How to benefit from the Non-Habitual Resident (NHR) status in Portugal ?

For several years now, the Non-Habitual Resident (NHR) status in Portugal has offered foreign nationals the opportunity to become Portuguese tax residents under very favorable income tax conditions.

The United States and Portugal have long ratified a tax treaty designed to avoid double taxation and establish rules for administrative cooperation regarding income tax.

Retirees, in particular, who spend at least 183 days per year in Portugal, or who, by December 31, own a home whose characteristics and living conditions suggest the intention of establishing it as their main residence, may be exempt from personal income tax for a period of ten years, provided their pensions are paid from a non-Portuguese source.
However, the renewability of this exemption remains uncertain.

This exemption may be combined with other benefits available under the Portuguese Non-Habitual Resident regime, which already allows for tax exemption on foreign-sourced income.

The NHR scheme offers additional advantages: a flat tax rate of 20% applies to certain types of income derived from activities considered high value-added (e.g., IT services, certain liberal professions, etc.).

This flat rate is applicable to income earned from service provision and wages from foreign sources. Dividends, interest, capital gains, and any other foreign-sourced income are also exempt from Portuguese personal income tax.

⚠️ Important: To qualify for this regime, the applicant must not have been taxed as a Portuguese tax resident during the last five years, and must be able to demonstrate the existence of a primary residence in Portugal as of December 31, as outlined above.