- 16/10/19

Fiscal benefits of Non-Habitual Residency in Portugal

There are many reasons to invest in property in the Algarve, it is one of Europe’s most popular tourist regions, welcoming 3.7 million overnight tourists a year with high demand for quality summer rental properties. The Algarve enjoys 3000 hours of sunshine a year to enjoy its incredible golf courses, spectacular beaches and much, much more.


In recent years, Portugal has quickly become a haven for affluent, high net-worth individuals - all of whom are benefiting from a unique tax regime that presents several attractive fiscal benefits. However, non-habitual residency is something that everyone investing in the Algarve should consider.


Firstly, it renders any private pension income earned abroad tax exempt - with similar exemption possible for other incomes earned abroad. In addition, income derived from high value-added activities earned in Portugal is taxed at a flat rate of 20% (an additional surcharge of 3,5% applies). It is also worth bearing in mind that there is no wealth or inheritance tax under the Portuguese system. To apply as a non-habitual resident, an individual merely needs to become a Portuguese taxpayer - having not already been so in the five years prior to application. Having fulfilled these requirements, they are then free to enjoy the benefits of this taxation for a consecutive 10-year period - true fiscal stability.


The regime was first introduced in Portugal in 2009, with one of its principal objectives to attract wealthy individuals and their families to Portugal by making it financially beneficial to become tax-paying residents. As a result, Portuguese NHRs can grow their wealth in a white listed jurisdiction, earn income in a tax friendly environment, dispose of their assets and benefit from tax exemptions, pass on their wealth freed from inheritance or gift taxes and enjoy their retirement without sacrificing their pensions. There is more to the Algarve lifestyle than spectacular beaches and golf - it makes clear financial sense too.


Pensions, dividends, royalties and interest from non-Portuguese sourced income are all exempt from personal income tax in Portugal. Furthermore, certain types of salaries, provided they are paid from a non-Portuguese source, can also be exempt from tax. And this can be put into action quickly too - a decision typically has a timeframe of up to 8 months - with the status backdated to the date of becoming Portuguese tax resident.


The Golden Visa is a much-vaunted attraction to the Algarve - but as non-habitual taxation demonstrates there are many other financial incentives to entice you to make the move. As recent press has demonstrated, offshore tax strategies are not as reassuring as they once were - all of which makes the Algarve a highly desirable alternative for the future.


- 01/10/2024

Investing in the Algarve: A Comprehensive Guide to the D7 Visa Program and Its Advantages

Ombria Algarve emerges as an exclusive resort, a hidden gem for real estate investors seeking residency and diverse experiences.

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- 09/20/2021

Welcome to Portugal: 5 Reasons to Invest in Ombria Resort

Let’s look at the top 5 reasons why buying a property at Ombria Resort might be the best real estate investment for you.

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- 09/22/2020

Ombria’s Geothermal System: An Interview with Ville Tallbacka

The Project Director at Ombria Resort talks about its pioneering, low-impact near-to-surface geothermal system.

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