Moving abroad? Consider Portugal.
So, other than a high quality health system, easy accessibility to the rest of the world and 3300 hours of sunshine a year! What other reason do expats in Portugal have for the move?
How about the Portuguese Non-Habitual Tax Resident scheme (NHR)?
What is NHR?
The NHR is a Portuguese tax regime that allows for non-residents, who are likely to set up permanent or temporary residence, to benefit from tax exemptions. However, certain high-income activities are subject to tax.
Which foreign-sourced incomes are exempt?
- Passive income (interest, dividends, certain royalties, other income from capital, capital gains and income from immovable property).
- Income from pensions.
- Employment income.
- Income from independent personal services.
However, some of the above sources of income are, potentially, subject to taxation in the source country. Speak to a financial advisor for all the details.
What types of income are eligible for reduced rates under NHR regime?
Domestic and foreign-sourced income from high value added activities of a scientific, artistic or technical nature will be subject to taxation at a rate of 20%. The following professions will be subject to the low (20%) tax rate:
- Architects, engineers and similar technicians
- Visual artists, actors and musicians
- Doctors and dentists
- Professional services, technicians and similar
- Investors, administrators and managers.
Inheritance and Gift Tax
If you’re considering Portugal as a retirement move then it may be important to think about inheritance tax.
It will please you to hear that since 2004, Portugal hasn’t imposed stamp tax on Inheritance for close family. Close family being children, grandchildren, parents, grandparents and spouse. For other heirs inheritance is taxed at just 10%.
However, in 2015 the Socialist Party put forward plans to impose a tax on inheritance over €1,000,000.