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Portuguese NHR

Portuguese NHR and foreign-sourced income

Rewarding innovation and skills

For professionals and entrepreneurs looking for new horizons, Portugal offers an intriguing opportunity. The country's Non-Habitual Resident (NHR) program provides favorable tax rates and incentives aimed at attracting top international talent. The program is well-designed to reward skills and innovation. Participants can gain financial advantages through a mix of low flat taxes and exemptions on certain income streams. At the same time, Portugal's high quality of life and affordable healthcare ensures peace of mind.

A magnet for global talent

In recent years, professionals across many fields have been drawn to the NHR program. Portugal has benefited from an influx of dynamic, world-class human capital. This has energized the economy and helped establish Portugal as a hub for forward-thinking industries.

A boon for businesses

Businesses also stand to gain from the global expertise the program attracts. By leveraging global talent, they can expand their capabilities and compete effectively in worldwide markets. The Portuguese government continues to refine the NHR program to align with strategic economic goals.

A blend of career success and life enjoyment

For those seeking to blend career success with life enjoyment, Portugal offers tremendous potential. With its mild climate, stunning landscapes, and appealing incentives, the country has much to offer globally-minded professionals. The NHR program provides a valuable springboard for seizing new opportunities.

Foreign-sourced income under the NHR

The tax rules in Portugal for income earned abroad can seem straightforward at first glance, but there are nuances to be aware of. For example, if you move to Portugal and work remotely as an independent contractor, providing services to clients in another country, that income may not actually be exempt from Portuguese taxes under the Non-Habitual Resident regime.

This is because Portugal determines the source of income based on where the work is performed physically, not where the client is located. So if you are located in Portugal while doing the work, you could be subject to Portuguese income tax at the reduced NHR rate of 20%, plus social security contributions and VAT.

In some cases for lower levels of income, it may be more favorable to opt for the standard tax rates instead. However, there are ways to potentially exempt foreign sourced income when working remotely from Portugal, such as by channeling the income through a company in another jurisdiction, or ensuring the work is done while physically outside of Portugal.

Overall, Portugal's NHR program offers excellent benefits for new residents, including favorable tax treatment and the appeal of living in a beautiful country with great weather and lifestyle. But it's worth planning things properly upfront to avoid any unintended tax implications or compliance issues.

The importance of planning

Of course, as with any opportunity, the details matter. Individual circumstances and income sources determine how tax exemptionsapply. Advance planning and expert guidance can help avoid any misconceptions, please do not hesitate to get in touch so an accurate planning loyal to your personal and business aspirations can be drawn to take the most benefit out of Portugal's NHR.