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Portugal has an interesting tax regime in terms of the Personal Income Tax (IRS), called Non-Habitual Resident (RNH), with a view to attracting non-resident professionals qualified in high value-added or intellectual property activities to Portugal, industry or know-how, as well as beneficiaries of pensions obtained abroad.

- Who can apply for registration as a non-habitual resident?

Citizens who meet the following conditions can apply for registration as a non-habitual resident:

• Be considered, for tax purposes, resident in Portuguese territory, in accordance with any of the criteria established in no. as a non-habitual resident;

• Has not been considered a resident in Portuguese territory in any of the five years prior to the year in which he intends to start taxation as a non-habitual resident.

- When should you apply for registration as a non-habitual resident?

The application for registration as a non-habitual resident should only be made after having registered as a resident in Portuguese territory. Therefore, if you already have a Portuguese tax identification number (NIF) but are still registered as a non-resident, you must first request a change of address and resident status at any Tax Office or Citizen's Shop. . The application for registration, as a non-habitual resident, must be made by 31 March, inclusive, of the year following the year in which you become a resident in Portuguese territory.

- What right does a person who is considered a non-habitual resident acquire?

You acquire the right to be taxed as such for a period of 10 consecutive years from the year, inclusive, of your registration as a resident in Portuguese territory, provided that in each of these 10 years you are considered a resident there. This 10-year period is non-extendable.

For income obtained in Portugal from activities covered by the regime, the fixed IRS rate is 20% with withholding tax.

With regard to income obtained from a foreign source, the exemption method may be applied. However, it is necessary to analyze the existing bilateral agreements between Portugal and the country where the source of foreign income comes from.

In the case of Brazilians, there is an agreement to avoid double taxation between Brazil and Portugal. Therefore, for these nationals it is necessary to check the rules that apply to each of the taxes.

- What are the high added value activities, of a scientific, artistic or technical nature, that are relevant to the non-habitual resident tax regime?

Professional activities

• 112 – General directors and executive managers of companies;

• 12 – Directors of administrative and commercial services;

• 13 – Production and specialized service directors;

• 14 – Directors of hotels, restaurants, commerce and other services;

• 21 – Specialists in physical sciences, mathematics, engineering and related techniques;

• 221 – Doctors;

• 2261 – Dentists and stomatologists;

• 231 – University and higher education teachers;

• 25 – Specialists in information and communication technologies (ICT);

• 264 – Authors, journalists and linguists;

• 265 – Creative and performing arts artists;

• 31 – Intermediate level technicians and science and engineering professions;

• 35 – Information and communication technology technicians;

• 61 – Market-oriented farmers and skilled workers in agriculture and animal production;

• 62 – Skilled forest, fishing and hunting workers, market oriented;

• 7 – Skilled workers in industry, construction and craftsmen, including, in particular, skilled workers in metallurgy, metalworking, food processing, woodworking, clothing, crafts, printing, the manufacture of precision instruments, jewelers, artisans, workers in electricity and electronics;

• 8 – Operators of installations and machines and assembly workers, namely operators of fixed installations and machines.

1.2. Other professional activities

In addition to these professional activities, the Ordinance also lists other activities covered, namely the directors and managers of companies promoting productive investment, provided that they are related to eligible projects and with contracts for the concession of tax benefits signed under the Investment Tax Code.

-  What changed in 2020?

Foreign retirees who benefited from the Non-Habitual Resident Tax Regime were not taxed. But the 2020 state budget introduced a 10% fee, which could now be applied to new applicants. However, it is necessary to verify the existing agreements between Portugal and the country where the income was obtained. In the case of Brazil, it is determined that the person who pays the pension tax is the paying country, so it will be up to Brazil to tax it.

The RNH is a very interesting scheme, but the analysis of the advantages must be analyzed on a case-by-case basis.