How to make Portugal your personal tax haven (with NHR)? (2023)

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00:56 The key to 0% tax status – Non Habitual Residence
01:30 Other tax and financial benefits for life Portugal
02:46 Making most use of the NHR framework when you arrive
06:20 Futureproofing is important too
06:48 Those without NHR status
07:18 What does NOT work
08:21 Solutions
09:21 Ensure you plan pre move

Caveat

Please take personalised advice and do not rely on the content of this video.

Without planning Portugal can be an expensive place to live, with tax rates as high as 53% but by taking advice early and doing the necessary planning, we have been able to create situations where clients pay 0% tax.

00:56 – The key to 0% tax status – Non Habitual Residence

Portugal introduced the Non-Habitual Residence (NHR) scheme in 2009 to attract new residents to the country. This scheme offers the potential for very low (or no) tax on pensions, capital gains and certain types of income for 10 years.

01:30 Other tax and financial benefits for life Portugal

• Inheritance tax has been abolished
• Succession tax but only applies to non direct line descendants or ascendants, or no spouse but do consider your nationality / domicile
• No wealth tax
• Uniform tax system – unlike Spain for example

02:46 Making most use of the NHR framework when you arrive

0% on dividends

0% on certain business sales

We have been able to advise clients on the sale of their UK businesses free of tax and in certain cases, created losses to carry forward into the future thus securing further tax savings.

0% on pension income – pre 2020 NHR

Pension income is taxed at 10% for post-31st March 2020 NHRs

0% tax on non Portuguese property sales

NHR can exempt capital gains tax in Portugal which would otherwise be taxed.

0% tax on trust withdrawals

There are certain situations that will allow withdrawals from trusts free from tax.

Preferential employment tax rates

20% income tax rate on earned income for those working in Portugal in jobs deemed as ‘highly valued’ by the Portuguese government.

06:20 Futureproofing is important

If you have NHR already, think about planning for the end of the scheme, as there are steps you can take now to futureproof yourself after your NHR period expiries.

06:48 Those without NHR status

With the correct planning and structuring, you can still create a tax-favourable position and in some cases, no or single-digit rates of tax.

07:18 What does NOT work

• Capital gains on shares and portfolio including ISAs – taxed at 28%
• Income from collective investment schemes even within ISAs – taxed at 28%
• Employment and self employment income – taxed as a Portuguese worker if you don’t qualify for the HVA under the NHR program

08:21 Solutions

In light of the above, you want to review structure of your assets and plan e.g. selling or rebasing assets

Thinking creatively

Sometimes the obvious course of action is not always the most effectively.

09:21 Ensure you plan pre move

Planning well ahead of your move puts you in the most favourable position. This will
allow you to take advantage of any tax opportunities in your home country and arrive in Portugal with the right structures, assets or income sources.

Caveats

The benefits of NHR do not automatically apply to all situations; planning is required to maximise tax-saving opportunities.

There are subtle nuances to the NHR scheme and international tax rules, meaning that in some cases it may not be beneficial to apply for NHR. It depends on how your income is generated and the interaction with your originating country and in some cases, we have seen this create an additional tax liability.