In 2009, the Portuguese government established a special tax regime that was very attractive for both foreign investors and Portuguese individuals who had constituted their assets outside the country. It was popularly known as the «Non-Habitual Residency» (NHR) regime.
This regime provided a series of tax benefits for a period of 10 years. Under this regime, certain income such as foreign dividends, rental income abroad, interest income generated abroad, capital gains on the sale of assets located abroad, income from employment or self-employment in another country, as well as foreign pensions, were subject to zero or very low taxes.
Following a series of political and social events during 2023, the Portuguese authorities decided to put an end to the NHR. The measure implies that, starting from January 1, 2024, it will no longer be possible to apply for this tax regime; however, it continues to apply to those who opted before that date.
For example, individuals who officially registered as tax residents in Portugal, applying for the Non-Habitual Residency before December 31, 2023, will continue to enjoy the tax benefits until the end of the 10-year period.
However, there are specific categories in which interested parties can qualify for the same tax benefits as the NHR. This is the Highly Qualified Activities (HQA) Visa. It is aimed at highly skilled professionals, investors, entrepreneurs, as well as small and medium-sized enterprises.
Individuals in the eligible categories for this program are subject to a flat tax rate of 20% on any income earned in Portugal for a period of 10 years.
Additionally, interested parties are not taxed on income from abroad for a period of 10 years. This is attractive because there is a high probability that the economic income of those who qualify for the HQA will be generated outside the Portuguese country.
Why are these tax incentives offered? Because, as a state policy, Portugal is committed to investing in science, innovation, and entrepreneurship. With these benefits, they ensure attracting highly skilled professionals to those areas.
The Portuguese HQA has been compared by some media outlets to the Golden Visa and the D7 Visa («non-lucrative visa»). There is some resemblance in that an investment is required, and the actual stay in the country is minimal during the visa period, but there are other characteristics that differentiate both programs.
What are the requirements for the HQA? The main requirement is that interested parties must establish a company in Portugal, in which they must invest €175,000; this amount includes the legal costs of establishing the company, as well as the visa application fees. The application can include the partner and up to two dependents.
In addition to the aforementioned tax facilities, the HQA opens a route for both residency and citizenship.
If you want to delve into the topic, or if you are already in a Golden Visa, D7, or Digital Nomad program, and want to know if you can qualify for greater tax benefits, schedule a meeting with our team. We have experts in legal and tax matters who will be willing to help and accompany you throughout the process. Don’t hesitate and act now!
