Portugal taxes on foreign investments while and after NHR regime

Hi there!

I’m trying to align my investment plan regarding to migration to Portugal in future, and its tax consequences :slight_smile:
By searching all over the resource and a lot of others, I’ve found out this simple tax scheme:

  1. Income on dividends from foreign source
    a) 0% from non-laundry countries while on NHR
    b) 28% after that
  2. Cap gain income - 28% at any time.
    Could anyone confirm it’s correct?

What confuses me is:

  • 1a) - is it really 0%? If I own ETFs domicilated in Ireland (with 0% withholding tax), then dividends are completely tax-free for me?
  • 28% for investment income - I couldn’t find any progressive tax levels, only flat rate. Is it really so?

Thanks in advance!

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Hi,
actually it is not that simple. The NHR tax regime grants a relief in Portugal only if based on the double taxtation treaty between Portugal and the source country, the source country has the possibility to tax the income.
So the first element to check is if exists a DTT between Portgual and the source country and then check if the source country can tax the income. If this conditions are met and the source country does not apply WHT then the dividend is tax free. For example dividends coming from Malta are tax exempt under this condition. But be very careful because it may vary from every country and also from the income qualification (es. interest).
If the dividend comes from a portuguese entity it will be taxed at 28% rate.

Regarding the capital gain, in general they are always taxated in the source state. So you will be exempt in Portugal even without the NHR regime.
If capital gains are originated in portugal 28% rate may apply. There is no progressive tax on capital incomes.

International taxation is a very complex matter and you should be advised by a professional.

Hope this helps

Thanks a lot for a reply!

Definitely asking a professional advice seems a very good point - for approving a positive answer. However, if I can get a negative answer, it saves me some amount :slight_smile:

I was considering Ireland as a source of income (ETFs dividends and sale, to be specific)
As you wrote, and I’ve found this statement in other sources, income tax is exempt if the source country can tax it. Indeed, Ireland has a DTT with Portugal, so it can be taxed. But, it is not taxed. So, what in this case Portuguese IRS do?

Any practical experience from those Portuguese NHR residents having Irish funds?

The same stuff for cap gain, I’ve realized it’d be taxed in PT , thanks for the confirmation of the flat rate

In that case you will be exempt from the income in Portugal and therefore if Ireland does not tax, the income is tax free.
Be also aware that you will be already effectively registrated in Portugal as NHR at the moment you receive the income. There are some risks of double residence during the year of the relocation.

We have experience with NHR clients with investments in Ireland but any case is unique.

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Thanks a lot, magwind!