; Latvia;
Lithuania; Luxembourg; Macao; Malta; Mexico; Moldova; Montenegro; Morocco;
Mozambique; Netherlands; Norway ; Oman; Pakistan; Panama; Peru; Poland;
Qatar; Romania; Russia; San Marino; Sao Tome and Principe; Senegal;
Singapore; Slovakia; Slovenia; South Africa; South Korea; Spain; Sweden;
Switzerland; Tunisia; Turkey; Ukraine; United Arab Emirates; United Kingdom;
United States of America; Uruguay; Venezuela; Vietnam ; 


https://info.portaldasfinancas.gov.pt/p … ncoes.aspx

I'm a translator, so i would be eligible for NHR status as a
"264 - Authors, journalists and linguists" ?

As said, in 15 years of freelance work, i have never ever encountered issues with the country of taxation or having had to prove where i was paying taxes so as to avoid double taxation, i think we just stumbled on an overzealous pen-pushing bureaucrat...

nilonilonilo wrote:

I'm a translator, so i would be eligible for NHR status as a
"264 - Authors, journalists and linguists" ?

As said, in 15 years of freelance work, i have never ever encountered issues with the country of taxation or having had to prove where i was paying taxes so as to avoid double taxation, i think we just stumbled on an overzealous pen-pushing bureaucrat...

It might be beneficial to utilise the 'nhr' provisions

JohnnyPT wrote:

Article 81: Elimination of international double taxation (CDT)

https://info.portaldasfinancas.gov.pt/p … irs81.aspx

According to Article 81(4), employment income obtained outside the Portuguese territory will be exempt in Portugal if:
(i) the worker is effectively taxed by the source state under the applicable CDT; or
(ii) if no CDT is applicable, the income is effectively taxed by the source State.

This is a mistranslation of the original legislation (or the translator did not understand the subtleties)- this is an  extact of what is in the tax website (AT):

a) Sejam tributados no outro Estado contratante, em conformidade com convenção para eliminar a dupla tributação celebrada por Portugal com esse Estado; ou

The critical phrase 'em conformidade' has not been properly translated and will induce users to an incorrect conclusion.  If the country of source taxes but it is not according to the terms of the double tax treaty, the income is subject to tax in Portugal -  the remedy is to recover incorrectly charged tax from the country of source

nilonilonilo wrote:

At the risk at sounding like a complete ignoramus: is there also such a thing as a "Habitual resident" status (a "standard" residency status)? Or do expatriates by default fall under the NHR status?

In my case, our plan would be to move with our family, my wife and i have both have freelance jobs and would declare income and pay social security in Portugal, send our kid to a local school. We are not high net worth individuals or anything like that and I don't have the faintest idea about tax optimisation ...

So, NHR or something else?

Anybody who was not tax resident in the previous 5 years (tax) and becomes a resident may apply for this status -  whether it is beneficial or not, would depend on individual circumstances  - but also take into account that individual circumstances may change within the 10 years of the status - job changes, new skills, promotions, inheritances,etc

TonyJ1 wrote:

This is a mistranslation of the original legislation (or the translator did not understand the subtleties)- this is an  extact of what is in the tax website (AT):

a) Sejam tributados no outro Estado contratante, em conformidade com convenção para eliminar a dupla tributação celebrada por Portugal com esse Estado; ou

The critical phrase 'em conformidade' has not been properly translated and will induce users to an incorrect conclusion.  If the country of source taxes but it is not according to the terms of the double tax treaty, the income is subject to tax in Portugal -  the remedy is to recover incorrectly charged tax from the country of source

What subtleties? The entire original text can be found at the link I have referred to, official AT source:

https://info.portaldasfinancas.gov.pt/p … irs81.aspx

And all convention agreements that Portugal has established, in force, country by country, are here, and can be accessed by anyone who is interested:

https://info.portaldasfinancas.gov.pt/p … ncoes.aspx

Each PDF has the full text of the agreement in portuguese, followed by the full text in the official language of each country. Better than writing here, is to see the original, for each country.

That way subtleties disappear, conformities are detailed... And it has the advantage of not requiring any translator

nilonilonilo wrote:

I'm a translator, so i would be eligible for NHR status as a
"264 - Authors, journalists and linguists" ?

As said, in 15 years of freelance work, i have never ever encountered issues with the country of taxation or having had to prove where i was paying taxes so as to avoid double taxation, i think we just stumbled on an overzealous pen-pushing bureaucrat...

You should not put the question like that. You can apply for NHR status if you meet the conditions mentioned throughout this discussion. Obviously, having a high value added activity is not one of the conditions for applying for NHR status.

But, if you have that NHR status: in case you work in a high value added activity, you can enjoy that tax benefit.

JohnnyPT wrote:

nilonilonilo wrote:

I'm a translator, so i would be eligible for NHR status as a
"264 - Authors, journalists and linguists" ?

As said, in 15 years of freelance work, i have never ever encountered issues with the country of taxation or having had to prove where i was paying taxes so as to avoid double taxation, i think we just stumbled on an overzealous pen-pushing bureaucrat...

You should not put the question like that. You can apply for NHR status if you meet the conditions mentioned throughout this discussion. Obviously, having a high value added activity is not one of the conditions for applying for NHR status.

But, if you have that NHR status: in case you work in a high value added activity, you can enjoy that tax benefit.

Your are correct - taxpayers should request the nhr status - however, they should not be misled that foreign salary income is tax free in Portugal - this is rarely the case. If the taxpayer qualifies for the 'high    value profession' then the tax should be limited to 20%, otherwise normal tax tables apply. The other benefits such as interest, dividends, capital gains on disposal of fixed property, rental income from abroad  (save for 'black listed' countries/ territories), 10% rate for foreign pensions will be available.

The Portuguese taxation of the main types of employment income under the NHR regime is broadly as follows:

1. Employment income (which will be subject to social security contributions if Portugal-sourced (*) ) will be:

1A. tax-exempt if foreign-sourced and effectively taxed at source, no matter at what rate; or

1B. optionally taxed at the flat rate of 20% in Portugal, in case of a Value-Added Activity, independently of the country of source; or

1C. otherwise, taxed at the normal progressive rates applicable to habitual residents in Portugal.

Progressive rates here (post #1):
https://www.expat.com/forum/viewtopic.php?id=905979


(*) Employment income - worker's social security contributions if Portugal-sourced income = 11%
https://www.seg-social.pt/trabalhadores … -de-outrem


____


2. Self-employment income (which will be subject to social security contributions in Portugal (**),  except if the taxpayer already contributes to another social security system in the other country) will be taxed at the normal progressive rates applicable to habitual residents unless it is derived from a Value-Added Activity. If so:

2A. tax-exempt in Portugal if it is foreign-sourced and may be taxed at source under a DTA Double Treaty Agreement, or, in the latter's absence, under the OECD model tax convention (provided in this case that the source country is not a blacklisted tax haven), namely for being obtained through the individual's fixed base or permanent establishment in the other country;

2B. otherwise, taxed at the optional flat rate of 20% in Portugal (but the NHR taxpayer may choose the normal progressive rates, which may make sense only in the case of a very low level of income, ie., 1st level of income = 14,5% tax rate).


(**)
Self-employed workers (if Portugal-sourced income, general regime):
https://www.expat.com/forum/viewtopic.php?id=905979

Social security contributions if Portugal-sourced income = 21,4%
https://www.seg-social.pt/trabalhadores-independentes

1A. tax-exempt if foreign-sourced and effectively taxed at source, no matter at what rate;

As I have pointed out before, this is not accurate. The legislation reads as follows:

a) Sejam tributados no outro Estado contratante, em conformidade com convenção para eliminar a dupla tributação celebrada por Portugal com esse Estado; ou

ie I know it is a subtlety, but the income is only tax free in Portugal, if it is taxable in the country of source in terms of the rules of the double tax treaty - which for Portuguese tax residents is rarely the case. The income can still be effectively taxed in the country of source, but if not in accordance with the rules of the relevant double tax treaty, the PT tax authorities do not allow the exemption. The remedy in this case is that the taxpayer will have to claim the tax paid incorrectly in the country of source - the PT authority will not intervene on the taxpayers behalf

The topic in my previous post is about income from dependent employment income, originating from foreign-sourced. And only that. Is that what you are talking about? And if so, can you detail more about it, since everyone here knows that there are double convention agreements between Portugal and most countries, and that information has already been made available here n times, including in this thread about NHR, and can easily be accessed by anyone who is interested in...

If you read most, if not all double tax conventions, for the country of source to be able to validly tax salaries, there are three conditions, and they are cumulative. Here is the wording on the dependent clause of the UK Portugal double tax treaty (but most treaties the wording will be similar - maybe one or two variations, and inn that case, it would have to be evaluated in its own merits - the underlining is mine:

Article 15
Employments
(1) Subject to the provisions of Article 17, salaries, wages and other similar remuneration
(other than remuneration to which Article 18 applies) derived by a resident of a Contracting
State in respect of an employment shall be taxable only in that State unless the employment
is exercised in the other Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other State.
(2) Notwithstanding the provisions of paragraph (1), remuneration derived by a resident of a
Contracting State in respect of an employment exercised in the other Contracting State shall
be taxable only in the first-mentioned State if:
(a) The recipient is present in the other State for a period or periods not exceeding in
the aggregate 183 days in the fiscal year concerned, and
(b) The remuneration is paid by, or on behalf of, an employer who is not a resident of
the other State, and
(c) The remuneration is not borne by a permanent establishment or a fixed base
which the employer has in the other State.
(3) Notwithstanding the preceding provisions of this Article, remuneration in respect of an
employment exercised aboard a ship or aircraft in international traffic may be taxed in the
Contracting State in which the place of effective management of the enterprise is situated.

The third clause ie 2 b) is usually not the problem, and most of the time neither is 2a) but if someone is a remote worker, he will not usually be resident on the 'other' country (and if he is, then he is probably not resident in Portugal in terms of article 4 in any event). The catch is that if the person concerned is not spending more than 183 days, then the other country does not have the right to tax and thus the 3 conditions of the dta is not fulfilled. This is a general misunderstanding - the tax exemption only applies if the other country can and does tax the tax payer, but if the taxpayer is resident in Portugal, the other country 'can' tax the taxpayer - but if it does so, it is not in terms of the dta. Similar wording in the Portugal / South Africa dta, Portugal / Canada, Portugal / US - probably virtually all the treaties entered into by Portugal (and most other countries as this is based on the OECD model tax treaty)

Thank you TonyJ1, for your detailed explanation. It is useful for anyone who may be interested.

In case of UK-PT DTA treaty, if Art.15 - 2a) does not apply, UK does not tax income from dependent/independent work, these will be taxed in Portugal. This is in line with the following information available in this PDF from the Portuguese tax authorities (page 8):

https://europa.eu/taxedu/sites/default/ … rnh_pt.pdf


B - RENDIMENTOS DE FONTE ESTRANGEIRA

Eliminação da dupla tributação jurídica internacional pelo método de isenção

1 - Rendimentos da categoria A (trabalho dependente) – n.º 4 do art.º 81.º do CIRS

Aos residentes não habituais em território português que obtenham, no estrangeiro, rendimentos da categoria A, aplica-se o método de isenção, bastando que se verifique qualquer das condições previstas nas alíneas seguintes:

a) Sejam tributados no outro Estado contratante, em conformidade com convenção para eliminar a dupla tributação celebrada por Portugal com esse Estado; ou

b) Sejam tributados no outro país, território ou região, nos casos em que não exista convenção para eliminar a dupla tributação celebrada por Portugal, desde que os rendimentos, pelos critérios previstos no n.º 1 do art.º 18.º do CIRS, não sejam de considerar obtidos em território português.

(...)


_____

The taxation of the employment income of a UK NHR in Portugal, if Art.15 - 2a) is not fulfilled, will be favourable if it is a high value added activity (flat rate 20%), certainly lower than the tax rate to which it would be subject in the UK, but much less favourable in case of other professional activities.

Cryptocurrencies taxation

https://info.portaldasfinancas.gov.pt/p … _09541.pdf

You can translate free the PDF into English using a Doctranslator, such as:
https://www.onlinedoctranslator.com


According to the legal information issued by the Portuguese Tax Authorities (AT), it is stated that:
- income from cryptocurrencies sales will not be taxable under Personal Income Tax (IRS), under category E (relating to capital assets), nor will it be taxable under category G (relating to capital gains),
- unless, due to their regularity, it constitutes a professional or business activity of the taxpayer aiming at profit, in which case it will be taxed as income falling under category B (self-employment income) of Personal Income Tax (IRS).

In this way and regarding potential capital gains to be made by individuals, Portugal has an interesting tax attractiveness to add cryptocurrencies to the Non Habitual Resident Regime, in attracting non-Portuguese tax residents.

There is a lot of information on the internet about this, e.g.:

https://www.portugalresident.com/is-it- … -portugal/https://govisafree.com/crypto-portugal/

(...)

Foreign source dividends, interest, capital gains can be exempt from PIT if: The income can be liable to tax in the country of source, according to the applicable Tax Treaty or to the OECD Model Tax Convention; and
• It is not deemed derived in Portugal; and
• It is not deemed obtained in a tax haven.

Hi

I have to understand more the taxation for income from capital sources for NHR.

1)     For Foreign source dividends, interest, capital gains is the Tax Treaty of the  country where is located the bank deposit or the company for dividends or interests or the SICAV  (investment fund society)  ?  or the nationality of the NHR residents ?
2)    In case the income is exempt under the NHR rules, do you have to include anyway that income in the yearly individual income tax return  even if the rate is 0% ?
3)    Is the regular distribution from  SICAV  (investment fund society) similar to dividends ?
4)    Is somewhere to find out a list of the countries for which Foreign source dividends, interest, capital gains are exempt from PIT ?


Thanks

cpandrea wrote:

Foreign source dividends, interest, capital gains can be exempt from PIT if: The income can be liable to tax in the country of source, according to the applicable Tax Treaty or to the OECD Model Tax Convention; and
• It is not deemed derived in Portugal; and
• It is not deemed obtained in a tax haven.

Hi

I have to understand more the taxation for income from capital sources for NHR.

1)     For Foreign source dividends, interest, capital gains is the Tax Treaty of the  country where is located the bank deposit or the company for dividends or interests or the SICAV  (investment fund society)  ?  or the nationality of the NHR residents ?
2)    In case the income is exempt under the NHR rules, do you have to include anyway that income in the yearly individual income tax return  even if the rate is 0% ?
3)    Is the regular distribution from  SICAV  (investment fund society) similar to dividends ?
4)    Is somewhere to find out a list of the countries for which Foreign source dividends, interest, capital gains are exempt from PIT ?


Thanks

1) nationality does not come into tax affairs except in limited circumstances (usually more restrictive for citizens.  The source of the country is what is relevant eg you could have a deposit and earn interest from a bank incorporated in Switzerland but your bank account is in London - in this case the source is the UK. Sometimes not so easy to distinguish of where is the source, but in general if it is a dividend, the source will be where the company is incorporated, there iro of SICAV - where is the fund incorporated?
2) yes - there are declaratory obligations
3) from a Portuguese tax return point of view yes - both would be category E income, though with different tax codes
3) look for the Portuguese black list - the white list would be those countries not on the list

TonyJ1 wrote:

cpandrea wrote:

Foreign source dividends, interest, capital gains can be exempt from PIT if: The income can be liable to tax in the country of source, according to the applicable Tax Treaty or to the OECD Model Tax Convention; and
• It is not deemed derived in Portugal; and
• It is not deemed obtained in a tax haven.

Hi

I have to understand more the taxation for income from capital sources for NHR.

1)     For Foreign source dividends, interest, capital gains is the Tax Treaty of the  country where is located the bank deposit or the company for dividends or interests or the SICAV  (investment fund society)  ?  or the nationality of the NHR residents ?
2)    In case the income is exempt under the NHR rules, do you have to include anyway that income in the yearly individual income tax return  even if the rate is 0% ?
3)    Is the regular distribution from  SICAV  (investment fund society) similar to dividends ?
4)    Is somewhere to find out a list of the countries for which Foreign source dividends, interest, capital gains are exempt from PIT ?


Thanks

1) nationality does not come into tax affairs except in limited circumstances (usually more restrictive for citizens.  The source of the country is what is relevant eg you could have a deposit and earn interest from a bank incorporated in Switzerland but your bank account is in London - in this case the source is the UK. Sometimes not so easy to distinguish of where is the source, but in general if it is a dividend, the source will be where the company is incorporated, there iro of SICAV - where is the fund incorporated?
2) yes - there are declaratory obligations
3) from a Portuguese tax return point of view yes - both would be category E income, though with different tax codes
3) look for the Portuguese black list - the white list would be those countries not on the list

Many thanks for your replay

1)    Most of the SICAV (investment fund society)  are incorporated in Luxembourg and Ireland
2)    How is to do,  just to put 0 on the tax amount or you have to put the income eg. 12.500 as exempt income under the NHR rules in   in the yearly individual income tax return  ?  or you need to enclose to the  the yearly individual income tax return a detail of each transaction, that you did abroad ?  is the same for    Cryptocurrencies trading income ?
4)    Sorry  I don't understand it,   for some countries under the NHR rules the dividend and interest are exempt income,  all the white list countries ?         and for which countries are capital gains exempt

Thanks

cpandrea wrote:

TonyJ1 wrote:

cpandrea wrote:

Foreign source dividends, interest, capital gains can be exempt from PIT if: The income can be liable to tax in the country of source, according to the applicable Tax Treaty or to the OECD Model Tax Convention; and
• It is not deemed derived in Portugal; and
• It is not deemed obtained in a tax haven.

Hi

I have to understand more the taxation for income from capital sources for NHR.

1)     For Foreign source dividends, interest, capital gains is the Tax Treaty of the  country where is located the bank deposit or the company for dividends or interests or the SICAV  (investment fund society)  ?  or the nationality of the NHR residents ?
2)    In case the income is exempt under the NHR rules, do you have to include anyway that income in the yearly individual income tax return  even if the rate is 0% ?
3)    Is the regular distribution from  SICAV  (investment fund society) similar to dividends ?
4)    Is somewhere to find out a list of the countries for which Foreign source dividends, interest, capital gains are exempt from PIT ?


Thanks

1) nationality does not come into tax affairs except in limited circumstances (usually more restrictive for citizens.  The source of the country is what is relevant eg you could have a deposit and earn interest from a bank incorporated in Switzerland but your bank account is in London - in this case the source is the UK. Sometimes not so easy to distinguish of where is the source, but in general if it is a dividend, the source will be where the company is incorporated, there iro of SICAV - where is the fund incorporated?
2) yes - there are declaratory obligations
3) from a Portuguese tax return point of view yes - both would be category E income, though with different tax codes
3) look for the Portuguese black list - the white list would be those countries not on the list

Many thanks for your replay

1)    Most of the SICAV (investment fund society)  are incorporated in Luxembourg and Ireland
2)    How is to do,  just to put 0 on the tax amount or you have to put the income eg. 12.500 as exempt income under the NHR rules in   in the yearly individual income tax return  ?  or you need to enclose to the  the yearly individual income tax return a detail of each transaction, that you did abroad ?  is the same for    Cryptocurrencies trading income ?
4)    Sorry  I don't understand it,   for some countries under the NHR rules the dividend and interest are exempt income,  all the white list countries ?         and for which countries are capital gains exempt

Thanks

1 investments in Luxembourg and Ireland are fine
2. you would have to break down by country and nature of income - reported gross, taxes withheld
3 at the moment there are no reporting requirements for cripto currency (except for traders). Does not mean that tax returns will not be adjusted
4 you have to analise country by country - the rule is that interest, dividends, capital gains are tax free in Portugal under the nhr rules if the other country can tax it - if there is a double tax treaty with Portugal and the country concerned. If there is no treaty, then if the country can tax it under the rules of the OECD Model TAX Treaty and the country is not on the Portuguese Black list.

For practical purposes, basically interest/ dividends/ rental income will effectively be tax free in Portugal but reportable. In the case of capital gains - if from the disposal of immovable property, and other property of a similar nature, in most (if not all) double tax treaties (and the OECD Model tax treaty) gives the right to tax to the country where the asset is situated - therefore granted exemption (the wording 'can be taxed by the other country in terms of a dta etc). You will find that in respect of Financial instruments, the taxation rights in the double tax treaties (probably all, but should be analised one by one for certainty) and the OECD Model tax treaty is granted to the country of residence - hence not qualifying for the exemption under the nhr rules ie the other country cannot tax the capital gain derived from financial instruments - €200 for the analysis (joking)

Applying for NHR status - step by step (made by yourself)

Step 1. Get NIF

Go to a Tax Office (Repartição de Finanças) and obtain a taxpayer id number (NIF) as a non-resident, registering your current non-portuguese address, for which you will be required to show your passport and proof of residence.

https://eportugal.gov.pt/en/servicos/pe … a-singular

How to schedule a meeting at the Tax Office:

https://www.economias.pt/marcar-atendim … -financas/

A few days later, you will receive at your non-portuguese address, a letter with a password to access the Portaldasfinancas website. You can later change your password at portaldasfinancas website:

https://www.acesso.gov.pt/v2/loginForm? … /dashboard

With your NIF and password, you can log in to handle steps 4, 5 & 6 online, and access other services available online.

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Step 2. Become resident in Portugal (purchase or rent a residential property in Portugal)

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Step 3.Get the Certificate for Citizens of the EU/EEA/Switzerland issued by your Town Hall where you are resident or get a SEF residence permit / visa for non EU/EEA/Switzerland citizens

Registration Certificate for Citizens of the EU/EEA/Switzerland

https://www.expat.com/forum/viewtopic.p … 33#5088039

(Post #7)

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The NHR request should only be made after you have obtained your resident registration in Portugal (step 3)

If you already have the NIF number but still remain registered as a non-resident, you must first arrange to change your address and your resident status (steps 4 & 5)

Step 4.Update your address on the Portaldasfinancas website

Everything is done online on the Portaldasfinancas website. You have to make that request at the e-balcão (e-counter) facility inside.

You must upload here your document proving your residence in Portugal. This can be a residence certificate issued by your local council (if you are an EU citizen), or a residence permit (if you have a visa). This will take a few days to be completed.

Check here for more details / how to do:

These are unofficial how to do's because there is not much detailed information available on internet with printed screens for foreign residents who want to change their address by themselves.

https://support.e-residence.com/article … as-website

https://support.bordr.io/article/289-ho … as-website

(...)

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Step 5. Change your resident status: How to become a tax resident in Portugal

After step 4 completed, you will need to change your resident status.

Everything is done online on the Portaldasfinancas website by filling in this form:

https://www.portaldasfinancas.gov.pt/pt … Certidao=M

Select certidão = residência fiscal

This tax residence certificate issued through the Portaldasfinancas website is the only document that certifies your tax residence in Portugal for you to be able to make the activation of the Convention to Avoid Double Taxation (CDT). If you don't do this, you can pay tax in 2 countries.

You must then attach this document to the duly completed form from the tax authority of your country (where you are currently tax resident) and send it to that entity. That entity will be the equivalent to AT Finanças in Portugal.

Check here for more details / how to do:

https://observador.pt/2021/12/16/certif … e-janeiro/

https://www.economias.pt/certificado-de … ia-fiscal/

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Step 6. Submit your application for NHR status

After steps 4. and 5. completed, you can submit your NHR request.

Everything is done online on the Portaldasfinancas website by filling in this form:

https://sitfiscal.portaldasfinancas.gov … l/entregar

How to follow your NHR request:

https://sitfiscal.portaldasfinancas.gov … aohabitual

Select Consultar (Consulting) or Select Gerir (Managing)

One week or so later, you should receive in your portuguese address your NHR status approval or a request for additional documentation.

Check here for more details / how to do: NHR - A step-by-step guide

https://www.movingtoportugal.pt/en/dest … -portugal/

https://nomadgate.com/guide-to-portugal … residency/

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Thank you. This is very informative

When doing the NHR on the Portuguese Portal das Fincancas, if you have nominated yourself as your fiscal representative previously, do not fill in the NIF mandataria at the bottom.  Otherwise you will get a message to the effect that you cannot be a representative.  I asked a lawyer friend who sent me this information:

You should only fill the "mandatária" part if you were choosing a

third-party to be your representative, like a lawyer, for example. If that's

not the case, you don't need to fill anything in this specific part of the

page. You can leave it blank.

Hope this helps others when applying for the NHR status.

I have income in Dubai, UAE - which is essentially a "Foreign source income", will it fall under the below category and be exempted to be taxed within Portugal?

(c) An exemption on other foreign source income and earnings, provided they may be taxed outside of Portugal under the applicable tax conventions or the OECD model (if not a tax heaven) or, in case of employment income, that it is effectively taxed in the source country.

That's right, but you have to declare that income in your PT tax statement, as well as the taxes paid on that income in Dubai.

https://www.doutorfinancas.pt/impostos/ … er-no-irs/