Portugal non habitual resident pays no tax on foreign-source income?

Tax and legal
1

Hi guys

I’m Iranian and live in Italy with permanent residency permit. I’m self employed and work with online freelancing sites such as Upwork.

1- I wanted to know, can I apply for Portugal non habitual residency and then by using that, pay no taxes legally? (As the income is considered as foreign-source income)

2- I noticed if I want to do this, I need to be resident of Portugal. Is there any possibility that I switch my Italian permanent residency permit with Portugal? (Because I know this is possible with Sweden)

Thanks for your help

2

1- I wanted to know, can I apply for Portugal non habitual residency and then by using that, pay no taxes legally?

That depends on whether Italy has a tax treaty with Portugal. If it does, then it depends on the agreements in the treaty.

3

Hey thanks a lot Dan.

It has double taxation treaty with Italy.

https://i.imgur.com/8XYCllo.png

This is what has been written on the nomad site:

“This is possible, in part, due to Portugal’s 71 double taxation treaties. According to the regime, as long as the source country of your income has the power to tax your income (regardless of whether or not they actually apply the tax), Portugal will not tax your foreign-sourced income.”

I live in Italy and I work on Upwork freelancing site which is a USA company, does this mean that the source country of my income is USA? or it’s still Italy? [Portugal has double taxation with USA too]

This means, if I get Non habitual residency from Portugal and live in Italy, I’m able to not pay tax legally? Maybe I missed something here, can you help me out a bit?

Thanks

1 Like
4

I’d answer your questions if I could.

Unless it quoted the tax treaty, I’d start with the actual tax treaty. Be sure to read Chapter II - Definitions (Chrome browser translates sites in Portuguese.):

PWC has a high level summary of how residency types affect Portugal’s ability to tax income:

PWC also has an in depth explanation of personal income taxes in Portugal. Ignore the date in the URL, the page is dated 31 Jan 2020.
https://home.kpmg/xx/en/home/insights/2011/12/portugal-income-tax.html

PWC is not an official source. However, their business reputation relies on them knowing the legal foundations of the services they sell.