Zero tax on expat pensions in Portugal

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casapt Contributor

Member since 15 October 2010

casaptContributor24 September 2013 15:29:44

153

Hi,

Foreign pensioners will become exempt from paying income tax from January 2013. The government in Portugal has introduced a 10-year tax exemption window of opportunity for foreign retirees who want to retire abroad to live in Portugal, and who want to enjoy a reduced cost of living thanks to having no income tax deducted from their pension

I. Introduction to the Non Habitual Retired Resident Regime

In its assumed objective to attract affluent senior citizens from around the world, and specially from high tax countries, the Portuguese government has approved one of the most aggressive and competitive tax regime for pensions of any kind, from pensions paid by social security, employers retirement plans, to pension funds, trough other arrangements like private insurance.

Since the 1st of January 2013, foreign sourced pension income, even if has not been taxed in the country of origin (most cases), received in Portugal by individuals who qualify for the status of non habitual resident, are totally exempted from tax (0%).

Other foreign sourced income will also be exempt in Portugal and locally generated income, will be in most cases taxed at a flat rate of 20%.

II. Who can benefit from the status of non-habitual resident?

Any foreigner was not been taxed as Portuguese residents in the previous five years.

III. What is needed to fulfill the legal criteria to become a Non-Habitual Resident?

a) the individual must reside in Portugal 183 calendar days, either consecutive or not, in the year of application and the subsequent years.

b) The individual should have by the 31st of December of the year of application a permanent residence and be able to show that he is the intent of using it has his primary home and residence.

IV. For how long is this tax exception granted?

The retired foreign citizen that successfully applies to this status benefits from the foreign sourced personal income 0% tax and reduced tax from Portuguese generated income for 10 (ten) years.

V. Other advantages:

The Non Habitual Resident Regime can be cumulated or coupled with other existing tax incentives such as the GOLDEN VISAS. Portuguese eraned income such as wages, provision of services will be taxed at a reduced rate of 20%. In general, dividends, interests, capital gains and other foreign earned income will be exempt from personal income tax in Portugal.

You welcome

MarkM1 Member

Member since 19 October 2013

MarkM1Member19 October 2013 12:17:23

Hi,

Can you let me know (approximately) how long the process takes to obtain NHR status if there are no problems or unusual circumstances?

casapt Contributor

Member since 15 October 2010

casaptContributor19 October 2013 15:37:52

153

To get the NHR status takes 5 min, you select it on the form when you apply for a fiscal number at the finance bureau. Do you already have a portuguese fiscal number?

MarkM1 Member

Member since 19 October 2013

MarkM1Member19 October 2013 15:53:21

Thanks for the answer and No, I don't have a fiscal number yet.

I didn't mean how long does it take to apply for the status. I realise that's just a matter of selecting the option on a form. I was really more interested in how long it takes to receive notification of whether the application has been successful or not.

I know some people have been waiting a very long time (i.e. months/years) but I presumed that was because the regime was in a state of confusion until the beginning of this year when things were finally clarified.

Since then, I was expecting to hear that the flow of applications were being processed rather than building up in a backlog. I can't find much indicating that to be the case nor whether the whole process has ground to halt again. I know that you can really only apply once and I'm reluctant to apply if the powers-that-be are dragging their feet or still discussing a change of rules.

Does anyone know how many of these applications have been successful this year or indeed, if there have been any at all?

casapt Contributor

Member since 15 October 2010

casaptContributor19 October 2013 16:42:45

153

Hi,

There were none approved yet.
This clarification made in january should make the law applied starting this year2013, but we will only be sure in march/ april 2014 when tax payers will receive their tax bill.

I am a real estate agent and I follow the case from a distance. Maybe if you ask one of these 2 fiscal audit agencies they will brief you on their experience:
1. http://www.pwc.pt/en/fiscalidade/index.jhtml
2. http://www.deloitte.com/view/pt_PT/pt/s … /index.htm

I know they are offering full pack for fiscal residence transfer and tax exemption services

MarkM1 Member

Member since 19 October 2013

MarkM1Member19 October 2013 17:32:50

OK Thanks. That would explain why I have been unable to find anyone who actually has this residency status.

miguelmarquesrocha Member

Member since 10 December 2013

miguelmarquesrochaMember10 December 2013 19:32:50

Hi Mark,

Hope this finds you well.

I came across with your posts about the non-habitual tax residency status.

I have relevant tax experience regarding this matter and I can assure you that the regime is currently being applied by the Portuguese Tax Authorities.

Kind regards,

Miguel

jeanpierrehonda1 ViP

Member since 13 June 2013

jeanpierrehonda1ViP08 January 2014 22:48:55

2511

miguelmarquesrocha wrote:
Hi Mark,

Hope this finds you well.

I came across with your posts about the non-habitual tax residency status.

I have relevant tax experience regarding this matter and I can assure you that the regime is currently being applied by the Portuguese Tax Authorities.

Kind regards,

Miguel

Hi,

Can you assure me, that for ANY reformer , this NHR no tax residency status will be applied.

miguelmarquesrocha Member

Member since 10 December 2013

miguelmarquesrochaMember09 January 2014 21:53:42

Hi Jean,

Note that, in principle, any pensioner can be a NHR, but not every pensioner may benefit from 0% tax. That will depend on the country of the source of the pension and the type of pension. Please e-mail me at mmr@lugna.pt and, with a more detailed description, I will confirm it to you.

Kind regards,

Miguel

TonyJ1 Contributor

Member since 25 March 2014

TonyJ1Contributor22 June 2014 21:06:04

#10

162

If you have never been a Portuguese resident before or possess a Portuguese tax number, the process is relatively easy, If you already have a Portuguese tax number and plan to retire here (maybe you have bought property) then you need to tax advice.

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