I am receiving more enquiries from people who are attracted to move to Portugal because of its Non-Habitual Residents scheme. For those who are eligible, the scheme can provide substantial tax advantages for the first 10 years of tax residence, with tax exemptions applying to employment, pension and investment income if certain conditions are met.
With regards to overseas investment income, under the scheme dividends and interest are exempt from tax in Portugal, provided the income:
- May be taxed in the state of source under a double tax treaty, or
- May be taxed under the terms of the Organisation for Economic Cooperation and Development (OECD) Model Tax Convention and is not regarded as arising from a Portugal source.
It is important to note, however, that this excludes income generated in one of the blacklisted tax havens. Those applying for the Non-Habitual Residents scheme may need to review their investment holdings if they wish to receive the full tax benefits.
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