IN391 - Portuguese Golden Visa and the Non-Habitual Residents Tax Scheme - Making Portugal an Attractive Location for Residence

Since the introduction of Portugal’s “Golden Visa” and a special tax regime for non-habitual residents, Portugal has become a destination of choice for many non-EU nationals.

The Golden Visa enables non-EU residents to not only be resident in Portugal, but to also move freely within the Schengen Zone.  The “Non-Habitual Residents Regime” means that they can also enjoy low taxes or, in some cases, freedom from taxation in Portugal. EU nationals moving to Portugal can also benefit from the Non-Habitual Residents Regime.

Who is Eligible for a Golden Visa?

In order to qualify for a Golden Visa an individual must meet and maintain, for at least five years, one of the following three investment criteria:

  • Investment of at least €1 million in Portugal.  This can be achieved by transferring €1 million to a bank account in Portugal or the acquisition of equity in a company or companies in Portugal; OR
  • Creation of a business which employs at least 10 people in a full or part time capacity; OR
  • Purchase and retention of a property for a minimum value of €500,000.

New rules, introduced in July 2015, extend the choice of investments available to apply for a Golden Visa:

1.    Investment of a minimum €350,000 in a project relating to cultural or scientific research; OR

2.    The purchase of a property built at least 30 years ago or located in an area designated for urban renewal. The property, including the costs of rebuilding and/or renewal, must equal a minimum €350,000; OR

3.    Investment of a minimum €250,000 to support artistic productions and/or national heritage projects organised through the central or local Portuguese authorities; OR

4.    Investment of a minimum €500,000 to purchase shares in investment funds or venture capital companies that are being used to support small and/or medium sized companies in Portugal that have generated viable business development plans.

In addition, individuals investing in a region with a low population density (less than 100 habitants per km2) or with a GDP 75% or less than the national average benefit from a 20% reduction in the specified investment criteria. The two exceptions are the capital transfer of at least €1,000,000 to a Portuguese bank account or a Portuguese company and the investment of a minimum €500,000 to purchase shares in investment funds or venture capital which is being used to support small and/or medium size companies.

Are there Minimum Stay Requirements?

In order to renew a Golden Visa an individual must be present in Portugal for:

  • 7 days in the first year.

  • 14 days in the subsequent two year periods (i.e. years 2-3 and 4-5).

Is it Possible to Obtain a Portuguese Passport?

Once an individual has been resident in Portugal for 5 years he/she can apply for Portuguese citizenship at the end of the 5th year and obtain a Portuguese passport.

NON-HABITUAL RESIDENTS SCHEME (NHR)

Details

The NHR regime is available to individuals who have not been tax resident in Portugal for the previous 5 years but who wish to be tax resident in Portugal.

An individual can enjoy the NHR regime for 10 years, after which he/she will be taxed at the standard Portuguese tax rate.

The tax rates applicable during the 10 years that an individual can benefit from the NHR scheme, as long as all of the requirements are met, are:

Type of Income

Taxation Rate

Portuguese source:

  • Employment income
  • Self-employment income
 
  • Taxation at a 20% flat rate (instead of taxation at progressive rates)

Foreign source:

  • Self-employment income
  • Passive income (interest, dividends, capital gains, other income from capital and income from immovable property)

OR

  • Tax exemption if the income is potentially taxed in the source country under a tax treaty between Portugal and the source country
  • In the absence of such a treaty if the income is potentially taxed in the source country in accordance with the OECD model tax convention on income and capital and is not deemed to be earned in Portugal and the source country is not a tax haven (as defined by Portugal)

Foreign source:

  • Employment income
  • Pension income

OR

  • Tax exemption if the income is potentially taxed in the source country under a tax treaty between Portugal and the source country
  • In the absence of such a treaty if the income is potentially taxed in the source country and is not deemed to have been earned in Portugal in accordance with the rules set out in the Personal Income Tax Code (PIT)

 

Why Portugal?

There are a number of additional reasons why Portugal is an attractive location:

  • Pleasant climate.
  • Low cost of living.
  • Excellent healthcare.
  • Good communication links: 278 daily flights from Portugal to destinations worldwide.
  • A low crime rate.

Summary

Portugal is a viable and appealing country for residence. It offers two attractive residence schemes enabling individuals to enjoy free movement within Schengen countries and a number of tax advantages.

The Golden Visa Regime and the Portuguese Non-Habitual Residents Regime are legally compatible. A non-EU national can therefore simultaneously make an application to both regimes.

EU nationals who are able to move to Portugal without needing to apply for a Golden Visa are able to benefit from the Portuguese Non-Habitual Residents Regime.

Additional Information

If you would like further information on the Portuguese Golden Visa and the Non-Habitual Residents Regime, please speak to Carlos Santos at the Dixcart office in Madeira, or to your usual Dixcart contact.

Updated August 2018

Categories: Jurisdiction, Portugal, Year, 2016, Category, Dixcart Domiciles