NHR Portugal | What You Need to Know
LEARNING OBJECTIVES
We’re passionate about providing free, high quality and up-to-date financial information to Expats around the world.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
What is the Non-Habitual Residence regime in Portugal
Why and when it’s coming to an end
Other options for British Expats
The importance of financial planning for tax-efficiency
The NHR in Portugal
Portugal has been a leading destination for retirees and remote workers for many years. Warm weather, rich culture and friendly locals have not however been the only attractions for those seeking a slower pace of life and more sun.
The non habitual residence Portugal tax regime means that people who are Portuguese tax residents could qualify for a special tax status offering attractive benefits and tax relief for a period of 10 years.
Tax Rates in Portugal NHR
The current NHR Tax rates in Portugal can be broken down into 3 areas:
Income Tax Rate
A flat tax of 20% qualifying income made in Portugal.
No tax on foreign labour income assuming it was taxed at source.
No tax on self-employment income earned abroad subject to double taxation agreements.
2. Passive income
No tax on foreign dividends, rentals, royalties etc. regardless of taxation at source.
No tax on capital gains from foreign property sales.
3. Pensions
A flat 10% of foreign and private pensions is taxed in Portugal
The End of NHR | Expat Advice
Wildly popular with digital nomads, retirees, and other investors the party is unfortunately coming to an end on 01/01/2024.
Although the Portuguese government needs to pass the bill for scrapping of the NHI regime at the end of November, there is a strong likelihood this will be the case.
Those who have qualified for the NHR status will keep on enjoying the benefits until the end of their respective 10-year terms.
Residents who are eligible at the end of 2023 can still apply for the special tax status until the 31st of March 2024.
Moving forward, Expats should take regulated advice to structure their finances.
Similarly to the UK ( think ISAs, pension contributions and Unit Trusts) Portugal offers various tax wrappers that can fit within your retirement strategy abroad.
Taking Financial Advice in Portugal
Portugal offers resident investors other investment options that can see them benefit from a favourable tax regime. The most prominent vehicle is a tax efficient life assurance policy, which is compliant and designed to sit within the Portuguese tax system.
Key Benefits include:
Portfolio Diversification: Tax-efficient life insurance policies provide a diverse range of investment options, including traditional savings, investment-linked policies, and retirement solutions. This diversification can help investors manage risk and achieve their financial objectives more effectively. At The Wealth Genesis, we build our client investments around low-cost index trackers, which are complemented by active fund managers, such as Fundsmith, Ballie Gifford and others.
Tax Optimisation: By planning withdrawals and investment strategies correctly investors can pay as little as 11.2% of Portugal Income Tax on the value of their gains. These tax benefits in Portugal kick-in a few years after holding the policy, and represent the most-tax efficient investment in Portugal.
Financial Flexibility: Life insurance policies can be tailored to suit individual financial goals, whether that's saving for retirement, providing for education expenses, or ensuring a comfortable retirement.
Easy to Understand: Whilst Portuguese banks may offer these investments, they will be in the local language, which could cause some confusion. You'll also be charged commissions for setting these up. At The Wealth Genesis, we use providers that issue policies in plain English, whilst remaining tax-efficient in Portugal.
Expat Wealth Management
As the NHR in Portugal is ending, British Expats should organise their finances in the most tax-efficient way.
The Wealth Genesis is fully regulated and authorised to provide expert and unbiased Wealth Management services to British Expats all over Portugal.
We're the first Expat Financial Adviser to charge all our clients the same flat-fee, regardless of background, wealth and circumstances. This ensures no conflicts of interest, commissions or hidden fees when working with us.
We have expert, experienced Advisers based in Faro, Lisbon & Madeira.
Contact us today to see how we can help secure your financial well-being in Portugal.
Get Started with The Wealth Genesis
FAQs
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Like other European countries, Portugal introduced a tax-efficient regime for Expats to encourage investment into the country and net inflows.
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Whilst the NHR regime has been effective in bringing investment into the country, it comes with it’s concerns.
Politically, it has become a controversial issue for some nationals.
Separately, the Portuguese are looking to increase tax income from Expats. -
As per the article, consider a locally compliant life-assurance policy .
At The Wealth Genesis, we provide fully indepedent and unbiased advice.
Our only priority is providing our clients with the best advice possible, both initially and on an ongoing basis. -
Depending on your bank, and the value of your assets, you should be able to do this yourself.
However, be wary. Make sure you understand the terms and conditions, the cost as well as the investments.
Naturally, we feel we can add a great deal of value to our clients, as well as peace of mind knowing that your hard-earned money is being looked after by a regulated expert.
