Portugal’s NHR Program: Planning for Post-10 Year Tax Obligations

The Non-Habitual Resident (NHR) program in Portugal is a tax incentive program designed to attract foreign nationals to the country. It offers significant tax advantages and exemptions for foreign-sourced income for a period of 10 years. This has made it a popular choice for high-net-worth individuals and professionals looking to relocate to Portugal.

However, what happens after the initial 10-year period is up? Here’s what you need to know:

1. Taxes on foreign-sourced income: After the 10-year period is up, foreign-sourced income may become subject to taxation in Portugal. The exact tax rules will depend on the tax laws in your home country and whether a tax treaty exists between Portugal and your home country. It’s important to consult with a tax advisor to understand your specific tax situation.
2. Portuguese tax residency: If you’ve been living in Portugal for a significant amount of time, you may become subject to Portuguese tax residency rules after the 10-year period is up. This means that you may be required to pay taxes on worldwide income, not just income sourced from Portugal.
3. Renewing NHR status: If you wish to continue enjoying the tax advantages and exemptions of the NHR program after the initial 10-year period is up, you can apply to renew your NHR status. However, in order to be eligible for renewal, you must have been out of Portugal for at least five years.
4. NHR cannot be paused: It’s important to note that the NHR status cannot be paused or suspended if you are out of Portugal during the 10-year period. This means that if you leave Portugal for an extended period of time during the 10-year period, you will not be able to extend the duration of the NHR program.
5. Other residency and tax options: If you’re no longer eligible for the NHR program, there may be other residency and tax options available to you in Portugal. For example, the Golden Visa program offers residency to foreign investors who meet certain investment requirements, while the D7 visa is designed for retirees and independent workers.

In conclusion, after the initial 10-year period of NHR in Portugal, foreign-sourced income may become subject to taxation in Portugal, and you may become subject to Portuguese tax residency rules. Renewing the NHR status is possible, but only after five years of being out of Portugal. It’s important to consult with a tax advisor and explore your options to ensure you’re making informed decisions about your tax and residency status.