2. Low tax on foreign pensions
Under the non-habitual residency scheme, foreign pensions are taxed at the low rate of 10% for the first ten years of living in Portugal. Following that time period, taxable rates do rise, however, they continue to be significantly lower than in many other European countries.
3. No inheritance tax
For foreign pensioners that invest in Portugal real estate, there’s an additional advantage: this country does not have inheritance tax on real estate properties. The only requirement is the payment of the associated administrative fees, and a stamp duty at a flat rate of 10%. Spouses, descendants and ascendants are exempt from the latter.
How to benefit from the NHR status
In order to be granted the NHR status, the pensioner must be a tax resident in Portugal, meaning the pensioner must prove that he/she has lived in Portugal more than 183 days (consecutive or not) during a 12-month period beginning or ending in the year that the pensioner applies for the NHR status; or alternatively, the pensioner has lived in Portugal for less than 183 days but has acquired, during the last 12-month period, a real estate property that makes it clear that this is and will continue to be the pensioner’s main residence. The application for the NHR status must be filed until March 31 of the year following the year of registration as a resident. Granted for a period of 10 years, the NHR status is non-renewable. However, if the pensioner is not recognized as a Portuguese tax resident during one year, for example, the status is not lost and the pensioner can continue to benefit from it once they become a tax resident in Portugal again.
Greater savings, greater quality of life
With such a broad range of tax benefits for foreign pensioners, spending power is increased. And when you factor in the fantastic quality of local life – natural beauty, weather, safety, health system – and low cost of living in Portugal, well these are exactly what retirement dreams are made of.