All of these people wish to achieve tax optimisation by relocating to a friendly, discreet and safe EU country. They are able to do so through a special tax regime, for non-habitual residents (NHR), that presents many attractive fiscal benefits.
The programme offers tax relief on some foreign income sources. For example, you may receive your pension income paying only 10% tax; be exempt from tax on earnings from dividends and royalties; be entitled to a 20% flat rate on certain foreign sourced incomes, this to mention just the main benefits. It is also worth bearing in mind that there is no wealth or inheritance tax under the Portuguese system.
In order to apply for the NHR scheme, an individual needs to become a Portuguese resident, therefore a Portuguese taxpayer - having not already been so in the five years prior to the application and another requirement is that they are able to spend at least 183 days per fiscal year in Portugal. Having fulfilled these and a couple other requirements, they are then free to enjoy the benefits of this taxation for a consecutive 10-year period - true fiscal stability.
Besides the benefits under the NHR regime, Portugal as a jurisdiction has a very favourable tax regime, here are some highlights:
No gift and inheritance tax for assets outside of Portugal. Inheritances or gifts of Portuguese assets to spouse, descendants or ascendants are tax exempt.
Gifts to other individuals are subject to a flat 10% stamp tax rate.
No wealth tax and free remittance of funds either to Portugal or abroad.
Beneficial treatment for pensions and other life insurance products may also significantly reduce the effective tax burden on capital invested.
Portuguese companies may take advantage of EU non-discrimination rules and EU directives on mergers, dividends, interest and royalties, as well as Double Taxation Treaties (DTT) signed by Portugal.
Dividends and capital gains obtained by Portuguese companies can benefit from a participation exemption regime, thus making Portugal an interesting location for investments abroad.
At Blacktower, we can advise on how NHR can work for you. We are specialists in wealth and financial management, tax and estate planning and more. Our focus is your future financial security.