The tax benefits of being a habitual resident

When researching migration to Portugal, Brazilians often come across the term “non-habitual resident”. But what does this tax regime mean? What are the benefits and how can you join?

Being a non-habitual resident (NHR) can offer various tax advantages for foreigners who wish to live in Portugal, or for Portuguese who live in other countries and wish to return. However, it is important to analyze each case individually to understand in which scenarios the system can be advantageous for the immigrant.

To understand how the Non-Habitual Resident Tax Regime works, you need to know its rules. The scheme offers a number of benefits, one of the main ones being the possibility of exempting income from abroad. It is important to remember that the RNH is valid for ten years after registration and cannot be renewed later.

Rules for applying to become a non-habitual resident in Portugal

According to the statute, it is possible to apply for registration as a non-habitual resident for foreigners and Portuguese who have not been tax residents in Portugal for the last five years, i.e. for those who are transferring their residence to the country.

It is important to note that, for tax purposes, Brazilians arriving in Portugal must be considered residents in accordance with the criteria laid down in article 16, number 1 of the IRS (Personal Income Tax) Code.

So, when should you apply to the RNH?

To apply for Non-Habitual Resident (NHR) status in Portugal, you need to register as a resident in the country. If you already have a Portuguese Tax Identification Number (NIF) but have not yet been registered as a non-resident, the first step is to apply for a change of address at any Tax Office or Citizen’s Bureau. It is important to remember that the application must be made by March 31 of the year following the year in which the citizen became resident in Portuguese territory.

Before starting the application process, it is recommended that you check the advantages and disadvantages of being a non-habitual resident in Portugal.

The main benefits of being a non-habitual resident

• Possibility of tax exemption on employment income from abroad
• Reduced rates or tax exemptions on certain types of income received in Portugal and/or abroad, for up to 10 years

However, it is important to remember that these benefits vary according to each situation and that the decision to become an RNH must be carefully assessed, taking into account each person’s individual circumstances. It is recommended to seek specialized professional advice to better understand the advantages and disadvantages and make an informed decision.

What do you have to do to qualify for NHR tax advantages in Portugal?

Since January 1, 2020, Ministerial Order no. 12/2010 has defined a series of activities eligible for the Non-Habitual Resident regime in Portugal. These include professions such as architects, engineers, visual artists, actors, musicians, auditors, tax consultants, doctors, dentists, psychologists, university professors, freelance technicians, computer programmers, designers and information services, among others.

Investors, directors and managers of companies promoting productive investment are also eligible, provided that they are involved in eligible projects and have contracts granting tax benefits under the Investment Tax Code, approved by Decree-Law no. 249/2009, of September 23.

In short, these activities allow professionals to fall under the NHR tax regime in Portugal and thus enjoy the tax advantages offered by the country. However, it is important to remember that each case must be assessed individually and that not all professions can be covered by the scheme.

It is therefore essential to consult a tax specialist before making any decision about moving to Portugal.

What documents are needed to prove that the activities are valid for the RNH?

• Employment or service contract with the duties performed duly identified;
• Certificate of qualification as an investor, administrator or manager;
• For senior management activities, you must present a joint power of attorney and an employment contract proving that you hold a management position;
• In the case of partners and managers, the analysis will be carried out according to code 801;
• For self-employed activities, you must submit a declaration of commencement of activity indicating the CIRS code or CAE compatible with the table of high value-added activities, a description of invoices issued and proof of registration with the Professional Association, if necessary.

In addition to these specific documents, other proof of professional practice can also be accepted as suitable evidence.

How to become a non-habitual resident in Portugal

Step by step to apply for the RNH tax in Portugal

In order to start the registration process, the citizen must send the request directly to the Tax and Customs Authority, Finance sector. You can find more information about the procedure on the Finance Portal. However, it is important to remember that the application for registration in the scheme should only be made after registering as a resident in Portugal.

The application for the Non-Habitual Resident Regime (NHR) can be made online. All you have to do is fill in the necessary forms in the personal area of the organization’s website. If the applicant is a foreigner and does not have access to or prefers the face-to-face method, it is possible to submit the application at one of the tax office counters.

Instructions for accessing your account on the organization’s website

First of all, you need to register on the site and request a password. With the login in hand, the citizen must access the option “Submit Registration Application – Non-Habitual Resident”. On this page, you need to fill in information such as the year you started your application and your previous country of residence. Next, the applicant must confirm that they meet the requirements to be considered a non-resident for the last five years and then finalize the application.

Follow your application for non-habitual resident status in Portugal in real time

You can check the status of your application within 48 hours. If approved, the portal will provide proof of application. However, if the application is rejected, the citizen will receive a notification from the Finance Department and will be able to present the required documents, along with a proof of registration, to appeal the decision.

To follow up the request on the website, you need to access the options: Tax Services > Citizens > Consult > Application > Non-Habitual Resident Registration.

Understanding the elimination of international double taxation

If the citizen has income obtained outside Portugal, they can request the elimination of international double taxation in two scenarios, corresponding to the year in question. For non-habitual residents in Portugal who receive income in other countries, it is possible to use the exemption method as stipulated in article 81 of the Personal Income Tax Code (CIRS).

In this way, the applicant can choose the tax credit method, which implies that the income must be included for tax purposes, except for those provided for in paragraphs 7, 9 and 10 of article 72 of the CIRS.

Non-habitual resident in Portugal: worth considering?

As pointed out throughout this article, the NHR scheme offers numerous advantages. However, in order to assess whether it is advantageous for each applicant, it is necessary to analyze the situation individually. It is recommended that you seek advice or specialized professionals to clarify any doubts and help you make the best decision for each specific case.