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Learn what Portugal offers to move to the country to work or to enjoy life after retirement – the Tax System for the Non-Regular Resident.

The personal income tax system for the non-regular resident has the purpose to attract to Portugal non-resident professionals as well as pensioners whose pension scheme is granted abroad.

This tax system has been attracting many to come to work or to enjoy life after retirement in Portugal and it can also interest you.:)

Who can benefit from the Tax system for the non-regular residents?

The Tax system for the non-regular residents is aimed to:

  1. Pensioners (Foreigners and Portuguese immigrants) beneficiaries of pensions schemes granted abroad;
  2. Non-resident Professionals qualified for activities * with high added value intellectual or industrial property or know-how. In this sense, Portugal has been attracting more and more young people from other countries.

* Are activities of high added value, with scientific, artistic or technical character (architects, engineers and similar; visual artists, actors and musicians; auditors; doctors and dentists; teachers; psychologists; liberal professionals, technicians and alike; investors, managers and directors).

What are the tax benefits for “non-regular residents”?

By changing the tax residence to Portugal, “non-regular residents” will benefit, in the Personal Income Tax (IRS):

  1. Pensioners enjoy full exemption from IRS for pensions granted abroad for 10 consecutive years;
  2. Professionals qualified for activities of high added value shall apply a special tax rate of 20% of IRS for 10 consecutive years;

Who can get the status of “non-regular resident?

This status can be requested by citizens:

  1. Deemed resident in Portugal for tax purposes; **
  2. And has not been deemed resident in Portugal during the 5 preceding years prior to the year in which intended to be taxed as “non-regular resident”.

* * In a simple way, to be deemed resident in Portugal for tax purposes, will have to stay more than 183 days in a row or interpolated per year or have a house that lead to the presumption of an intention to keep it and used it as usual residence.

Income taxation for “non-regular residents”

Taxation of income obtained by “non-regular residents” depends on the source of income, ie whether it’s Portuguese or foreign …

I- Portuguese source income

Net income from category A of the IRS (employment), or category B (self-employment) earned from high added value activities, in Portugal, are taxed at the special rate of 20%.

II- Foreign source Income

II.1- Income from category A (employment)

Income in category A obtained abroad is exempt from IRS, provided that:

  1. It is taxed in another State which held a Convention with Portugal to eliminate double taxation;
  2. And/or are taxed in another Country where there is no convention to eliminate double taxation, along as the income obtained is not considered to have been obtained in Portugal.

II.2- Income from Categories B (self-employment), E (capital income), F (real state income) and G (increase in wealth)

For Income obtained abroad:

  1. Category B the exemption method is applied in:
  • Activities of high added value or intellectual or industrial property;
  • or providing information concerning an experiment carried out in the industrial, commercial or scientific areas.

2. Categories E, F and G, are exempt from IRS, provided that:

  • It is taxed in another State which held a Convention with Portugal to eliminate double taxation;
  • And/or in another Country, under the terms defined by OECD Model Tax Convention on Income and Capital, where there is no convention to eliminate double taxation and provided that the corresponding income cannot be considered to have been obtained in Portugal.

II.3- Category H Income (pensions)

For income of category H obtained, abroad, are exempt from IRS, if they are from contributions that have not be deducted under Personal Income Taxe (IRS) Code, provided that:

  1. They are taxed by the State, according to the Convention to eliminate double taxation;
  2. And/or, according to the IRS Code, they cannot be considered to have been obtained in Portugal.

II.4- Other income obtained abroad

Other income obtained abroad (e.g. professionals and businesses income of category B), which do not benefit from this non-regular resident Tax Regime, will be taxed in Portugal:

  1. According to the Convention to eliminate double taxation;
  2. Or if there is no such convention, will be applied the unilateral standard to eliminate international juridical double taxation.

For More information: Check the Portal das Finanças (www.portaldasfinancas.gov.pt) or the Autoridade Tributária e Aduaneira (Tax and Customs Authority).

Now that you know what Portugal offers to move to the country to work or to enjoy life after retirement discover what are the Top reasons for living in Portugal.

If you want to Invest in Portugal (and receive a visa exemption for traveling within Europe), find out what the Golden Visa is.

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