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Tax System for the Non-Regular Resident (RNH)

Posted by: Saraiva Lima e Associados

Tax System for the Non-Regular Resident (RNH)

The Tax System for the Non-Regular Resident is a system created with the purpose to attract to Portugal nonresidents which are professionals qualified for activities with high added intellectual or industrial property value or know-how, as well as beneficiaries of pension schemes that are granted abroad.

This system taxes the citizens’ income in the least damaging way, namely by taxing:

  • The Portuguese source income will be taxed at a 20% rate, unless these nonresidents choose aggregation;
  • The foreign source income – elimination of international juridical double taxation:
    • Category A income (employment) – exemption method in case of existing Convention between Portugal and the source state (nation);
    • Category B income (self employment), E (Capital Income), F (Real Estate Income) e G (Increase in Wealth) – exemption method when the income is taxed by the source state
    • Income in Category H (pensions) – exemption method when the income is taxed by the source state
    • Other Income obtained abroad – the income not covered by this tax regime for non-regular residents will be taxed in Portuguese territory

To be eligible under this regulation, citizens must fulfill these requirements:

  • Citizens must be deemed resident on Portuguese territory for tax purposes, according to one of this criteria:
    • To be present for more than 183 consecutive or unsequential days, in any 12 months period initiated or ended in the reporting year;
    • If staying for a shorter period, to have in the Portuguese territory, on the 31st of December, a dwelling under circumstances that lead to the presumption of an intention to hold and occupy it as a place of habitual abode;
    • To be, on the 31st of December, a crew member of a ship or aircraft at the service of an entity with residence, head office or effective management in Portugal;
    • To be a member of a household where one of the spouses is, on the 31st of December, a Portuguese tax resident.
  • Citizens must not have been deemed resident on Portuguese territory during the five years prior to the last year pretended to be taxed as a non-regular resident.

This Tax System for the Non-Regular Resident may be used for 10 consecutive years, and it is not extendible.