In addition to other advantages, the status of Non-Habitual Resident brings with it some tax benefits that you can enjoy/appreciate.
Firstly, these benefits vary according to the type of income that a given taxpayer earns. For example, taxpayers who have income in Portugal from employment or/and self-employment may enjoy a lower rate of IRS, in this case 20%. However, this rate reduction does not apply to all workers. Thus, it only applies to taxpayers who have high value-added activities. Therefore, taxpayers who work as doctors, architects, psychologists, teachers, among others, will be able to enjoy this benefit. The list of activities can be found in the ordinance no.230/2019.
For taxpayers who have obtained income from employment or/and self-employment abroad, the tax exemption method is applied in Portugal. This means that these taxpayers do not pay tax in Portugal, as long as they are taxed in another country. In addition, they are also considered if they are covered by other criteria laid down by law. Thus, it means that these taxpayers do not pay tax in Portuguese territory, as long as they are subject to taxation in another country. In addition, they are also considered if they are covered by other criteria provided by law.
If the taxpayer is a foreign pensioner, who is receiving his retirement through another country, then exactly the same method of tax exemption is applied in Portugal. This is subject to compliance, of at least one of the requirements set out below:
- Be taxed in the other Contracting State, provided there is agreement between the two States, to prevent double taxation;
- When, by the criteria presented in nº1 of articleº18 of the CIRS (Tax Code on Personal Income), the income should not be considered as obtained in Portugal.
However, it is worth remembering that, with the approval of the State Budget for 2020, Law nº. 2/2020 of 31st. of March, the net pension income is now taxed at the rate of 10% – when it is not taxed in the contracting country through a Double Taxation Agreement signed between Portugal and that same country.