Portugal NHR Program

Portugal's Non-Habitual Resident (NHR) regime offers favorable tax treatment for new residents. While recent changes have reduced some benefits, it remains an attractive option for certain profiles.

Note: The Portuguese government has made significant changes to the NHR program. This guide reflects the current state as of 2024, but you should verify current rules before making decisions.

Overview

Feature	Details
Duration	10 years
Type	Tax regime (requires residency)
Key benefit	20% flat tax on qualifying Portuguese income
Foreign income	Treatment varies by source
Path to citizenship	5 years

What is NHR?

The Non-Habitual Resident regime is a special tax status available to people who:

Become Portuguese tax residents
Have not been Portuguese tax residents in the previous 5 years

It offers favorable tax treatment for 10 years.

Tax Benefits

Portuguese-Source Income

Qualifying high-value professions pay a flat 20% tax rate instead of progressive rates up to 48%.

High-value professions include:

Software engineers
Architects
Designers
Teachers
Doctors
And others

Foreign-Source Income

Recent changes have affected this significantly.

Previously, foreign-source pensions and certain income could be tax-exempt or taxed at reduced rates. The 2024 changes have modified these benefits.

Current rules (verify before applying):

Foreign employment income: May be exempt if taxed at source
Foreign dividends/interest: May be exempt under certain conditions
Foreign pensions: Now subject to taxation (previously exempt)

Requirements

To qualify for NHR:

Become a Portuguese tax resident — Spend 183+ days in Portugal or have your primary home there
Not been a Portuguese tax resident in the previous 5 years
Apply within the deadline — Usually by March 31 of the year following becoming a resident

Getting Residency

To become a Portuguese tax resident, you first need legal residency. Options include:

EU/EEA Citizens

Can move freely and register as residents.

Non-EU Citizens

Need a visa, such as:

D7 Visa (Passive Income) — Requires €760/month income
D8 Visa (Digital Nomad) — For remote workers
Golden Visa — Investment-based (minimum €500k in funds)
D2 Visa (Entrepreneur) — For those starting a business

Cost of Living

Lisbon

Rent: €1,000-2,500/month
Total budget: €2,000-4,000/month

Porto

Rent: €700-1,500/month
Total budget: €1,500-3,000/month

Smaller Cities/Algarve

Rent: €500-1,000/month
Total budget: €1,200-2,000/month

Pros & Cons

Pros:

Cons:

NHR + US LLC

How does an NHR setup work with a US LLC?

This depends on:

EU residency and travel
High quality of life
Good healthcare and infrastructure
English widely spoken
Path to EU citizenship (5 years)
Safe, beautiful country
Not a territorial taxation system
Recent changes have reduced benefits
Higher cost of living than Eastern Europe or Latin America
Bureaucracy can be slow
Need to actually live there (183+ days)
How your LLC income is classified
Whether it's taxed in the US
Current Portuguese tax treaty provisions

Generally:

If you work remotely for clients outside Portugal, through your US LLC
And you qualify as a high-value profession
You may pay 20% on that income

However, the tax treatment is complex and requires professional advice specific to your situation.

Is NHR Still Worth It?

NHR remains attractive for:

EU citizens wanting a southern European base
High-value professionals with Portuguese-source income
Those prioritizing lifestyle and EU citizenship over pure tax optimization

For pure tax optimization, territorial taxation countries (Panama, Paraguay) may be more straightforward.

Getting Help

Portuguese tax rules are complex. We recommend working with:

A Portuguese tax advisor familiar with NHR
An immigration lawyer for visa applications

Need a US LLC to run your business while living in Portugal? Learn about our formation services →