What Are The Tax Benefits Available in Portugal For Digital Nomads and Other Individuals Moving There?
The Rise of Digital Nomads
Following on from the restrictions caused by the pandemic and the significant increase of people no longer working in an office, or place of work, a number of individuals have realised that they can work from ‘anywhere’. Portugal offers a temporary residence visa that can be used by freelancers and entrepreneurs, which digital nomads can take advantage of.
Digital Nomad Village in Madeira, Portugal
The local government in Madeira has launched the ‘Madeira Digital Nomads’ project, to attract foreign professionals to the island. Those taking advantage of this initiative can live in the nomad village in Ponta do Sol, in villas or hotel accommodation and enjoy free; wi-fi, coworking stations, and specific events.
The Attractions of Portugal – to a Wide Audience
Portugal is an attractive and popular location – not only for digital nomads to move to – but for a large variety of individuals, in many different circumstances.
Not only is it a beautiful country, offering an attractive lifestyle, but it also offers the popular Golden Visa (GV), and the Non Habitual Residents (NHR) programme, which can be combined, and offer a route for individuals to move to Portugal and to enjoy tax advantages once they re-locate here.
The GV is less important for EU citizens, as they already have a right to live in Portugal without formal immigration or investment being required.
- NHR has proved to be a major motivator for both EU and non-EU citizens.
Key Advantages of Portugal NHR status:
Portugal is a full member of the EU and therefore legal residents can travel freely and visa-free throughout the EU under Schengen.
NHR status lasts for ten years.
Tax efficiencies in relation to NHR status include:
- It is possible, with careful structuring, for NHRs to not be taxed on income, other than Portuguese-source income, for the ten year NHR designated term.
- Recent amendments now include a tax of 10% on pension income, which remains considerably less than the standard Portuguese tax on pensions.
- 20% flat rate for certain Portuguese source income (from specific professions and from self-employment), as opposed to standard Portuguese income tax rates of up to 48%.
Criteria to Meet NHR Status
The following criteria must be met:
- The right to reside in Portugal, either by being an EU/EEA/Swiss citizen, or through schemes such as the Golden Visa programme.
- Must not have been resident in Portugal within the last five Portuguese tax years.
- Must not have been a Portuguese tax resident in the five years prior to taking up residence in Portugal.
- The individual must have a place to live in Portugal, this could be the rental of a modest apartment.
- To apply for NHR, a fiscal representative, such as Dixcart, needs to be appointed in Portugal.