The Non-habitual Tax Residents regime (“NHR”) foresees a very favourable tax regime applicable to individuals transferring their tax residence to Portugal. The NHR is one of the most competitive European regimes and is granted for a period of 10 years.

A non-habitual tax resident is an individual that:
- Was not a resident taxpayer for Personal Income Tax purposes in the 5 years prior to the application of the regime; and
- Becomes a resident taxpayer for Portuguese Personal Income Tax Code (“PIT” Code).
To qualify as a tax resident under Portuguese domestic rules, an individual is required to:
- Spend more than 183 days in Portuguese territory (on a 12-months period); or
- Own a dwelling that qualifies as a habitual residence in Portuguese territory (regardless of the number of days effectively spent in Portugal).

The benefits provided in the NHR range from a full exemption on certain types of income and a reduced flat tax rate of 20% to other types of income.
- Foreign-source income:
- Passive income deriving from outside Portugal (e.g. dividends, interest and rental income) are fully exempt in Portugal and this exemption applies irrespective of the taxation applicable at source (i.e. it is possible to achieve double non-taxation);
- Retirement pensions earned abroad and not deemed as Portuguese-sourced pensions, are subject to a flat rate of 10%; and
- Active income (e.g. income from employment and self-employment) deriving in connection with “high value-added activities” may also be fully exempt provided specific conditions are met. The activities qualified as “high value added” are identified in a statutory shortlist and include software developers, academics, researchers, tax advisors, senior company personnel and, in certain cases, board members such as CEOs and CFOs.
- Portuguese-source income, in particular active income deriving in Portugal in connection with “high value-added activities” will be subject to a flat rate of 20% (instead of the general progressive tax rates).