The exception to all of this is the position of US citizens, where NHR means that CG is not taxed in Portugal. This is apparently now accepted by Financas in the last tax filing season (not necessarily automatically, but sometimes after some effort).
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Just a data point for anyone considering applying for the existing NHR regime before the end of 2024 on the basis of having applied for residency before 31 Dec 2023. There were some scare stories going round of NHR applications being denied under the transition regime.
Well, we moved here permanently in July and changed our tax residency to Portugal last month. We then applied for NHR and have both been accepted. I do understand that this is apparently straightforward to do on your own (for free) but we used our GV accountants, Finpartner, to do this because I wanted to make sure it was done in a timely manner and weāve got enough to sort out what with outstanding SNSs and NISSs and the like and our accountants charged us ā¬100 each transaction. Iāve seen some people here given quotes of ā¬1000s to do this very simple application.
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I am looking for some guidance, we are March '23 GV applicants (obviously years away from preapproval). We plan on moving to Portugal in July '25 and enrolling our children in school (ages 14 & 15). We have already secured NHR status and I am in the process of starting a business based in the US but able to do from anywhere (mostly remote/digital). How should I set up my business to be most advantageous for NHR? LLC, sole proprietor, etc.? I remember reading somewhere that setting it up one way was much better than the other but now canāt find the source. Any insight/guidance would be greatly appreciated.
Am trying to get some clarity on the residency requirements around tax residency with/without the NHR. I know all of this comes with financial implications, but for now, ignore that. Once I understand the rules, I can do a cost-benefit comparison to drive a decision.
I have a contracted apartment in Portugal. And I do not yet have a residency card (thank you GV process).
Say I update my address with FianƧas to my PT address. Correct me if Iām wrong, but Iām now a tax resident of Portugal. I will be subject to PT taxes, and whether this is done via NHR or not is a separate point.
Now, having updated my address - what, if any, are my in-country (boots on the ground) residency requirements - without the NHR.
If I understand this, if I then apply for the NHR, Iām going to be looking at a residency requirement of 183+ days in country.
What happens if I donāt apply for NHR?
No, this is not a requirement. However, the reverse is correct: if you stay 183+ days in Portugal, you automatically become a tax resident.
The bigger question is whether your home country has a Double Taxation Treaty with Portugal, and what does it entail. I believe there is plenty of information on what to expect for U.S. citizens, and potentially U.K. ones as well. For other countries, this might vary.
Iād put it the other way. Why wouldnāt you apply for NHR if you become tax resident and are still eligible for NHR? Thereās only potential upside.
If you become tax resident in Portugal using your legally-leased apartment address and you began your GV process before the end of 2023 then thereās no reason to not apply for the old NHR regime.
The actions are separate (tax registration and NHR registration) but hurry. You need to do the NHR registration before the end of 2024 and I personally would not leave it until December because processes can take some time to complete and people in Portugal take holidays in December. After you are registered for NHR then my understanding is that you can choose to be taxed normally or under NHR in Portugal in each of the 10 NHR years so you lose nothing by being registered.
My accountants charged us ā¬100 each to do both tax and NHR registration in August this year and I do understand that you can do it yourself online for free but I preferred to get a professional to do it so it was done correctly first time and ā¬100 is nothing in the scheme of things.
It has been explained to me that once you update your address to a PT addressāno fiscal representative,āyou are a tax resident and subject to PT taxes. With or without NHR. Without NHR, you are subject to tax on your worldwide income, subject to treaty provisions.
Hereās the rub. If you arenāt actually living here, you are likely resident in two countries. Most all DTTs have a tie breaker for determining whether, for treaty purposes, you are a resident of PT or the other country. But there is something about having changed your address that implies you have elected to be treated as a resident of PT for treaty purposes. I donāt understand it, but PT tax counsel get all pale if you suggest you can change your address and then still be a resident of the other country for treaty purposes.
Now, with NHR, there isnāt a huge difference in tax treatment between being nonresident and resident with NHR. In both cases your foreign income isnāt taxed (except pensions for PT purposes), and your PT earned income is taxed progressively. But without NHR it is a whole different ballgame. You have three months to get in the door.
Thank you (and to the others who have responded as well)
Details
- US citizen, so DTT applies
- GV applicant as of Dec2021 - so old NHR regime applies
Our plan is to travel for 2-3 years before settling down; either in PT or the US. Unclear right now. Thus the concern is being tied down to more than 183 days in PT. As the window is closing, the thought was apply and then do said travel with NHR in a āsuspended modeā, allowing us to re-establish it when the travel phase is done.
My lawyer is indicating the expectation for NHR is in-country 183+ days. Hence the concern about applying and not meeting this expectation. The wording on whatās Ok to be exempt from the 183+ days is pretty squishy, but Iād really donāt want to be too far into the grey zone.
Also, re dates, my understanding is
- Dec2024 - update FianƧas with a PT address
- Mar2025 - NHR applied for
Am I correct?
Your lawyer is a funny guy.
See, what your lawyer is telling you is consistent with what my PT tax counsel is saying, but in a reversed sort of way. Being here 183 days makes you a tax resident. To put it a different way, you are then a habitual resident. The election is to be treated as a non-habitual resident, but it doesnāt seem like the fact of the election should be read to mean you are otherwise a habitual resident. Changing the financas address could, and that is a precondition to NHR, and you definitely have to file a tax return. There isnāt anything in the tax return that requires you to identify how long you are in country (except the first part year return). Still the lawyers get all squishy about NHR status vulnerable to being retroactively revoked as being somehow based on a bad faith misrepresentation.
Until I have a better handle, weāre staying more than 183 days. It pushes my self employment tax rate for that period to over 80%.
To add to the debate, the way it was explained to me was about your āintentā and āabilityā to establish your main residence in PT at the time you apply. Hence you need somewhere to live and the right to live there.
The application for GV can be used as an example of intent, and a lease your āabilityā. In fact you must spend at least one night in that residence too.
Thereafter you are free to change your mind any time. However your NHR is not revoked if you do change intent.
The majority of NHR applicants (northern European retirees) do actually live in PT for more than 183 days.
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If you have the correct enablers (which you appear to have) and want NHR then why would you wait until the last legal date to apply for tax residency and subsequently NHR? Given everything we know about the randomness of the bureaucracy here, what is holding you back from just getting on with it and ticking the boxes while thereās still a few months breathing space and you can remove official bureaucracy from the equation?
Iād also reiterate what youāve been told here about the 183+ day rule which is to do with mandatory tax residency and not mandatory residency. Theyāre two different things. More than 183 days and you must be tax resident. But it doesnāt follow that you must then be physically present in the country for more than 183 days which seems to be your concern.
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Sorry, this may have been addressed earlier, but does anyone have a firm to recommend (or individual) they trust to assist with the NHR application/filing?
I still have no update from biometrics, April, 2023 and nothing, not even pre-approval for spouse application January, 2021, but think I best apply now for the NHR as we plan to live in Lisboa full-time no later than early 2027.
Thanks in advance for the recommendations!!
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If you have applied for the GV then you must already have a fiscal representative in Portugal. An accountant, in other words. I would start with them because they will have access to your PT revenue account; the user name and password.
In order to register for NHR you must first be tax resident in Portugal and this involves changing your legal tax address on your PT Financas account to a Portuguese address. This needs either a legal lease agreement or property deeds in your name.
My accountant, Finpartner, charged us ā¬100 to change our addresses and subsequently apply for NHR when we moved here in July having bought a property. They then gave us our user names and passwords to the Financas accounts and are no longer our legal fiscal representative in Portugal which happens automatically when you change your address and become tax resident. Itās ā¬100 because thereās nothing to it and you can in theory do it yourself on the Financas portal if you already have your user name and password. Some people here report being quoted ā¬1000s to do this.
So, start with your existing legal fiscal representative and donāt let them rip you off. But be prepared with the legal proof of address (lease or deeds) because without this you wonāt get past step 1.
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Thank you all for the thoughtful advice & comments.
TBH, what Iāve described as NHR residency requirements are coming from the paralegal in the lawyers office. Hence, Iām scheduling a call with the lawyer directly to clear this up.
Thank you @richn4! I already have the deed to a 1 bedroom in Lisboa and paid the property tax earlier this year.
I donāt reside in Portugal, full-timeā¦yet, so was unaware if I qualified and how best to file for the NHR.
Greatly appreciate the guidance, especially with regard to fees! 
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Does anyone know if people whoāve already got āold NHRā can switch to ānew NHR 2.0ā once whatever 2.0 is finally gets published?
From what Iāve been told (could be wrong!)
- old NHR - 10% tax (or 0% for āold old NHRā) on pensions, 28% on long-term capital gains. Need to obtain before end of this year (2023 grandfathering)
- new NHR 2.0 (TBD!!) - no more 10% on pensions, but potentially lower capital gains taxes than old NHR (especially in Madeira, which strives to be lower-tax than the mainland)
Thatās a great question - it could lead to an effective 20-year period under NHR 1.0 and 2.0, however what Iāve read states that NHR 2.0 is " directed to individuals that were not considered tax residents in Portugal during the last five year".
That wording seems to preclude a switch between the two programs except possibly during the first tax year. Certainly NHR 1.0 is only open to new tax residents.
Yes good point that either NHR are only available to those who have not been PT tax resident in the previous 5 years.
What Iām not sure about is whether that means once youāre down the 1.0 path you canāt switch to 2.0ā¦ or if both are just āNHRā to them. Certainly you wonāt be able to switch from 2.0 to 1.0 as 1.0 is extinct.
For US citizens, the long term rate on capital gains under NHR 1.0 and 1.1 is 0%.