The Non-Habitual Resident regime allows you to enjoy a set of benefits for a period of 10 years. Essentially, we have:
- Reduced fixed taxation rate of 20% related to IRS (personal income tax) from employment and self-employment income, and
- IRS exemption for specific incomes.
To this end, you cannot have been a tax resident in Portugal in the last 5 years and, additionally, you must meet certain conditions.
Regarding the reduced rate of income tax of 20%, it is a prerequisite to practice an activity of high added value. Already this year of 2019, some changes have already taken place that should be considered, including:
- Architects, Psychologists, Geologists and Designers no longer benefit;
- Farmers, Contractors and Machine Operators will benefit.
Check here the full list and, in addition, check out the case study below, for a better understanding of this Regime application.
I - Professional Activities (SCO – Standard Classification of Occupation):
112 -General Manager and Chief Executive of Companies
12 - Administrative and Commercial Services Directors
13 - Production and Specialised Services Directors
14 - Hotel, restaurant, trade and other services Directors
21 - Experts in physical sciences, mathematics, engineering and related arts
221 – Doctors
2261 - Dentists and stomatologists
231 - University and Higher Education Teacher
25 - Information and Communication Technology (ICT) Experts
264 - Authors, journalists and linguists
265 - Creative artists and performers
31 - Technicians and professions of science and engineering, intermediate level
35 - Information and Communication Technology Technicians
61 - Market-oriented, skilled agricultural and livestock production farmers and workers
62 - Market-oriented and skilled forest, fishing and hunting workers
7 - Industry, construction and artisans skilled workers, including metallurgy, metalworking, food processing, woodworking, clothing, crafts, printing, precision instrument manufacturing, jewellers, craftsmen, electrical and electronics skilled workers.
8 - Plant and machine operators and assembly workers, namely fixed installations and machine operators
In addition, you are required to have at least secondary education or five years of duly proven professional experience.
II - Other professional activities:
Managers and chief executives of companies promoting productive investment, if they are related to eligible projects and with tax benefit concession agreements concluded under the Investment Tax Code.
When Ruth received the information about the amendment to this current regime, as a UWU Solutions customer, she was amazed! This is because Ruth, as a professional designer, has already benefited from the advantages of this regime for 4 years.
By this we mean that instead of a rate of 45%, it is charged a reduced rate of 20%. This allows her a 25% tax saving every year!
And now? Your professional activity no longer fits into this regime! Will you stop saving 25%?
The answer is simple and favourable: No!
As Ruth was already registered as a Non-Habitual Resident on 1st January 2020, these changes will not apply to her.