Financially relocating
A move and relocation will involve compulsory tax registration
Done correctly this will offer tax savings or zero tax payments
You should be checking over how your financial position will perform living in Portugal under Portuguese laws well ahead of your move, there may be some nice surprises around the corner and pre-planning is recommended and worthwhile.
In Portugal there is a special tax regime called the Non-Habitual Tax Regime or NHR for short, this a tax incentive for higher rate tax payers and those with private pensions, it effectively gives you a great deal more in your pocket and can advance your retirement plans by several years.
The NHR should be considered as the best personal income tax option in Europe. The programme works on the principle of reduced personal income tax, in this regard it is the best option for low tax income allowing your pension, dividends and interest payments to increase your disposable income in Portugal substantially.
Company owners who become tax residents can receive their company dividend payments entirely tax free inside the regime. The NHR alone is a good reason to make Portugal your future home, allowing you to be more tax efficient in your retirement and investments.
None-Habitual Resident
Are you a suitable applicant of the Non-Habitual Residents regime or NHR?
Within the NHR programme is a significant section aimed at qualified and suitable working persons. A salary that is paid by an overseas company can be taken in Portugal by a qualifying remote worker and be subject to a flat taxation of just 20% with no higher limit. Not all work activities are suitable for the NHR. This is especially attractive to digital nomads who want to make Madeira their permanent home.
The NHR explained
The Non-Habitual Tax regime or NHR has been created by the Portuguese government with the aim of attracting wealthier retirees and high earning individuals who want to make a residential move to Portugal, the aim of the Portuguese government is that these individuals will spend their significant pensions, salaries and dividends within Portugal and by doing so bolster the Portuguese economy.
In order to qualify for the NHR there are two criteria that must be attained:
- To reside in Portugal as tax resident for a minimum of 183 days per annum must be achieved, these nights do not need to be consecutive. An applicant can spend less than the 183 days per annum in Portugal and Madeira, however Portugal must be the main residence in number of nights of the financial year.
- NHR applicants cannot have been tax resident in Portugal or Madeira within the last 5 years. Tax resident is deemed automatic in Portugal by spending or exceeding 183 days or more per annum within Portuguese territory.
The reduced or zero tax benefit of the Non-Habitual Regime last for a total period of 10 years from the applications approval.
Cost of living in Portugal:
Living in Portugal when compared to northern Europe represents a saving of 35%
Portugal being on the western tip of Europe and only sharing a land border with Spain has its own lively and interesting culture, excellent cuisine and great people. Portugal also has a developed economy however generally lower wages are paid, this means services and groceries are outstanding value for money.
From having coffee served in china by a professional waiter to clothes shopping and buying groceries, Portugal will surprise you with the quality of service right through to the high quality of local produce. There is also excellent value in the wonderful wines that Portugal and Madeira produce.
Expect to pay more for cars in sunny Madeira, however they are some beneficial ways to either import cars into Madeira via mainland Portugal for new residents or by bringing your car from your current home country, this does require some planning and paperwork once in Madeira.
