Taxes and Residency

Residents in Portugal for tax purposes are taxed on their worldwide income at progressive rates varying from 14.5% to 48% for 2023.

Non-residents are liable to income tax only on Portuguese-source income, which includes not only that portion of remuneration that can be allocated to the activity carried out in Portugal but also remuneration that is borne by a Portuguese company or permanent establishment (PE).

Non-residents are taxed at a flat rate of 25% on their taxable remuneration in 2023.

New NHR

Do you know about the New NHR 2.0 (Tax Incentive Scheme for scientific Research and Innovation)?

In addition to the changes to the NHR regime, a new tax incentive for scientific research and innovation has been introduced for individuals relocating to Portugal from 1 January 2024 onwards.

To be eligible for this incentive, individuals must meet one of the criteria below:

a) Teaching in higher education and scientific research, including scientific employment in entities, structures, and networks within the national science and technology system, as well as jobs and members of governing bodies in entities recognized as technology and innovation centres.

b) Qualified jobs and members of the governing bodies of entities that fall within the scope of contractual benefits towards productive investment, as defined in Chapter II of the Portuguese Investment Tax Code.

c) Highly qualified professions, as defined by a Ministerial Decree, in companies with relevant applications in the year of starting work or the prior five years that benefit or have benefited from the Tax regime for investment promotion (RFAI) or in industrial and service companies (with activities in areas to be defined by Ministerial Decree) that export at least 50% of their turnover in the year of starting work or the prior two years.

d) Other qualified job positions and members of the governing bodies of entities engaged in economic activities recognized by AICEP or IAPMEI (investment public agencies) as relevant to the national economy, particularly in attracting productive investment and reducing regional asymmetries.

e) Research and development personnel, with costs eligible for the R&D tax incentive system, as outlined in the Investment Tax Code.

f) Job positions and members of the governing bodies of entities certified as start-ups under the Portuguese Start-Up Law.

g) Hold a job position or carry out other activity as a tax resident in the Autonomous Regions of Madeira and the Azores under terms to be defined by regional decree.

Conclusion

The updated Non-Habitual Resident (NHR) program in Portugal, which will commence in 2024, introduces substantial alterations to the tax advantages for those moving to Portugal. Although the existing NHR scheme is concluding, provisions for grandfathering are in place to facilitate an effortless shift for current NHR beneficiaries. Additionally, the newly instituted tax incentive is designed to draw individuals active in scientific research and innovation, further enhancing Portugal’s appeal as a destination for global talent.

Our expert team of English-speaking professionals offer a wealth of services including matters relating to Portuguese property tax, fiscal representation, accountancy and non-habitual residency applications, tax returns, taxation services for residents and non-residents.