Taxation of Non Residents

June 19, 2023

Taxation of Non Residents and the Portuguese Non-Habitual Residence Scheme

Do you want to retire in Portugal? Do you want to live in Portugal for a part of the year? The Portuguese non-habitual resident regime gives you the possibility to receive your pension or other income tax free!

The Non Habitual Resident regime was introduced to attract individuals and their families to Portugal, by making it beneficial from a tax perspective to become tax resident in Portugal. This means providing the the ability to

  • grow wealth
  • pass on wealth without taxes on inheritance or gifts,
  • namely for children or spouse enjoy their retirement
  • without tax on their pensions.dispose of assets and may benefit from tax exemptions,

In Portugal non residents are only taxed on income which arises in Portugal. An individual is considered tax resident in Portugal if they either

a) Spend more than 183 days in Portugal during a particular calendar year;

b) Spend less than 183 days in a calendar year but have at the 31 December of the year their principal residence in Portugal.

Income and capital gains from immovable property located in Portugal are considered as arising in Portugal.

Taxation of income arising in Portugal is usually taxed at a flat rate which means that the non resident does not need to present a tax return or pay any additional tax beyond the tax already deducted.

The following types of income are taxed at a flat rate of 25% when they are paid to non residents:

  • Employment Income
  • Pensions

The following types of income are taxed at a flat rate of 28%

  • Rental income
  • Interest
  • Dividends
  • Capital gains

Do you have questions regarding Taxation of Non Residents
or would you like to book a meeting?