“The best kept personal TAX secret in Europe”
The Portuguese Non-Habitual Residency status or NHR enables those who become tax resident in Portugal to receive qualifying income, tax free in Portugal and Madeira, provided that the income in the source country is liable to taxation in accordance with the applicable tax treaty. To benefit from this preferential regime is to become a Portuguese tax resident, in accordance with Portuguese tax law, plus not having before been a tax resident in Portugal in the previous five fiscal years. The NHR status is granted for a fixed 10 year period. This means you can move to Madeira and potentially receive your entire pension tax free for the first 10 years of residency
Interest and dividends
Introduced in 2009, the NHR regime is a step towards Portugal and Madeira being a tax-free jurisdiction for individuals in receipt of qualifying non-resident income. Income that qualifies from NHR inclusion includes pensions, royalties, interest and dividends.
NHR also extends to include professional income from high value activities, these can benefit from a low flat tax rate of 20%. The principle objective of the regime has been to attract individuals and families to reside in Portugal and Madeira.
Tax is removed
In effect, NHR for those who qualify means that income tax is removed, this means your pension, dividends and interest payments increase your disposable income in Madeira substantially. The NHR is often overlooked, in Europe it is considered the most attractive tax option available.