Portuguese Special Tax for Non-Habitual Residents

A special tax regime for non-habitual tax resident individuals offers tax saving opportunities for foreign pensioners.

Overview of the regime
A foreign-source occupational pension may be fully exempt from tax for a ten-year period, if its recipient qualifies for the special tax regime for “non-habitual residents” in Portugal.

In addition, the tax treaty between the source country and Portugal may preclude that country from taxing the pension, resulting in no taxation in either country. 

I. The pensioner must be a non-habitual resident for Portuguese income tax purposes

II. The pension is an occupational pension, paid from a foreign source

If these requirements are met, the pension will not be taxed in Portugal and, depending on the provisions of the applicable tax treaty, it is usually also non-taxable in the source country for the duration of residence in Portugal..

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