COUNTRY:
Menu
Portugal - Residency Programs
Portugal offers a variety of residency programs for individuals who wish to live, work, study, or invest in the country. Here are some of the notable residency programs in Portugal:
- Golden Visa Program: The Golden Visa Program is one of the most popular residency programs in Portugal. It grants residency to non-EU/EEA nationals who make a significant investment in the country. Eligible investments include real estate purchases, job creation, capital transfer, or scientific research. Successful applicants and their family members are granted temporary residency permits, which can be renewed and eventually lead to permanent residency or citizenship.
- Non-Habitual Resident (NHR) Program: The NHR program is designed to attract high-net-worth individuals and retirees to Portugal. It offers tax benefits to individuals who become tax residents in Portugal. Under this program, qualifying individuals may be eligible for special tax rates, exemptions, or reductions on foreign income, pensions, and certain professional income.
- D2 Startup Visa Program: The D2 Startup Visa Program aims to attract innovative entrepreneurs and startups to Portugal. It offers residency to non-EU/EEA entrepreneurs who establish an innovative and scalable business project in the country. Successful applicants are granted a one-year visa, which can be renewed for an additional two years. After completing five years in the program, entrepreneurs may become eligible for permanent residency or citizenship.
- D7 Visa Program: The D7 visa is designed for individuals who wish to retire or live in Portugal with a passive income. It is suitable for individuals with regular income from pensions, investments, or other sources. Applicants must demonstrate that they have sufficient financial means to support themselves and their dependents. The D7 visa grants temporary residency, which can be renewed and eventually lead to permanent residency or citizenship.
It’s important to note that residency programs may have specific eligibility criteria, application requirements, and renewal conditions. It is recommended to seek professional advice to get the most up-to-date and accurate information regarding the specific residency program you are interested in.
The Taxation System
Portugal operates under a progressive tax system, where individuals are taxed at different rates based on their income. Here are the key aspects of the taxation system in Portugal:
- Personal Income Tax (IRS): Personal income tax, known as IRS (Imposto sobre o Rendimento das Pessoas Singulares), is levied on the worldwide income of residents in Portugal. Non-residents are only taxed on income derived from Portuguese sources. The IRS rates for 2023 range from 14.5% to 48% and are divided into several income brackets. The rates are applied progressively, meaning that higher income is subject to higher tax rates.
- Corporate Income Tax (IRC): Corporate income tax, known as IRC (Imposto sobre o Rendimento das Pessoas Coletivas), is levied on the profits of companies operating in Portugal. The standard corporate tax rate is 21%. However, there are reduced rates applicable to certain situations, such as small and medium-sized enterprises (SMEs) and companies operating in Madeira's International Business Center.
- Value Added Tax (VAT): VAT, known as IVA (Imposto sobre o Valor Acrescentado), is a consumption tax applied to most goods and services. The standard VAT rate in Portugal is 23%. However, there are reduced rates of 6%, 13%, and 23% applicable to specific goods and services.
- Capital Gains Tax: Capital gains tax is levied on the profit earned from the sale of assets, such as real estate, stocks, and other investments. The tax rate for capital gains is generally 28%, but it can be reduced or exempted in certain circumstances, such as the sale of a primary residence or certain qualifying investments.
- Property Tax: Property tax, known as IMI (Imposto Municipal sobre Imóveis), is an annual tax levied on the value of properties. The tax rate ranges from 0.3% to 0.45% for urban properties and up to 0.8% for rural properties. There may be additional taxes on luxury properties.
- Wealth Tax: This was reintroduced in 2017. Regardless of residency status, there are rates that vary between 0.4% and 1% depending if the property are held by companies or individuals.
It’s worth mentioning that tax rates and regulations may be subject to change, so it is advisable to consult with a tax professional or seek the latest information from an advisor to ensure compliance with the current tax laws in Portugal.
Tax Residency
In Portugal, tax residency is determined based on the individual’s habitual residence or presence in the country. The Portuguese tax authorities consider an individual to be a tax resident if any of the following conditions are met:
- The individual spends more than 183 days in Portugal during a calendar year, whether consecutive or not; or
- The individual spends fewer than 183 days in Portugal but has a residence in Portugal as of December 31st of that year with the intention to hold it as their habitual residence.
It’s important to note that tax residency can also be determined by the existence of family, economic, or professional ties that lead to the reasonable assumption of an individual’s intention to establish residence in Portugal.
Tax residents in Portugal are subject to tax on their worldwide income, meaning they must report and pay taxes on income earned both within and outside of Portugal. Non-residents and residents under the programs have certain tax exemptions and tax deductions.
To determine your tax residency status and obligations in Portugal, it is advisable to consult with a tax professional or seek guidance, to be able to provide specific information based on your individual circumstances and help you understand your tax obligations in Portugal.
