The NHR (non-habitual residency) tax regime is very appealing and one of the reasons that many prospective expats choose Portugal over neighbouring countries like Spain and Greece. It offers newcomers (and in many cases those returning) to Portugal preferential tax rates; tax rates that are different to what most people in Portugal normally pay. For example, pensions are typically taxed at a flat rate of 10%, which can be very appealing for those with large pensions.
But NHR only lasts 10 years. According to Paula Santos from Tax Team Consulting, after those 10 years are up, you go onto normal Portuguese tax rates. Santos also highlights that “it’s 10 consecutive years,” which means that you cannot pause it or start it a few years after you move to Portugal: it starts “from the first fiscal year in Portugal.”
Santos also cautions that while NHR can be very appealing, it isn’t always the best deal for everyone and in actual fact, there may be a different tax regime that sees you taxed less. That said, she still encourages everyone to apply for NHR regardless. “You should always apply when you arrive as, even if you don’t benefit from NHR in the first year, a lot can happen in 10 years and you may benefit from NHR in the future.”
If you’re planning on moving to Portugal for more than 10 years, it’s a good idea to plan for what your financial life will be like during those 10 years and after.
Have more taxing questions? Read our big guide to the non habitual tax regime