The Portuguese government approved a new tax regime for non-habitual residents, as an incentive to attract foreign investors and highly skilled professionals as well as people having considerable net worth.
The income of non-habitual residents may thus not be subject to taxation, if applicable, or benefit from a flat tax rate of 20%, when derived from employment and self-employment.
This could offer significant tax savings to non-habitual residents, since the actual marginal income tax rates (IRS) may exceed 45%.
In concrete terms, the income of non-habitual residents may be taxed in the following ways:
The active income, which means, income derived from employment or high added value self-employment activities in the scientific, artistic or technical field are taxed at a flat rate of 20%, whether it was earned in Portugal or abroad. Those activities encompass a wide range of professionals, such as architects, engineers, accountants, doctors, academics, senior business managers, among others.
In regard to passive income, such as interest, dividends, capital gains and other income from investments, properties and pensions from abroad, non-habitual residents may enjoy tax (IRS) exemption in Portugal, since taxation in the source State is possible, considering the Convention to avoid double taxation between Portugal and the State in cause.