Non-Habitual Resident Status and Taxes

In my last post I mentioned that I would be consulting with an accountant about filing taxes in Portugal. The news was all good. However, I did become aware of another step that I need to take in order to not pay income tax in Portugal.

I have until March 31 of the year following the year in which I obtained my Temporary Resident status to file as a non-habitual resident. It is a simple online process to apply, followed up by submitting proof electronically or by mail that I am currently paying taxes in the country of which I am a citizen. So what does that mean for my tax obligations here in Portugal?

Once my status is granted I will need to file a report online showing that I am still residing in Portugal and that I am still paying taxes in the country from which my income originates.

Certain types of income are allowed to be exempt and others are capped at a 20% tax rate. Here is the abbreviated version of how tax obligation is applied if have non-habitual resident status.

  • For a period of 10 years, taxation related to IRS (personal income tax) on labour income in Portugal is at a fixed rate of 20%
  • No double taxation for pension incomes or for employment and self-employment income obtained abroad for a period of 10 years

I will still need to file a tax return each year in Portugal, with no payment due, and I will also need to update my non-habitual resident status annually for 10 years. Then, a new set of rules regarding citizenship and taxes will apply. I am not going to worry about that yet!

For more information

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The Dream Continues

 

Where Did the Last Month Go?

I do not know how a month has gone by since I last posted. I had a bout with a severe chest cold which laid me up for a while. However, mostly I have been reading, walking and spending time with family.

My grandson celebrated his 13th birthday in Colares, Portugal. Five days with my son and his family sped by with a birthday party, family card games, sushi dinner out in Malveira da Serra for my grandson’s birthday and hours of laughter and tears of nostalgia watching videos of my grandson from the ages of one to five. Included in the videos were videos of him at four years of age on his first visit to see me in Praia da Luz at Easter.

The weather continues to be sunny but has dropped in temperature and when the wind blows it is actually chilly! We had one stormy day which I especially loved as it is my favorite weather for a walk next to the ocean.

I am leaving for Madrid in a week to spend six days volunteering with the Vaughantown English Immersion program. More about that when I return.

And I haven’t forgotten that I owe my readers a list of the contents of my final packet for my SEF interview. I am meeting with an accountant next this month to make certain that I filed all of the necessary paperwork to be exempt from taxes in Portugal. I will let you know what I find out.

In the meantime, may your dreams be fulfilled. They can be, one step at at time.