Understand the Portuguese Non-Habitual Resident Tax Regime (RNH)

Did you know that foreigners living in Portugal can receive a differential tax treatment?

This is the goal of the Non-Habitual Resident Tax Regime (RNH), a statute that offers tax advantages to citizens who have just immigrated to the country. Portuguese citizens who have lived abroad for a while and decide to return to their homeland can also benefit from this tax regime.

The RNH was created by the Portuguese government in 2009 to stimulate the economy and attract qualified professionals to Portugal. The RNH establishes that a taxpayer may have their income earned abroad exempt from taxation in Portugal.

After applying for this status, the benefits are valid for 10 years from the year starting from the date of being granted resident status in the country, without the possibility of renewal. See below who is eligible for the RNH.

The Non-Habitual Resident (RNH) Tax Regime can be requested by:

  • Foreigners or Portuguese citizens who have not been considered Portuguese tax residents in the five years prior to the RNH application.
  • Individuals who are considered Portuguese tax residents in the year of application for registration in the regime. To be considered a tax resident in Portugal, it is necessary to spend 183 days or more in the country or present a housing contract in Portugal.

The main advantages of choosing the RNH are:

  • Payments received as a result of services provided outside Portugal may become exempt if they are taxed at source or in another country – this exemption is valid for technical, scientific, artistic services or income arising from industrial or intellectual property;
  • Income from professional activities in the technical, scientific or artistic areas has the benefit of the IRS (Individual Income Tax) with a special rate of 20%, also valid for 10 years.
  • Taxation at 10% on the value of pensions earned abroad, also for a maximum period of 10 years.
  • For income gains in other countries where the amount has already been taxed at source, the taxpayer will be exempt from double taxation in Portugal.

As described in Ordinance No. 230/2019, the following professions may access this special tax regime:

  • I – Professional activities (codes of the Portuguese Classification of Professions – CPP):
  • 112 – Managing Director and Executive Manager of companies
  • 12 – Administrative and commercial services directors
  • 13 – Production and specialized services directors
  • 14 – Directors of hotels, restaurants, stores, and other services
  • 21 – Experts in the physical sciences, mathematics, engineering and related techniques
  • 221 – Physicians
  • 2261 – Dentists and stomatologists
  • 231 –University and higher education professors
  • 25 – Information and communication technology (ICT) specialists
  • 264 – Authors, journalists, and linguists
  • 265 – Creative and performing arts artists
  • 31 – Technicians and professions related to science and engineering, mid-level
  • 35 – Information and communication technology technicians
  • 61 – Market-oriented skilled farmers and workers in agriculture and livestock production
  • 62 – Market-oriented skilled forestry, fishing, and hunting workers
  • 7 – Skilled workers in the industry, construction and craftsmen, namely skilled workers in metallurgy, metalworking, food processing, woodworking, clothing, handicrafts, printing, the manufacture of precision instruments, jewelers, craftsmen, workers in electricity and electronics.
  • 8 – Operators of machinery and assembly workers, namely operators of fixed installations and machines. Workers listed in the above-mentioned professional activities must have at least level 4 qualification of the European Qualifications Framework (EQF) or level 35 of the International Standard Classification of Education (ISCED) or have five years of duly proven professional experience.
  • II – Other professional activities:
  • Company managers promoting productive investment, provided that they are allocated to eligible projects and with contracts for the granting of tax benefits signed under the Investment Tax Code, approved by Decree-Law No. 162/2014, of October 31.
  • Other information about professions that fall under the RNH is available in this leaflet released by the government: https://info.portaldasfinancas.gov.pt/pt/apoio_contribuinte/Folhetos_informativos/Documents/Non_habitual_residents_Tax_regime.pdf

Auditors, tax consultants, psychologists, and archaeologists are currently listed as eligible professionals for the RNH. However, those who requested this status until March 30, 2021, will still be able to enjoy the benefits of the regime until the end of their 10-year period.

How to apply for the Non-Habitual Resident Tax Regime?

The foreigner can only apply to be considered RNH after having registered as a resident in the country through the issuance of the Tax Identification Number (NIF). The deadline to apply for the RNH is March 31 of the year following the issuance of the NIF.

This request must be made directly to the Portuguese Tax and Customs Authority (AT), preferably on the agency’s website or in person at one of the AT’s service units.

Any questions about how to apply for the Non-Habitual Resident Tax Regime? Get in touch with Drummond! Our specialists will be able to assist in the filing and monitoring of your application, as well as tax filing and compliance with other important tax aspects for foreigners living in Portugal. Contact us at: info@drummondadvisors.com.

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