No double tax
Prior to making an NHR application, a tax-efficient structure can be put in place using Portugal’s extensive network of double-taxation agreements to ensure, for example, the majority of an applicant’s income derives from dividends.
As the NHR programme is based on bi-lateral double-taxation agreements that Portugal has with other countries, Brexit would have little or no effect on its operation. As it currently stands, non-EU citizens can apply for NHR status, provided they have a valid visa.
Even the application for Portuguese residency should not be affected as it is likely the UK would be offered the same treatment as Switzerland in this respect.
This concept of a remittance basis does not exist in Portugal. NHRs are subject to tax on their worldwide income, as for capital gains in real estate that are generally taxable in the state in which the asset is located, according to the respective double-taxation agreement. But all qualifying income will be exempt from tax in Portugal. As a result, the NHR programme is an ideal fit for UK non-doms.
No wealth tax
There has never been a wealth tax in Portugal, nor is there a requirement for a taxpayer to declare their assets to the tax authorities.Succession tax
The rate of succession tax between a testator and his spouse, ascendants or descendants is 0%.
Portuguese assets only need to be declared and are charged to succession tax. As a result, this can be a very effective tax-planning tool.
Rules of succession
Provided UK nationals born in England and Wales make an explicit election in their Portuguese will for English law to apply, they can freely dispose of their estate by this will.
Access
All EU citizens have access to the NHS in Portugal and, as a result, can register at their local health centre and receive hospital treatment free of charge.
Access to Europe and beyond is easy. EasyJet and Ryanair have hubs in Portugal and the national airline, TAP, runs daily flights to the majority of the European capitals, with daily flights to the US and South America, particularly Brazil.
Connections to the Middle and Far East can be found through Emirates and most major airlines fly to Portugal direct.
Portugal also has an extensive network of motorways linking each part of the country.A safe haven Portugal’s tourist industry is already benefiting from its status as a safe location to go on holiday. With English spoken widely, and a Mediterranean climate, an good quality of life is very accessible.
Overcoming hurdles
The beauty of the NHR programme lies in its simplicity. The habitual residency requirement can be satisfied easily and the chances of success in any application are high. Difficulties only arise in situations, for example, where an applicant has been previously tax resident in Portugal and has not previously ‘checked out’ or has been registered as tax resident by mistake.
This can happen if the applicant previously bought a Portuguese holiday home and was registered incorrectly as tax resident at the time of the purchase. Even in these circumstances it is relatively easy to correct the tax register by showing an international tax certificate issued by the country in which the applicant was actually tax resident.
In a world where tax avoidance is coming increasingly under pressure and scrutiny, the NHR programme in Portugal gives the opportunity to plan tax using a government-approved programme that is increasingly stable and mature.
