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Tax information Living in Portugal Work and retirement Non-Habitual Resident (NHR) tax regime

Non-Habitual Resident (NHR) tax regime

​If you have Non-Habitual Resident (NHR) status in Portugal, you can benefit from a special tax regime for 10 consecutive years. This status offers reduced tax rates on income from high-value activities and, in some cases, foreign income.

Duration of the regime

  • The NHR status applies for up to 10 years.
  • The years do not need to be consecutive.
  • You may benefit from the regime in any year during this period, provided you are a tax resident in Portugal that year.

Income tax return obligations

Non-habitual residents must submit their annual IRS tax return (Modelo 3), with Annex L, indicating the codes for high added value activities. The tax return is submitted on Portal das Finanças, under IRS​ > Ent​regar Declaração.

You must keep supporting documents, as the Tax and Customs Authority may request proof after submission.

High added value activities

High added value activities are defined by law and are relevant for applying the special 20% IRS rate.

The applicable list of high added value activities depends on the date of NHR registration. The list of eligible activities was updated on January 1, 2020.

Tax rates and exemptions

Income taxed at a special rate

  • Employment income (Category A) - Income from high added value activities is taxed at a flat rate of 20%. Employers must withhold tax at 20%.
  • Self-employment income (Category B) - ​Income from high added value scientific, artistic, or technical activities is taxed at a 20% withholding rate. 

Foreign-source income

  • Pensions (category H): taxable at a 10% fixed rate
  • Foreign income may be exempt from taxation in Portugal if it meets the conditions set out in Article 81(4) and (5) of the IRS Code. Alternatively, taxpayers may opt for the tax credit method, aggregating foreign income for taxation in Portugal. 

Other income categories

  • Capital income (category E): Taxable under standard rules
  • Rental income (category F): Taxable under standard rules
  • Capital gains, including property sales (category G): Taxable under standard rules

Some gains may be taxed at special rates under Article 72 of the IRS Code. 

Required documentation (examples)

Depending on your activity, you may need to provide:

  • An employment or service contract describing your functions;
  • Proof of registration with a Professional Association, if applicable;
  • For managers/senior executives:
    • employment contract, and
    • power of attorney proving binding authority or management role;
    • proof of qualification as an investor, and
    • documents showing company involvement in eligible projects.
  • For self-employed individuals:
    • declaration of commencement of activity with compatible codes;
    • proof of registration, when required.

Additional reliable documents may be requested to confirm the actual exercise of the activity.

 

Associated Links

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Legislation (in Portuguese)