Portugal has become an increasingly popular destination for expatriates seeking a favourable tax environment. The Portuguese tax system offers several advantages for foreign residents, particularly through the Non-Habitual Resident (NHR) regime. This programme, introduced in 2009, provides significant tax benefits for a period of ten years to eligible individuals who become tax residents in Portugal.
Under the NHR scheme, foreign-sourced income, including pensions, may be exempt from Portuguese taxation, subject to certain conditions. Additionally, income from high value-added activities performed in Portugal may be taxed at a flat rate of 20%, which is considerably lower than the standard progressive tax rates.
It is important to note that whilst these tax incentives are attractive, expatriates must carefully consider their specific circumstances and seek professional advice. The intricacies of international taxation, including potential double taxation agreements between Portugal and one's home country, require thorough examination to ensure full compliance and optimal tax efficiency.
Furthermore, expatriates should be aware that the Portuguese tax system is subject to periodic revisions, and staying informed about any changes is crucial for maintaining a advantageous tax position whilst residing in Portugal.