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Non-Habitual Resident Tax Regime (NHR) vs. Visa | Residence Permits

First I would like to say we are a Real Estate Brokerage and our business is strictly limited to serving our clients either buying | selling or renting property in Portugal… The information in this post is an accumulation of many years of experience working closely with our clients and trusted attorney, as well as accountant, and you should always seek a Lawyer | Solicitor | Notary | Tax Attorney | Accountant or other professional for legal advice and representation, as this information is not to be considered any form of legal advice, and additionally the tax or Visa | residency laws are subject to change. Let’s start with the basics and clarify a few misconceptions… The NHR (Non Habitual Resident) Tax Regime is not a Residence Visa, nor a Portugal Residence Permit – it is a Portuguese Tax Regime. A Residence Permit is a document, issued as a residence title, that allows foreigner citizens to live and work in this country. When one decides to relocate to a different country, some of the issues that arise need a quick solution, while other issues come with time. The first thought that usually crosses a foreign citizen’s mind is to make sure that they comply with the immigration rules of the country they decide to live in and how they can benefit from the legal framework of said country. A foreign citizen begins their relocation process by applying for a Visa | residence permit. A Visa will allow them to enter the country and the Residence Permit will be a sort of an ID card that will prove that the holder complies with all the requirements to stay in the country for a certain period. This is the common procedure for someone who is looking to move to Portugal… First apply for a residence visa, then obtain a residence permit. But this will ultimately depend on each specific case. There are a lot of different Visa | Residence Permits that may be applicable depending on numerous factors. With respect to Portugal, there are a few options for Visa and residence permits. For instance, authorization for residency through investment (Golden Visa); short-stay visas; temporary work visas; work permits; investment residence permits; family reunification Visas | residence permits, and so on. Typically, depending on the applicant's reason for moving to Portugal and on whether they have all the legal requirements, they may have a specific Visa | Residence Permit in mind.

Our trusted lawyer usually assists our clients during this process at the Portuguese Consulate closest to their legal area of residence outside of Portugal, such as the most popular D7 Visa aimed at retirees and pensioners, or at a local SEF Office – The Immigration and Border Service in Portugal as the case with the Golden Visa (ARI - Authorization for Residence through Investment) aimed at any non EU Citizen wanting to obtain residency through an investment in Portugal. On a general basis, the applicant submits a request to one of these public entities and after a detailed analysis, they should be granted a Visa or a Residence Permit. The Visa | Residence Permit implies the payment of a government fee, and the amount varies according to the type of Visa or residence permit. In my experience, once the immigration matter and residency authorization is solved, the foreign citizen should then consider taxes. And on this note, when it comes to becoming a new tax resident in Portugal, I usually suggest that our clients apply for the NHR (Non-Habitual Resident Tax Regime). The Non-Habitual Resident tax regime is a special tax status for individuals (Portuguese or foreigners) that haven’t been tax residents in Portugal in the five years prior to becoming one. The conditions necessary to be considered a tax resident in Portugal are as follows: The applicant has stayed in Portugal for more than 183 days, either consecutive or not, in any 12-month period beginning or ending in the year in question or The applicant has stayed in the country for less time but has an available accommodation that can serve as their habitual place of residence. Please be advised that one does not need to apply for or be granted residency rights to be eventually considered a tax resident in Portugal. It is important to understand that tax residence is separate from legal residency status. The entity responsible for deciding on the NHR application is the Portuguese tax authority (Autoridade Tributária e Aduaneira or simply “AT”). A residence permit is therefore different from the NHR tax status… The following summarizes the main differences:

Non-Habitual Tax Resident Eligibility Criteria a) One must not have been a tax resident in Portugal in the previous 5 years before becoming one; b) One must register as a tax resident in Portugal; c) Apply for NHR status by March 31st of the year following the first year they became a tax resident in Portugal; d) The right to be taxed as a non-habitual resident yearly implies that the person must be considered a tax resident in Portugal at any time during that year. Visa | Residence Permit Eligibility Criteria Depends on the applicant's reasons to move to Portugal and whether they will be able to comply with the respective Portuguese legal framework. Portuguese Tax Residency Requirements The person will be considered a tax resident in Portugal if any of the below circumstances are met: a) Remaining within Portuguese territory (including Azores and Madeira) for more than 183 days, consecutive or interpolated, in any period of 12 months; b) Staying for less time but having an available accommodation that can serve as their habitual place of residence; c) Are crew members of ships or aircrafts, or are in service of entities with residence, headquarters, or effective management in Portuguese territory; d) Perform public functions or commissions abroad in the service of the Portuguese Government; e) A day of presence in the Portuguese territory corresponds to any day, complete or partial, that includes an overnight stay. Visa | Residence Permit Requirements Depends on the chosen Visa |Residence Permit. In conclusion: A Visa is granted solely at the discretion of the Portuguese Consulate after the applicant requests a visa to enter Portugal. A Residence Permit is granted only if the process is accepted by the SEF, after the applicant asks to live in Portugal. The NHR is a special tax regime best suited for new tax residents in Portugal. Feel free to schedule a call at your convenience on our calendar through Calendly, and let’s see where we can add value to your move or additionally investing in Portugal, as our trusted Lawyer and Tax Attorney can walk you through the NHR | Residence Visa or Portugal Residence Permit and our Loan Broker and Currency Exchange Broker will additionally be able to add value to your buying process!!! Link to schedule call on Calendly

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