Tax Optimisation and Residence Programme in Portugal

  Tax Optimisation Services for Individuals and Businesses
Tax Optimisation and Residence Programme in Portugal

How can a Maltese company reduce my personal tax if I am resident in Portugal under the Portuguese Non-Habitual Residence Programme?

Enjoy an attractive quality of living in Portugal

Portugal is the 3rd most peaceful country in the world ranked among 163 countries (Global Peace Index 2017). It is a safe and vibrant country with low crime rates and excellent infrastructure. Portugal offers a fantastic quality of life, a superb climate, great food and sandy beaches as far as the eyes can see. The cost of living is considered to be low, the Portuguese are very welcoming and a large portion of the population in and around the major cities and larger towns speak English as well as other foreign languages.

As if this wasn’t enough to make the country an attractive place to live, Portugal offers two highly desirable residence programmes: “The Golden Visa”, granting residency rights to foreign investors and “The Non Habitual Residence Programme”, offering tax exemptions to non-habitual tax residents on certain foreign sourced income.

Non-Habitual Residence Programme

The Portuguese Non-Habitual Tax Regime (NHR) allows qualifying individuals the possibility of becoming tax resident in Portugal and legally minimising income tax on certain categories of foreign sourced income for a period of 10 years.

The non-habitual tax resident status will apply to taxpayers who were not tax resident in Portugal in the previous five years, have become tax resident in Portugal through staying 183 days in Portugal and buy or rent a house with the purpose of establishing permanent residence. Once acquired, the non-habitual resident tax status will be kept for a period of up to ten years, provided that the Portuguese tax residency is maintained for each one of those years.

For Maltese companies, the tax regime in Portugal is particularly attractive in relation to non-Portuguese sourced income, since most foreign-sourced income will be exempt from tax in Portugal, provided certain conditions are met.

There is even the possibility of applying a reduced 20% tax rate to certain categories of Portuguese-sourced income based dependent upon the qualifying criteria being met.

Portuguese resident under the Non-Habitual Residence Programme in Portugal: a Maltese company can optimise my personal tax.

As seen above, certain classes of income are currently exempt from income tax for Portuguese residents qualifying under the Non-Habitual Residence Programme. Dividends from a Maltese company is one such exemption as it’s classified as income received from abroad.

For example, a Maltese company earning taxable profit of €100,000, if owned by a non-resident shareholder (a NHR qualifying Portuguese tax resident), will have the €100,000 taxed at 5%.

This means €95,000 net profit is taken from the Maltese company as a dividend in Portugal. Dividends from foreign sources are not taxed, meaning the full €95,000 is received in Portugal tax-free.

Show me how Portuguese residence can benefit me

Portugal Golden Visa Programme

The Golden Visa regime allows foreign investors from non-EU countries to acquire a valid residency permit in Portugal. The residency permit will allow the investor and his family members to enter and/or live in Portugal as well as to travel freely within the European Schengen countries.

There are three main criteria for qualification:

  • Make and maintain the qualifying investment for a minimum of five years
  • Spend a minimum of seven days in Portugal for the first year, then no less than 14 days each subsequent two-year period (this is called the stay requirement)
  • Have a clean criminal record

Qualification criteria includes a variety of investment options, with the lowest being a minimum investment of €250,000. However, most investors choose the Real Estate investment option of €350,000 or €500,000 depending on the route you choose.

A key advantage of the Golden Visa in Portugal is the very low ‘stay requirement’. In order for you to maintain your Golden Visa residency, you will only need to spend seven days in the first year and 14 days in the subsequent years (consecutively or non-consecutively) in Portugal. This makes the program particularly suitable if you do not intend to live permanently in Portugal, but wish to access the benefits of having EU residency and, eventually, citizenship.

After staying in Portugal for a period longer than 5 years, Golden Visa holders can request permanent residency. After staying in Portugal for a period longer than 6 years, foreign investors have the possibility to be granted Portuguese nationality.

As a Golden Visa Portugal holder, you will not need to pay any additional taxes on income produced outside of Portugal. However, you may wish to take advantage of the Non-Habitual Tax Regime by setting up tax residency in Portugal which in turn could help maximise your tax planning globally.

Discover how to apply for the Golden Visa Programme


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