Non Habitual Residency is a highly favorable tax status available to new residents in Portugal offering reduced tax rates and exemptions for a period of 10 years.
Under NHR, many types of foreign sourced income are exempt from taxation in Portugal including most foreign rental income, capital gains, dividends and interest provided they may be taxed outside of Portugal. Certain types of foreign employment income are also exempt, while pensions are taxed at 10%.
Portuguese Non Habitual Residents are also not subject to inheritance tax, gift tax or wealth tax in Portugal.
For Portuguese sourced employment or self employment income non-habitual residents are charged a flat rate of 20%, regardless of the level of income. In comparison, under the ordinary tax system in Portugal the highest income bracket is taxed a whopping at 48%.