NHR 2.0? The new Non Habitual Residence regime (2024)
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- Опубликовано: 28 июл 2024
- IMPORTANT - PLEASE READ REGARDING THIS CHANNEL
The content on this channel is for educational and information purposes only. It should not be relied on as advice, and you should always take qualified advice before making any changes to your personal position.
Whilst I have experience in the financial and tax industry, this channel is for recreational purposes and is not an advertisement for my business or services. Its purpose is to share quality information.
Whilst every care is taken as to the accuracy of the information in these videos, the information provided is based on the understanding of the rules at the time, and rules can change with little or no notice.
Whilst I cover a wide range of issues on the channel, in my professional role I specialise in tax efficient investments, UK and overseas pensions, estate planning, and wealth management for expatriates based in Portugal. Unfortunately, I do not offer visa or tax return services, nor can I assist US nationals.
Thank you for your support and understanding. I hope to continue to provide you with valuable information to help you with your life in Portugal. If you have any suggestions for content you would like to hear, please let me know
The Non Habitual Residence (NHR) was closed with effect from the end of 2023, and a new tax incentive scheme introduced.
Existing NHRs unaffected
Those with NHR status can rest assured that their NHR status will not be affected.
You can still apply for NHR - the transitional regime
You are still able to qualify for NHR if:
1. on 31st December you met the conditions to qualify as a Portuguese tax resident
2. become Portuguese residents by 31st December 2024 and have either:
• work contract or agreement dated prior to 31st December 2023, the duties under which are carried out in Portugal
• lease for property signed prior to 10th October 2023
• promissory contract for Portuguese property signed before 10th October 2023
• enrolment for dependant in education in Portugal completed by to 10th October 2023
• residence visa or permit valid up until 31st December 2023
• the initiation of the process for visa or residence before 31st December 2023
If you cannot meet any of the above criteria, then you may consider the new tax regime created with effect from 1st January 2024.
NHR 2.0 - the new regime
The conditions that applied for NHR also apply, namely:
• Can’t have been tax resident in the last 5 years
• Must become a tax resident in Portugal
• Not have benefited from the NHR regime
Qualifying for the new tax regime is more difficult as it is reliant on your exercising one of several qualifying roles/activities in Portugal, as follows:
• Teaching in higher education and scientific investigation
• Employment technology and innovation centres
• Employment in organisations benefiting from incentives for productive investment
• Highly qualified professions
• Positions in entities recognised by AICEP, EPE, IAPMEI or IP as being deemed relevant for the national economy
• Research and development
• Positions in start ups
• Positions carried out by tax residents in Azores and Madeira - still to be defined under legislation
0% tax…..?
Although qualifying for the new tax regime is more difficult, the major benefit is that for 10 years there is 0% tax on all foreign source income and gains. The only exceptions to this are income from backlisted jurisdictions or pension income.
Standard tax residency
Even if you cannot qualify for NHR or NHR 2.0, Portugal can still be an attractive place to live from a tax perspective.
Quick wins in Portugal compared to the UK
o Wealth tax - 0%
o Inheritance tax - 0%
o Succession tax - 10% but not for direct line ascendants or descendants and only applicable on Portuguese assets if it does apply
o Income tax similar to UK
o Structuring investments - it is possible to live on very low tax rates using structures such as the Portuguese Compliant Investment Bond (PCIB).
Standard rates of income and capital gains tax can be comparable or better than the UK, depending on each person’s situations and asset sources.
Employment and self employment income
UK - 20%, 40% or 45%
Portugal - 14-48%
Interest
UK - 20%, 40% or 45%
Portugal - 28% (35% blacklisted jurisdictions)
Dividends
UK - 8.75%, 33.75% and 39.35%
Portugal - 28% (35% blacklisted jurisdictions)
Pension income
UK - 20%, 40% or 45%
Portugal - 14-48%
Trust income
UK - 38.1% or 45%
Portugal - 28% (35% blacklisted jurisdictions)
Capital gains tax - non property
UK - 10% or 20%
Portugal - 28%, if held more than 365 days
Capital gains tax -property
UK - 18% or 24%
Portugal - 50% of gain added to income and taxed at progressive rates
Visas and tax
No relationship
Planning needed
Irrespective of which position you are in, planning is required, ideally before your leave your current country of residence.
IMPORTANT - PLEASE READ REGARDING THIS CHANNEL
The content on this channel is for educational and information purposes only. It should not be relied on as advice, and you should always take qualified advice before making any changes to your personal position.
Whilst I have experience in the financial and tax industry, this channel is for recreational purposes and is not an advertisement for my business or services. Its purpose is to share quality information.
Whilst every care is taken as to the accuracy of the information in these videos, the information provided is based on the understanding of the rules at the time, and rules can change with little or no notice.
Whilst I cover a wide range of issues on the channel, in my professional role I specialise in tax efficient investments, UK and overseas pensions, estate planning, and wealth management for expatriates based in Portugal. Unfortunately, I do not offer visa or tax return services, nor can I assist US nationals.
*Thank you for your support and understanding. I hope to continue to provide you with valuable information to help you with your life in Portugal. If you have any suggestions for content you would like to hear, please let me know*
Great content as always, thanks for the email and calls too
Thanks very much :-)
fantastic video thanks for sharing. I will be booking a call with you.
Thank you for your kind comment!
The NHR 2.0 regime leads to more questions if I am wanting to work in PT and take advantage of the incentive… 1) how will I find a list of specific employers that would make me eligible. Would not want to go through the whole hiring and visa process to find out tue nature of the employer doesn’t make you eligible.2) if you work for one of the institutes mentioned, can you be in any occupational role? For example is the IT guy at the research institute eligible… or just the scientists? 3) can I start my own self-employed consulting firm that somehow fits in the regime and makes me eligible? 4) Can I move to PT under a D7 with a passive income, and then apply for a job eligible for NHR 2.0 after, or create a self-employment consulting company after the move to take advantage
Thanks for your comment. Yes, it raises lot of questions, well beyond the scope of a RUclips comment :-) I would suggest you contact a tax lawyer to review your specific situation and how you could qualify. Good luck!
Very helpful video, thank you. Are you able to confirm if lawyers (solicitors) are covered by the list of High Value-Added professions for the purposes of NHR 2.0? I am afraid, I cannot find that myself.
Sorry, I don't believe they are
We had ruled out Portugal to retire to based on the old tax regime (NHR) expiring. My wife and I are retired, we don’t need to draw down a pension and can live off investments. How do we determine if we can qualify for the new tax regime? Many thanks
Thank you for your comment. If you live off investments, you can structure yourselves very tax efficiently even without the new tax regime. Pleas see my video on Portuguese compliant investment bonds as an example.
The NHR 2.0 is confusing. The last thing I read was that Portugal taxes U.S. government pensions at a 10% tax rate in the 2.0 scheme. Is that correct or old information?
Under the first NHR scheme, foreign pensions were taxed at a flat rate of 10%. Under NHR 2.0, pensions are not treated favourably and are taxed as per standard Portuguese tax rates. Best wishes, Mark
WOW im just speechless you have no idea how much I wanted to get accurate information on the new NHR.
Thanks for sharing this information with the public! so much needed! I live in spain and getting tax related queries is really painful .
can I ask if I live in Spain and I want to move to Portugal (recently acquired a citizenship in Portugal) can I apply to NHR2.0 remotely and move only if I get approved? or I need to first move to Portugal and only after apply? I am asking because in Spain I already have a tax benefit of beckham law and i dont want to lose it in case I cant get the NHR.
I am an Electrical Engineer, working in software (with 6 figures salary) can i try and get the NHR2.0?
Hg. Thank you for your kind comment. You cannot actually apply for NHR until you officially become a Portuguese resident, however, you could always speak with a tax specialist who can advise you of the likelihood of qualifying for the new tax regime here. Good luck and best wishes! Mark
Thank you so much! I already live for some years in Portugal. Unfortunately i did not know about the NHR status. Is there any chance to apply for the new NHR2? Or if i would move to Madeira can i apply there? Thank you for your help! If you have a contact from a good tax consult nearby V. Nova de Milfontes, i would be glad to get it!
hi Linda. Thank you for your comment. One of the main conditions for applying for NHR or NHR 2.0 is that you have NOT been a tax resident in either of the previous 5 years. Best wishes, Mark
Appreciate the video especially when there is so much unknown/uncertainty around 'NHR2.0'. We thought we missed the boat but maybe some hope ..my wife and I are IT consultants and project managers (mainly in banking and finance industry) and we cant find whether we fit in the category of emplyment that is elgible - can you tell us if we are on the list? Of course we unserstand we will need to consult with a tax advisor but would be good to know if we can apply for the preferential tax rates before investin time and money in the process. Thanks
Thank you for your comment. My understanding is that IT consultants and project managers are not on the list but there is an opportunity elsewhere in the rules to allow those that aren't on the list to qualify under "high valued activities". I suggest you contact a good tax lawyer who can anlayse how the new rules would apply to your specific situation.
Hello, thank you for this clear and detailed explanation. As a french doctor working remotely, I have never been in Portugal in the previous NHR, do you think I could apply to the new one?
thank you
Thank you. It is difficult to say without knowing more detailed information about your specific situation. I would recommend your taking advice from a Portuguese Accountant who will be able to assist. Best wishes, Mark
Thank you for this overview. Do It folks from Ukraine are eligible for NHR 2.0 if they will relocate to Azores?
Yes, Portugal is one tax system so you should still be able to qualify for NHR 2.0 there
Hi Mark, great video! If a person were to have a D7 visa and be considered a standard PT taxpayer, is there any way that rental income from UK or US would be considered anything other than personal income and hence be taxed at the corresponding standard rate? Trying to understand if there are any breaks on rental property income!
Hi Todd. Thank you. Rental income is taxed at 28% flat, OR at scale rates, whichever is better for you. Best wishes, Mark
Thanks for the great content. If you do not withdraw income from the offshore trust and just allow it to accumulate offshore, does the 35% tax you mentioned still apply?
No, only if you take withdrawals. Best wishes, Mark
when will we know what Madeira and the Azores have in store for the revised NHR?
This is still under review so can't say at the moment I'm sorry
Any suggestions for info/videos for potential retired expat couple and what are the tax implications for such a couple? Have pension/social security/401Ks/. Thanks for any assistance!
Thank you for your comment. There is quite a lot of information on these areas in my other videos, although it is very difficult to assist US nationals due to the citizenship based tax system.
Hi Mark, currently immigrating, approved Nhr, and totally confused with the Social security of 11% and 23% percent for employer not based on Portugal soil. Emoloyee 11% will be based in Portugal soil. How to calculate social security due, is this capped on income? As the more one earns the more you contribute? and what are the benefits, is anything that one contributes to fund refundable when doing tax returns. it a big percentage and just wanted to know the benefits. Please let me know if can assist. Will also br needing an accountant for tax returns! Also trying to establish what is left after taxes and what the Social security portion works?
Hi. Yes unfortunately social security contributions for employees and employers are uncapped. You would need to consultant with a Portuguese Accountant to do the tax calcs for you. best wishes, Mark
And if I understood correctly if someone classify under new NHR 2.0 there is no income tax or capital tax from sources outside Portugal (e.g. income from rent/dividend/bank interest or sell of crypto/property) - correct?
Correct :-) Although there is no tax on crypto gains full stop if you have held for longer than 365 days
yes but if i held for less and i have NHR2.0 do you need to pay 28% or not?
@@taxfinancialadviceinportug4745
With 85/15 princepal, the 85 %"return of capital" is not taxed at all or on a different tax rate?
Return of capital is not taxed. All the best
Hi I want to migrate to Portugal and get the NIF. If after few years I decide to live outside of Portugal (either in Europe or outside of Europe).
1-Do I need to do tax return every year for Portugal(Assuming I do not have any source of income like property in Portugal)?
2- Does having NHR make any difference in terms of doing tax return while I do not live in Portugal?
Hi. Thank you for your comment.1 No - you generally only need to do tax returns in the country that you are tax resident or have income coming from 2. No. Kind regards, Mark
Very informative information, thank you. May I ask a question as I'm a little confused.
I'll have interest from savings and some rental income. Will both of these be at 0% tax rate under NHR 2.0 (Both combined will be under £12,540 per annum so I'll have no UK taxes to pay). In a few years, I'll have my UK state pension, which if I understand right, will be taxable. Could you clarify any details please?
Hi Robert. Thank you for your comment. Re question 1, assuming it is FOREIGN source savings and rental AND It is not coming from a blacklisted jurisdiction such as Isle of Man or Channel Islands, then it will be free of tax under NHR. 2. The state pension is taxable at scale rates under NHR 2.0 and a flat 10% under NHR 1.0. Best wishes, Mark
Thankyou for the information Mark. I'm currently in the process of purchasing a property in the Castelo Branco region, but don't yet have the passive income available to apply for the D7 visa. I wanted to get as much info together ready for when I am able to do so. Thanks again.
@@robertsloan6490 You're welcome Robert and good luck with your move to Portugal. Kind regards, Mark
Thanks for an informative video. What is the best way to contact you?
Thank you - I'm glad you found it useful. My contact details can be found at The Spectrum IFA Group website. If I put my email address in the comments here, I get spammed!
So, I’m looking to retire to Portugal in 2 years time.
I will be living off my DC pension (flexible access drawdown of an ETF inside my pension).
So, 2 questions
1. I think I did not qualify for NHR 2.0. Correct?
2. What rate of tax is this? (Capital gains or income)
Thank you for your comment. My answers. 1. pension income isn't taxed favourably under the new regime so you would pay tax at standard tax rates 2. capital gains tax is 28% or added to your income if trading short term (less than 12 months). Pension income would be between 13.25% and 48%
@@taxfinancialadviceinportug4745 Thank you so much for taking the time to answer my question. Appreciate it 👍
@@Banthah You're welcome and good luck with your relocation
Can a EU citizen come to Portugal and if we're working in research / innovation go under NHR 2.0? Or is it only for folks outside of EU?
Yes EU citizens can apply too
Hey, How long does the process take if for example I want to apply and go through the process? another thing you haven't touched on is the minimum stay requirement
Thanks and looking forward
There are two aspects to the length of time issue 1. the immigration aspect i.e. if you are an EU citizen, the process is VERY quick (a matter of days) but if you are a non-EU citizen then you have to consider the visa process and the length of time this will take which could be many months 2. the tax aspect (applying for NHR) - some of my clients have obtained this status in days, mine tool 2-3 months. Good luck and best wishes, Mark
@@taxfinancialadviceinportug4745 Is there a way I can contact you ?
I would be interested to understand in more detail how you can structure your affairs in the way that you pay just 5% tax on the investments by living in Portugal
With effective tax and financial planning
Would an IT Engineer qualify for NHR 2.0? How to contact you for tax consultation?
Hi Sonia. Possibly - the rules around NHR 2.0 still needs clarifying. Due to time restrictions at the moment, I can only take on consultations for wealth management clients at this time. I would recommend your contacting a local Accountant to analyse your position. Best wishes, Mark
Hi Mark,
Do you have some contact details to look into using your services.
Thanks,
Sean
Hi Sean. I'll reply to your email today. Thank you, Mark
Hi I want to apply for old NHR. I read that people who apply need to be in Portugal for more than 183 days in a year. I will arrive to Portugal in August. From August to 31st of December will be less than 183 days.
Does it mean that I can not apply for NHR?(Assuming I have all the other conditions to get old NHR).
The 182 day period is measured over a rolling 12 month period, but I would seek formal advice to ensure you don't fall foul of the rules. Good luck and kind regards, Mark
@@taxfinancialadviceinportug4745
Hi Thanks for your great answer.
1-What do you mean by rolling 12 months period?
2-You suggested I get formal advice. How can I get formal advice and from where?
Thanks.
@@afshinazizi659 HI - I would suggest you consult with a Portugal based tax adviser. best wishes, Mark
Hi Andrew , I’m a landlord (£20k pa) plus around £30kpa investment income - is there any chance I’d be acceptable as D8 digital nomad or remote worker (self employed)?
HI Russell. I'm not a visa specialist but I would have thought you were the ideal candidate for the D7 visa, as that is the passive income visa which requires you to demonstrate that you're in receipt of certain forms of passive income such as rent and dividends. Good luck and hope all goes well. Mark
@@taxfinancialadviceinportug4745
Thanks Mark, I now understand the D7 is still open but it’s the NHR that’s changed. Unfortunately, I really want the new NHR2.0 tax breaks, and I’m trying to work out if I can “squeeze” myself into the D8 somehow.
@@user-bd9yh7gk4g Good luck and hope all works out for you. Best wishes. Mark
Could you provide your email? I have a lot of question maybe you can provide consultation. I am from Ukraine now in Poland with my family and we are thinking about moving to Portugal. Need you help.
Hi Stas. Thank you for your comment. Unfortunately at present and due to time restrictions, I can only offer initial consultations for those looking at investment and pension planning options in Portugal. Best wishes, Mark
Thank you for the great content. Can you provide me with your email? I have some additional questions.
Hi John. Thank you for your message, I'm out of office at the moment but will reply when I return. Kind regards, Mark