Changes to Portugal’s Low Tax on Foreign Pensions

The much talked-about changes to the Portuguese Non-Habitual Tax Resident status (NHR) which was recently approved by the Portuguese parliament will likely add to the success story of the NHR programme.

The new amendments are meant to alleviate criticism from other countries, as most qualifying income will now be subject to some tax, even if at a very low rate, either at source or in Portugal.

The changes now approved are as follows:

  1. A tax rate of 10% on foreign pension applying to new NH Residents with no minimum tax.
  2. NH Residents acquiring the status before the law comes into force will keep in full their current benefits until the end of the ten-year period;
  3. Existing NH Residents can choose to have the new rules applied to them.

The new rules broaden the definition of income, previously treated as salary, which can benefit from the 10% rate.

These rules also open up the possibility of applying under the existing rules if, at the date of entry into force of the new law the NHR application has been submitted, or the applicant can be considered as a tax resident and if this applicant submits the NHR application on or before 31st March 2020 (for the tax year 2019) or before 31st March 2021 (for the tax year 2020).

In short, the NHR programme still looks extremely attractive for High Net Worth Individuals who wish to relocate – and do so in a tax-efficient way.


This article is for information purposes only and should not be relied upon as a substitute for tax, legal, financial or other advice.






*Please note this content is the view of the author and not of Independent Trustee Company