Best tax benefits for US expats are in Portugal

Portugal is your best choice for TAX benefits of US citizens.

Portugal is part of the European Union and the Schengen area to start with. With a stable political and social environment for many decades, a very safe society, a highly skilled and English fluent labor force and an excellent quality of life, it is not a surprise that Portugal is becoming a top choice for highly qualified workers, entrepreneurs and ultra and high net worth individuals who wish to take up residence in the European Union

The special tax regime for Non-Habitual Residents aims to attract Ultra and High Net Worth Individuals (UHNWIs) and their families to Portugal, providing a very attractive tax regime for individuals. 

This is your chance to find your new home in Europe, where everybody speaks English and life is good in the purest form.

Benefits of the special tax regime for Non-Habitual Residents (NHR) in Portugal

• A special tax rate of 20% applicable to employment and self-employment income derived from a “high value-added activities”.
• A tax exemption (with progression) on foreign-source income (e.g. professional income, rental income, capital gains, interest, dividends, as well as other investment income), provided certain conditions are met. In most cases, capital gains on the sale of securities are taxable at a flat rate of 28%.
• A flat tax rate of 10% on pensions from a foreign source, as well as to other payments from pension funds and similar retirement schemes.
• An individual may benefit from this regime during a 10-year period starting from the year of his/her registration as tax resident in Portugal.

Conditions to qualify as non-habitual tax resident

To qualify as non-habitual tax resident, an individual must:

• be tax resident in Portugal in a certain year;
• have not been tax resident in the previous 5 years.
• In general terms,an individual is deemed to be tax resident in Portugal if one of the following conditions is met:
• more than 183 days are spent in Portugal in any 12-month period starting or ending in the tax year concerned; or
• maintains a residence suggesting being a habitual residence in Portugal in any period within the above 12-month.

Depending on the circumstances, the splitting of the tax year may be applicable, i.e., an individual may be considered as tax resident only during a part of the year.

Other beneficial aspects of the Portuguese tax system for individuals

• Atax exemption for gifts or inheritances to spouse, descendants or ascendants. Inheritance or gifts to other individuals will be either not taxable, due to the territoriality rules, or subject to a flat 10% stamp tax rate.
• No wealth tax and free remittance of fundseither in Portugal or abroad.
• Abeneficial tax regime for individuals starting a self-employment activity in Portugal.
• Beneficial tax treatment for pensions and other life insurance products(including unit linked) may reduce the effective tax burden on the income received.
• Portugal takes advantage of the EU non-discrimination rulesand has signed more than 60 double tax treaties, offering interesting opportunities in a tax friendly environment.

Are you intersted to know more? Take a read also to our BLOG about choosing the best VISA to become resident in Portugal.

Are you thinking of moving to Portugal and benefit from these tax schemes contact us through info@westmark.pt and we will guide you through the process.

We will find you a suitable home to live in the coastal areas of Albufeira, Vilamoura, Loulé or Santa Barabara de Nexe.

For more info you can also go directly to the Portugese Tax office.