RPBA - The Non Habitual Tax Resident Regime 27.03.2015
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Transcript of RPBA - The Non Habitual Tax Resident Regime 27.03.2015
Ricardo da Palma Borgesricardorpbapt
wwwrpbapt
THE PORTUGUESE NON-HABITUAL TAX RESIDENT (NHR) REGIME
A detailed guide on the NHR tax rules
Basic Features of the IRS Regime
Worldwide basis system for Personal Income Tax
(ldquoImposto sobre o Rendimento das Pessoas
Singularesrdquo hereinafter ldquoIRSrdquo) and credit
method to avoid international double taxation
Progressive IRS rates (higher bracket of 48 for
taxable income above euro 80640 additional
solidarity rate of 25 on taxable income above
euro 80000 and of 5 above euro 250000)
28 autonomous tax rate on rental income
capital income and capital gains on
shareholdings securities derivatives
autonomous warrants and certificates
2
There is still an extraordinary progressive surtax in
2017 (higher bracket of 321 for taxable income
above euro 80640) higher marginal rate of 48 + 5
+ 321 = 5621 in 2017
Portuguese tax residence for IRS purposes may be
acquired namely
a) Staying for more than 183 days in the Portuguese
territory whether these days are consecutive or
not in any 12-month period beginning or ending
in the given tax year
b) If staying for a shorter period having in the
Portuguese territory on any day during the period
referred above a dwelling under circumstances
that lead to the presumption of an intention to
hold and occupy it as a place of habitual abode
Why Portugal
29th country on the OECD Better Life Index
2016 (1) 5th on 2015rsquos Internations Quality of
Life Index (2)
According to The Huffington Post Algarve was
considered the Worlds best place to live or
retire in 2016 (3) and as reported by The
Telegraph Portugal is the 2nd best place to
retire abroad (4)
Portugal (httpenwikipediaorgwikiPortugal) has a number of attractive characteristics
01Quality of Life
3
(1) - httpwwwoecdbetterlifeindexorgcountriesportugal(2) - httpsinassets1-internationsgmbhnetdna-sslcomstaticbundlesinternationsexpatinsiderimages2015topicquality_of_life_index_fulljpg(3) - httpwwwhuffingtonpostcomkathleen-peddicordbest-places-to-retire-overseas_b_8917292html(4) - httpwwwtelegraphcoukfinancepersonalfinancepensions9677415The-10-best-places-to-retire-abroadhtml
Basic Features of the NHR Regime
Decree-Law nr 2492009 of September 23
created a new IRS regime for NHR individuals
This status is granted to individuals who become
residents for tax purposes in Portugal without
having been so in the previous five years
NHR individuals may enjoy such status for a ten-
year period after which they will be taxed under
the standard IRS regime
4
This new tax regime targets non-resident
individuals who are likely to establish a
permanent or temporary residence in Portugal
It establishes under certain conditions an IRS
exemption on foreign source income as well as
a limited taxation of income deriving from high
value added activities
NHR are issued Portuguese certificates of tax
residence The rationale of the regime is that we
are only switching over the credit method for
the elimination of international double taxation
for the exemption method
Basic Features of the NHR Regime
The particular features of the NHR regime may always
be amended by law for better or worse even for those
who have been granted NHR status prior to the
enactment of any change (although in such cases the
degree of change to the regime which is admissible
under Portuguese constitutional law is very debatable)
A change to the NHR regime could happen but it is not
likely as the regime was introduced in 2009 by a
government of the same center-left wing party
(ldquoPartido Socialistardquo) which is now in government with
the support of other (more) left-wing parties
Additionally there is currently no public debate or
controversy surrounding the NHR regime and no
changes to it have been included in the Government
Program approved by parliament (available at
httpwwwportugalgovptmedia18268168program
a-do-xxi-governopdf see pages 230 to 234 on tax
matters)5
The current Socialist party Government has just
declared the intention to revise the list of high value
added activities
In any case if such change happens i) even if NHR
status is abolished it cannot be taken away from
those that already have it at the time the change is
approved ii) Although the NHR status cannot be
taken away the regime could be made less attractive
(reducing the scope of the exemptions for instance)
even for those that have obtained it in the past To
what extent such change could be made is very
debatable under Portuguese administrative and
constitutional law Some changes would always be
admissible but in principle a change that would make
the NHR regime purely nominal (making NHR and
normal residents taxed in the same way or with only
very minor differences) should not be allowed
Assessing the degree of change that is allowed is very
difficult
6
02Weather
Weather and environment quality
(9th country on the OECD 2016
Better Life Index)
Why Portugal
03Sunshine
Estimated 3300 hours of sunshine
per year one of the highest rates
in Europe
Key Advantages
Foreign-sourced passive income (interest dividends certain royalties other income
from capital capital gains and income from immovable property) derived by NHR is
IRS exempt in Portugal (without progression except in the case of capital gains on real
estate) provided that it is potentially liable to taxation (no effective taxation is
required) in the source State (i) under the rules of an existing tax treaty or (ii) in the
absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Foreign-sourced income from pensions is IRS exempt (with progression) if such
income is not deemed to arise from a Portuguese source under the IRS Code
territoriality rules
7
8
Modern and cosmopolitan country
Lisbon was elected 2nd best place to travel in 2015 (5)
and Porto was the best European destination for
2017 (6)
Lisbon was also ranked the 16th most livable city in
the world in Monocle Quality of Life Survey 2016
Best Cities to Live (7)
(5) - httpwwweuropeanbestdestinationscomtopeurope-best-destinations-2015(6) - httpwwweuropeanbestdestinationscombest-of-europeeuropean-best-destinations-2017(7) - httpsmonoclecommagazineissues95top-25-liveable-cities(8) - httpenwikipediaorgwikiList_of_World_Heritage_Sites_in_Portugal
05Cultural Offering
Portugal has a great list of ldquowondersrdquo declared a World Heritage Site by Unesco (8)
Fado (the Portuguese most traditional music genre) was considered by UNESCO Intangible Cultural
Heritage of Humanity in 2011
Why Portugal 04Modernity
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Basic Features of the IRS Regime
Worldwide basis system for Personal Income Tax
(ldquoImposto sobre o Rendimento das Pessoas
Singularesrdquo hereinafter ldquoIRSrdquo) and credit
method to avoid international double taxation
Progressive IRS rates (higher bracket of 48 for
taxable income above euro 80640 additional
solidarity rate of 25 on taxable income above
euro 80000 and of 5 above euro 250000)
28 autonomous tax rate on rental income
capital income and capital gains on
shareholdings securities derivatives
autonomous warrants and certificates
2
There is still an extraordinary progressive surtax in
2017 (higher bracket of 321 for taxable income
above euro 80640) higher marginal rate of 48 + 5
+ 321 = 5621 in 2017
Portuguese tax residence for IRS purposes may be
acquired namely
a) Staying for more than 183 days in the Portuguese
territory whether these days are consecutive or
not in any 12-month period beginning or ending
in the given tax year
b) If staying for a shorter period having in the
Portuguese territory on any day during the period
referred above a dwelling under circumstances
that lead to the presumption of an intention to
hold and occupy it as a place of habitual abode
Why Portugal
29th country on the OECD Better Life Index
2016 (1) 5th on 2015rsquos Internations Quality of
Life Index (2)
According to The Huffington Post Algarve was
considered the Worlds best place to live or
retire in 2016 (3) and as reported by The
Telegraph Portugal is the 2nd best place to
retire abroad (4)
Portugal (httpenwikipediaorgwikiPortugal) has a number of attractive characteristics
01Quality of Life
3
(1) - httpwwwoecdbetterlifeindexorgcountriesportugal(2) - httpsinassets1-internationsgmbhnetdna-sslcomstaticbundlesinternationsexpatinsiderimages2015topicquality_of_life_index_fulljpg(3) - httpwwwhuffingtonpostcomkathleen-peddicordbest-places-to-retire-overseas_b_8917292html(4) - httpwwwtelegraphcoukfinancepersonalfinancepensions9677415The-10-best-places-to-retire-abroadhtml
Basic Features of the NHR Regime
Decree-Law nr 2492009 of September 23
created a new IRS regime for NHR individuals
This status is granted to individuals who become
residents for tax purposes in Portugal without
having been so in the previous five years
NHR individuals may enjoy such status for a ten-
year period after which they will be taxed under
the standard IRS regime
4
This new tax regime targets non-resident
individuals who are likely to establish a
permanent or temporary residence in Portugal
It establishes under certain conditions an IRS
exemption on foreign source income as well as
a limited taxation of income deriving from high
value added activities
NHR are issued Portuguese certificates of tax
residence The rationale of the regime is that we
are only switching over the credit method for
the elimination of international double taxation
for the exemption method
Basic Features of the NHR Regime
The particular features of the NHR regime may always
be amended by law for better or worse even for those
who have been granted NHR status prior to the
enactment of any change (although in such cases the
degree of change to the regime which is admissible
under Portuguese constitutional law is very debatable)
A change to the NHR regime could happen but it is not
likely as the regime was introduced in 2009 by a
government of the same center-left wing party
(ldquoPartido Socialistardquo) which is now in government with
the support of other (more) left-wing parties
Additionally there is currently no public debate or
controversy surrounding the NHR regime and no
changes to it have been included in the Government
Program approved by parliament (available at
httpwwwportugalgovptmedia18268168program
a-do-xxi-governopdf see pages 230 to 234 on tax
matters)5
The current Socialist party Government has just
declared the intention to revise the list of high value
added activities
In any case if such change happens i) even if NHR
status is abolished it cannot be taken away from
those that already have it at the time the change is
approved ii) Although the NHR status cannot be
taken away the regime could be made less attractive
(reducing the scope of the exemptions for instance)
even for those that have obtained it in the past To
what extent such change could be made is very
debatable under Portuguese administrative and
constitutional law Some changes would always be
admissible but in principle a change that would make
the NHR regime purely nominal (making NHR and
normal residents taxed in the same way or with only
very minor differences) should not be allowed
Assessing the degree of change that is allowed is very
difficult
6
02Weather
Weather and environment quality
(9th country on the OECD 2016
Better Life Index)
Why Portugal
03Sunshine
Estimated 3300 hours of sunshine
per year one of the highest rates
in Europe
Key Advantages
Foreign-sourced passive income (interest dividends certain royalties other income
from capital capital gains and income from immovable property) derived by NHR is
IRS exempt in Portugal (without progression except in the case of capital gains on real
estate) provided that it is potentially liable to taxation (no effective taxation is
required) in the source State (i) under the rules of an existing tax treaty or (ii) in the
absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Foreign-sourced income from pensions is IRS exempt (with progression) if such
income is not deemed to arise from a Portuguese source under the IRS Code
territoriality rules
7
8
Modern and cosmopolitan country
Lisbon was elected 2nd best place to travel in 2015 (5)
and Porto was the best European destination for
2017 (6)
Lisbon was also ranked the 16th most livable city in
the world in Monocle Quality of Life Survey 2016
Best Cities to Live (7)
(5) - httpwwweuropeanbestdestinationscomtopeurope-best-destinations-2015(6) - httpwwweuropeanbestdestinationscombest-of-europeeuropean-best-destinations-2017(7) - httpsmonoclecommagazineissues95top-25-liveable-cities(8) - httpenwikipediaorgwikiList_of_World_Heritage_Sites_in_Portugal
05Cultural Offering
Portugal has a great list of ldquowondersrdquo declared a World Heritage Site by Unesco (8)
Fado (the Portuguese most traditional music genre) was considered by UNESCO Intangible Cultural
Heritage of Humanity in 2011
Why Portugal 04Modernity
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Why Portugal
29th country on the OECD Better Life Index
2016 (1) 5th on 2015rsquos Internations Quality of
Life Index (2)
According to The Huffington Post Algarve was
considered the Worlds best place to live or
retire in 2016 (3) and as reported by The
Telegraph Portugal is the 2nd best place to
retire abroad (4)
Portugal (httpenwikipediaorgwikiPortugal) has a number of attractive characteristics
01Quality of Life
3
(1) - httpwwwoecdbetterlifeindexorgcountriesportugal(2) - httpsinassets1-internationsgmbhnetdna-sslcomstaticbundlesinternationsexpatinsiderimages2015topicquality_of_life_index_fulljpg(3) - httpwwwhuffingtonpostcomkathleen-peddicordbest-places-to-retire-overseas_b_8917292html(4) - httpwwwtelegraphcoukfinancepersonalfinancepensions9677415The-10-best-places-to-retire-abroadhtml
Basic Features of the NHR Regime
Decree-Law nr 2492009 of September 23
created a new IRS regime for NHR individuals
This status is granted to individuals who become
residents for tax purposes in Portugal without
having been so in the previous five years
NHR individuals may enjoy such status for a ten-
year period after which they will be taxed under
the standard IRS regime
4
This new tax regime targets non-resident
individuals who are likely to establish a
permanent or temporary residence in Portugal
It establishes under certain conditions an IRS
exemption on foreign source income as well as
a limited taxation of income deriving from high
value added activities
NHR are issued Portuguese certificates of tax
residence The rationale of the regime is that we
are only switching over the credit method for
the elimination of international double taxation
for the exemption method
Basic Features of the NHR Regime
The particular features of the NHR regime may always
be amended by law for better or worse even for those
who have been granted NHR status prior to the
enactment of any change (although in such cases the
degree of change to the regime which is admissible
under Portuguese constitutional law is very debatable)
A change to the NHR regime could happen but it is not
likely as the regime was introduced in 2009 by a
government of the same center-left wing party
(ldquoPartido Socialistardquo) which is now in government with
the support of other (more) left-wing parties
Additionally there is currently no public debate or
controversy surrounding the NHR regime and no
changes to it have been included in the Government
Program approved by parliament (available at
httpwwwportugalgovptmedia18268168program
a-do-xxi-governopdf see pages 230 to 234 on tax
matters)5
The current Socialist party Government has just
declared the intention to revise the list of high value
added activities
In any case if such change happens i) even if NHR
status is abolished it cannot be taken away from
those that already have it at the time the change is
approved ii) Although the NHR status cannot be
taken away the regime could be made less attractive
(reducing the scope of the exemptions for instance)
even for those that have obtained it in the past To
what extent such change could be made is very
debatable under Portuguese administrative and
constitutional law Some changes would always be
admissible but in principle a change that would make
the NHR regime purely nominal (making NHR and
normal residents taxed in the same way or with only
very minor differences) should not be allowed
Assessing the degree of change that is allowed is very
difficult
6
02Weather
Weather and environment quality
(9th country on the OECD 2016
Better Life Index)
Why Portugal
03Sunshine
Estimated 3300 hours of sunshine
per year one of the highest rates
in Europe
Key Advantages
Foreign-sourced passive income (interest dividends certain royalties other income
from capital capital gains and income from immovable property) derived by NHR is
IRS exempt in Portugal (without progression except in the case of capital gains on real
estate) provided that it is potentially liable to taxation (no effective taxation is
required) in the source State (i) under the rules of an existing tax treaty or (ii) in the
absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Foreign-sourced income from pensions is IRS exempt (with progression) if such
income is not deemed to arise from a Portuguese source under the IRS Code
territoriality rules
7
8
Modern and cosmopolitan country
Lisbon was elected 2nd best place to travel in 2015 (5)
and Porto was the best European destination for
2017 (6)
Lisbon was also ranked the 16th most livable city in
the world in Monocle Quality of Life Survey 2016
Best Cities to Live (7)
(5) - httpwwweuropeanbestdestinationscomtopeurope-best-destinations-2015(6) - httpwwweuropeanbestdestinationscombest-of-europeeuropean-best-destinations-2017(7) - httpsmonoclecommagazineissues95top-25-liveable-cities(8) - httpenwikipediaorgwikiList_of_World_Heritage_Sites_in_Portugal
05Cultural Offering
Portugal has a great list of ldquowondersrdquo declared a World Heritage Site by Unesco (8)
Fado (the Portuguese most traditional music genre) was considered by UNESCO Intangible Cultural
Heritage of Humanity in 2011
Why Portugal 04Modernity
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Basic Features of the NHR Regime
Decree-Law nr 2492009 of September 23
created a new IRS regime for NHR individuals
This status is granted to individuals who become
residents for tax purposes in Portugal without
having been so in the previous five years
NHR individuals may enjoy such status for a ten-
year period after which they will be taxed under
the standard IRS regime
4
This new tax regime targets non-resident
individuals who are likely to establish a
permanent or temporary residence in Portugal
It establishes under certain conditions an IRS
exemption on foreign source income as well as
a limited taxation of income deriving from high
value added activities
NHR are issued Portuguese certificates of tax
residence The rationale of the regime is that we
are only switching over the credit method for
the elimination of international double taxation
for the exemption method
Basic Features of the NHR Regime
The particular features of the NHR regime may always
be amended by law for better or worse even for those
who have been granted NHR status prior to the
enactment of any change (although in such cases the
degree of change to the regime which is admissible
under Portuguese constitutional law is very debatable)
A change to the NHR regime could happen but it is not
likely as the regime was introduced in 2009 by a
government of the same center-left wing party
(ldquoPartido Socialistardquo) which is now in government with
the support of other (more) left-wing parties
Additionally there is currently no public debate or
controversy surrounding the NHR regime and no
changes to it have been included in the Government
Program approved by parliament (available at
httpwwwportugalgovptmedia18268168program
a-do-xxi-governopdf see pages 230 to 234 on tax
matters)5
The current Socialist party Government has just
declared the intention to revise the list of high value
added activities
In any case if such change happens i) even if NHR
status is abolished it cannot be taken away from
those that already have it at the time the change is
approved ii) Although the NHR status cannot be
taken away the regime could be made less attractive
(reducing the scope of the exemptions for instance)
even for those that have obtained it in the past To
what extent such change could be made is very
debatable under Portuguese administrative and
constitutional law Some changes would always be
admissible but in principle a change that would make
the NHR regime purely nominal (making NHR and
normal residents taxed in the same way or with only
very minor differences) should not be allowed
Assessing the degree of change that is allowed is very
difficult
6
02Weather
Weather and environment quality
(9th country on the OECD 2016
Better Life Index)
Why Portugal
03Sunshine
Estimated 3300 hours of sunshine
per year one of the highest rates
in Europe
Key Advantages
Foreign-sourced passive income (interest dividends certain royalties other income
from capital capital gains and income from immovable property) derived by NHR is
IRS exempt in Portugal (without progression except in the case of capital gains on real
estate) provided that it is potentially liable to taxation (no effective taxation is
required) in the source State (i) under the rules of an existing tax treaty or (ii) in the
absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Foreign-sourced income from pensions is IRS exempt (with progression) if such
income is not deemed to arise from a Portuguese source under the IRS Code
territoriality rules
7
8
Modern and cosmopolitan country
Lisbon was elected 2nd best place to travel in 2015 (5)
and Porto was the best European destination for
2017 (6)
Lisbon was also ranked the 16th most livable city in
the world in Monocle Quality of Life Survey 2016
Best Cities to Live (7)
(5) - httpwwweuropeanbestdestinationscomtopeurope-best-destinations-2015(6) - httpwwweuropeanbestdestinationscombest-of-europeeuropean-best-destinations-2017(7) - httpsmonoclecommagazineissues95top-25-liveable-cities(8) - httpenwikipediaorgwikiList_of_World_Heritage_Sites_in_Portugal
05Cultural Offering
Portugal has a great list of ldquowondersrdquo declared a World Heritage Site by Unesco (8)
Fado (the Portuguese most traditional music genre) was considered by UNESCO Intangible Cultural
Heritage of Humanity in 2011
Why Portugal 04Modernity
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Basic Features of the NHR Regime
The particular features of the NHR regime may always
be amended by law for better or worse even for those
who have been granted NHR status prior to the
enactment of any change (although in such cases the
degree of change to the regime which is admissible
under Portuguese constitutional law is very debatable)
A change to the NHR regime could happen but it is not
likely as the regime was introduced in 2009 by a
government of the same center-left wing party
(ldquoPartido Socialistardquo) which is now in government with
the support of other (more) left-wing parties
Additionally there is currently no public debate or
controversy surrounding the NHR regime and no
changes to it have been included in the Government
Program approved by parliament (available at
httpwwwportugalgovptmedia18268168program
a-do-xxi-governopdf see pages 230 to 234 on tax
matters)5
The current Socialist party Government has just
declared the intention to revise the list of high value
added activities
In any case if such change happens i) even if NHR
status is abolished it cannot be taken away from
those that already have it at the time the change is
approved ii) Although the NHR status cannot be
taken away the regime could be made less attractive
(reducing the scope of the exemptions for instance)
even for those that have obtained it in the past To
what extent such change could be made is very
debatable under Portuguese administrative and
constitutional law Some changes would always be
admissible but in principle a change that would make
the NHR regime purely nominal (making NHR and
normal residents taxed in the same way or with only
very minor differences) should not be allowed
Assessing the degree of change that is allowed is very
difficult
6
02Weather
Weather and environment quality
(9th country on the OECD 2016
Better Life Index)
Why Portugal
03Sunshine
Estimated 3300 hours of sunshine
per year one of the highest rates
in Europe
Key Advantages
Foreign-sourced passive income (interest dividends certain royalties other income
from capital capital gains and income from immovable property) derived by NHR is
IRS exempt in Portugal (without progression except in the case of capital gains on real
estate) provided that it is potentially liable to taxation (no effective taxation is
required) in the source State (i) under the rules of an existing tax treaty or (ii) in the
absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Foreign-sourced income from pensions is IRS exempt (with progression) if such
income is not deemed to arise from a Portuguese source under the IRS Code
territoriality rules
7
8
Modern and cosmopolitan country
Lisbon was elected 2nd best place to travel in 2015 (5)
and Porto was the best European destination for
2017 (6)
Lisbon was also ranked the 16th most livable city in
the world in Monocle Quality of Life Survey 2016
Best Cities to Live (7)
(5) - httpwwweuropeanbestdestinationscomtopeurope-best-destinations-2015(6) - httpwwweuropeanbestdestinationscombest-of-europeeuropean-best-destinations-2017(7) - httpsmonoclecommagazineissues95top-25-liveable-cities(8) - httpenwikipediaorgwikiList_of_World_Heritage_Sites_in_Portugal
05Cultural Offering
Portugal has a great list of ldquowondersrdquo declared a World Heritage Site by Unesco (8)
Fado (the Portuguese most traditional music genre) was considered by UNESCO Intangible Cultural
Heritage of Humanity in 2011
Why Portugal 04Modernity
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
6
02Weather
Weather and environment quality
(9th country on the OECD 2016
Better Life Index)
Why Portugal
03Sunshine
Estimated 3300 hours of sunshine
per year one of the highest rates
in Europe
Key Advantages
Foreign-sourced passive income (interest dividends certain royalties other income
from capital capital gains and income from immovable property) derived by NHR is
IRS exempt in Portugal (without progression except in the case of capital gains on real
estate) provided that it is potentially liable to taxation (no effective taxation is
required) in the source State (i) under the rules of an existing tax treaty or (ii) in the
absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Foreign-sourced income from pensions is IRS exempt (with progression) if such
income is not deemed to arise from a Portuguese source under the IRS Code
territoriality rules
7
8
Modern and cosmopolitan country
Lisbon was elected 2nd best place to travel in 2015 (5)
and Porto was the best European destination for
2017 (6)
Lisbon was also ranked the 16th most livable city in
the world in Monocle Quality of Life Survey 2016
Best Cities to Live (7)
(5) - httpwwweuropeanbestdestinationscomtopeurope-best-destinations-2015(6) - httpwwweuropeanbestdestinationscombest-of-europeeuropean-best-destinations-2017(7) - httpsmonoclecommagazineissues95top-25-liveable-cities(8) - httpenwikipediaorgwikiList_of_World_Heritage_Sites_in_Portugal
05Cultural Offering
Portugal has a great list of ldquowondersrdquo declared a World Heritage Site by Unesco (8)
Fado (the Portuguese most traditional music genre) was considered by UNESCO Intangible Cultural
Heritage of Humanity in 2011
Why Portugal 04Modernity
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Key Advantages
Foreign-sourced passive income (interest dividends certain royalties other income
from capital capital gains and income from immovable property) derived by NHR is
IRS exempt in Portugal (without progression except in the case of capital gains on real
estate) provided that it is potentially liable to taxation (no effective taxation is
required) in the source State (i) under the rules of an existing tax treaty or (ii) in the
absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Foreign-sourced income from pensions is IRS exempt (with progression) if such
income is not deemed to arise from a Portuguese source under the IRS Code
territoriality rules
7
8
Modern and cosmopolitan country
Lisbon was elected 2nd best place to travel in 2015 (5)
and Porto was the best European destination for
2017 (6)
Lisbon was also ranked the 16th most livable city in
the world in Monocle Quality of Life Survey 2016
Best Cities to Live (7)
(5) - httpwwweuropeanbestdestinationscomtopeurope-best-destinations-2015(6) - httpwwweuropeanbestdestinationscombest-of-europeeuropean-best-destinations-2017(7) - httpsmonoclecommagazineissues95top-25-liveable-cities(8) - httpenwikipediaorgwikiList_of_World_Heritage_Sites_in_Portugal
05Cultural Offering
Portugal has a great list of ldquowondersrdquo declared a World Heritage Site by Unesco (8)
Fado (the Portuguese most traditional music genre) was considered by UNESCO Intangible Cultural
Heritage of Humanity in 2011
Why Portugal 04Modernity
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
8
Modern and cosmopolitan country
Lisbon was elected 2nd best place to travel in 2015 (5)
and Porto was the best European destination for
2017 (6)
Lisbon was also ranked the 16th most livable city in
the world in Monocle Quality of Life Survey 2016
Best Cities to Live (7)
(5) - httpwwweuropeanbestdestinationscomtopeurope-best-destinations-2015(6) - httpwwweuropeanbestdestinationscombest-of-europeeuropean-best-destinations-2017(7) - httpsmonoclecommagazineissues95top-25-liveable-cities(8) - httpenwikipediaorgwikiList_of_World_Heritage_Sites_in_Portugal
05Cultural Offering
Portugal has a great list of ldquowondersrdquo declared a World Heritage Site by Unesco (8)
Fado (the Portuguese most traditional music genre) was considered by UNESCO Intangible Cultural
Heritage of Humanity in 2011
Why Portugal 04Modernity
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Foreign-sourced employment income is IRS exempt (with progression) provided
that it is effectively taxed in the source State (i) under the rules of a tax treaty or in
the absence thereof (ii) of the OECD Model Tax Convention as long as such income
is not deemed to arise from a Portuguese source under the IRS Code territoriality
rules
Foreign-sourced employment income is IRS exempt (without progression) in
Portugal provided that it is income derived from high value added activities of a
scientific artistic or technical nature and it is effectively taxed in the source State
(i) under the rules of a tax treaty or in the absence thereof (ii) of the OECD Model
Tax Convention as long as such income is not deemed to arise from a Portuguese
source under the IRS Code territoriality rules
9
Key Advantages
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Foreign-sourced income from independent personal services is IRS exempt (without
progression) in Portugal provided that it derives from high value added activities of a
scientific artistic or technical nature as defined by Ministerial Order and is potentially
liable to taxation in the source State (i) under the rules of an existing tax treaty or (ii) in
the absence thereof under the rules of the OECD Model Tax Convention if such income is
not deemed to arise from a State region or territory included in the Portuguese tax
havensrsquo blacklist nor from a Portuguese source under the IRS Code territoriality rules
Income deriving from employment or independent personal services of a domestic or
foreign source but not qualifying for the mentioned exemptions will be liable to
autonomous taxation at a special 20 flat rate and not to the general and progressive IRS
rates (currently of up to 5621 for yearly taxable income above euro 250000) provided that
it derives from high value added activities of a scientific artistic or technical nature
10
Key Advantages
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
PORTUGUESE ENGLISH
1 - Arquitectos engenheiros e teacutecnicos similares
101 ndash Arquitectos
102 ndash Engenheiros
103 ndash Geoacutelogos
1 - Architects engineers and similar technicians
101 ndash Architects
102 ndash Engineers
103 ndash Geologists
2 - Artistas plaacutesticos actores e muacutesicos
201 ndash Artistas de teatro bailado cinema raacutedio e televisatildeo
202 ndash Cantores
203 ndash Escultores
204 ndash Muacutesicos
205 ndash Pintores
2 - Visual artists actors and musicians
201 ndash Theater ballet film radio and television Artists
202 ndash Singers
203 ndash Sculptors
204 ndash Musicians
205 ndash Painters
3 - Auditores
301 ndash Auditores
302 ndash Consultores fiscais
3 - Auditors
301 ndash Auditors
302 ndash Tax Consultants
High Value Added Activities of a Scientific Artistic or Technical Nature
11
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
PORTUGUESE ENGLISH
4 - Meacutedicos e dentistas
401 ndash Dentistas
402 ndash Meacutedicos analistas
403 ndash Meacutedicos cirurgiotildees
404 ndash Meacutedicos de bordo em navios
405 ndash Meacutedicos de cliacutenica geral
406 ndash Meacutedicos dentistas
407 ndash Meacutedicos estomatologistas
408 ndash Meacutedicos fisiatras
409 ndash Meacutedicos gastroenterologistas
410 ndash Meacutedicos oftalmologistas
411 ndash Meacutedicos ortopedistas
412 ndash Meacutedicos otorrinolaringologistas
413 ndash Meacutedicos pediatras
414 ndash Meacutedicos radiologistas
415 ndash Meacutedicos de outras especialidades
4 - Doctors and dentists
401 ndash Dentists
402 ndash Analyst Doctors
403 ndash Surgeons
404 ndash Board doctors in ships
405 ndash General Practitioners
406 ndash Dentists
407 ndash Dentist Doctors
408 ndash Physiatrists
409 ndash Gastroenterologists
410 ndash Ophthalmologists
411 ndash Orthopaedists
412 ndash Otorhinolaryngologists
413 ndash Paediatricians
414 ndash Radiologists
415 ndash Doctors in other specialties
High Value Added Activities of a Scientific Artistic or Technical Nature
12
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
PORTUGUESE ENGLISH
5 - Professores
501 ndash Professores universitaacuterios
5 - Teachers
501 ndash University professors
6 - Psicoacutelogos
601 ndash Psicoacutelogos
6 - Psychologists
601 ndash Psychologists
7 - Profissotildees liberais teacutecnicos e assimilados
701 ndash Arqueoacutelogos
702 ndash Bioacutelogos e especialistas em ciecircncias da vida
703 ndash Programadores informaacuteticos
704 ndash Consultoria e programaccedilatildeo informaacutetica e actividades
relacionadas com as tecnologias da informaccedilatildeo e informaacutetica
705 ndash Actividades de programaccedilatildeo informaacutetica
706 ndash Actividades de consultoria em informaacutetica
707 ndash Gestatildeo e exploraccedilatildeo de equipamento informaacutetico
708 ndash Actividades dos serviccedilos de informaccedilatildeo
709 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadasportais Web
7 - Professional services technicians and similar
701 ndash Archaeologists
702 ndash Biologists and experts in life sciences
703 ndash Computer Programmers
704 ndash Consulting and computer programming and activities related to
information and computer technology
705 ndash Computer programming activities
706 ndash Computer consultancy activities
707 ndash Management and operation of computer equipment
708 ndash Activities of information services
709 ndash Activities of data processing hosting information and related
activitiesWeb portals
High Value Added Activities of a Scientific Artistic or Technical Nature
13
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
PORTUGUESE ENGLISH
710 ndash Actividades de processamento de dados domiciliaccedilatildeo de
informaccedilatildeo e actividades relacionadas
711 ndash Outras actividades dos serviccedilos de informaccedilatildeo
712 ndash Actividades de agecircncias de notiacutecias
713 ndash Outras actividades dos serviccedilos de informaccedilatildeo
714 ndash Actividades de investigaccedilatildeo cientiacutefica e de desenvolvimento
715 ndash Investigaccedilatildeo e desenvolvimento das ciecircncias fiacutesicas e naturais
716 ndash Investigaccedilatildeo e desenvolvimento em biotecnologia
717 ndash Designers
710 ndash Activities of data processing hosting information and related
activities
711 ndash Other information service activities
712 ndash Activities of news agencies
713 ndash Other information service activities
714 ndash Scientific research and development
715 ndash Research and development of science physical and natural
716 ndash Research and development in biotechnology
717 ndash Designers
8 - Investidores administradores e gestores
801 ndash Investidores administradores e gestores de empresas promotoras
de investimento produtivo desde que afectos a projectos elegiacuteveis e com
contratos de concessatildeo de benefiacutecios fiscais celebrados ao abrigo do
Coacutedigo Fiscal do Investimento aprovado pelo Decreto -Lei nordm 2492009
de 23 de Setembro
802 ndash Quadros superiores de empresas
8 - Investors administrators and managers
801 ndash Investors administrators and managers of companies
promoting productive investment if allocated to eligible projects
under tax benefits contracts awarded under the Tax Code for
Investment approved by Decree-Law No 2492009 of 23
September
802 ndash Senior employees of companies
High Value Added Activities of a Scientific Artistic or Technical Nature
14
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
15
06Gastronomy
The Portuguese gastronomy is as rich and
diverse as its heritage and landscapes and has
recently been internationally recognized with
14 Michelin star restaurants in 2016 (9)
Portugal is also one of the best wine tourism
destinations Our country had 578 prizes at
the 2016rsquos Decanter World Wines Awards
(DWWA) (10) and also achieved 16 Grand Gold
114 Gold and 227 Silver Medals in the 2016rsquos
Concours Mondial de Bruxelles (11)
(9) - httpportugalconfidentialcom2016-michelin-star-restaurants-in-portugal(10) - httpawardsdecantercomDWWA2016
(11) - httpresultsconcoursmondialcomindexphppage=resultsampformular[ConcoursID]=59
Why Portugal
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Law nr 159-D2015 of December 30 had terminated the existing extraordinary surtax as of
January 1 2017
However the State Budget Law for 2017 has extended the application of the extraordinary
surtax for the higher brackets of income with some rate adjustments and a phased withholding
tax repeal during 2017
Consequently the extraordinary surtax still applies to income derived in 2017 the higher
bracket being 321 for taxable income above euro 80640
This surtax is applicable to the non-exempt employment or independent personal services
income deriving from high value added activities of a scientific artistic or technical nature
obtained by NHR liable to autonomous taxation at a special 20 flat rate as well as to any non-
exempt income liable to the general and progressive IRS rates
16
Key Disadvantages
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
17
08Other Languages Spoken
A large part of the population speaks foreign languages
especially English Spanish and French
Portugal was ranked 13th out of 70th countries in the EF
Global English Proficiency Index 2015 (13)
07EducationThere is a significant number of International Schools
throughout Portugal attended by both Portuguese and
foreign students
Portugal is ranked as the 8th best in the World according
to the U21 Rankings of National Higher Education
Systems 2016 (12)
Why Portugal
(12) - httpuniversitas21comnewsdetails220u21-ranking-of-national-higher-education-systems-2016(13) - httpwwwefeduptepi
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Other Attractive Features of the Portuguese IRS Taxation of Individuals
However several other attractive features exist in the Portuguese taxation system of
individuals
Firstly several capital gains are excluded from IRS taxation such as those on
a) shares and quotas acquired before 1 January 1989
b) real estate except land for construction owned before 1 January 1989
c) a taxpayers personal and permanent residence insofar as the sale proceeds are
reinvested in another personal residence in the Portuguese European Union or
European Economic Space territory
Contributions made by the employer to pension funds and life and health insurance
schemes are not regarded as IRS taxable employment income provided that certain
conditions are met18
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
19
09Daily FlightsAbout 300 daily flights from Portugal
to foreign countries
Porto Airport ranks among the best
airports in Europe since 2006 (14)
10Convenient Location
for Globetrotters
Portugal ranked 1st on Globe Spots
Top 10 countries in 2013 (15)
(14) - httpwwwaciaeroAirport-Service-QualityASQ-AwardsCurrent-WinnersBest-Airport-By-RegionEurope(15) - httpwwwglobespotscombesttravelphpyear=2013
Why Portugal
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Widening of the exemptions for foreign-sourced income to encompass
― all passive income (interest dividends certain royalties other income from capital capital
gains on any foreign asset including shares and income from immovable property)
regardless of the liability to potential taxation at source under an existing tax treaty or the
OECD Model Tax Convention
mdash independent personal services income of any kind provided that it is potentially liable to
taxation in the source State under the rules of a tax treaty or of the OECD Model Tax
Convention
Inclusion of actuaries airline pilots and directors and managers of all companies regardless of
their activity sector and of the existence of a tax benefit contract with the Portuguese State in the
list of high value added activities of a scientific artistic or technical nature which qualify non-
exempt employment and independent personal services income for the special 20 flat rate
20
2015 Proposals by the IRS Reform Commission (the 1st
rejected by the previous Government the 2nd may yet be considered by the current Government)
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
21
11Sports
Top conditions for sports (sailing diving biking trekking
horse riding golf - with some of the best World courses (16))
(16) - httpworldgolfawardscomawardworld-best-golf-destination2015
Why Portugal
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Procedure to Register as Tax Resident in Portugal
Registering as a tax resident in Portugal is a requirement to obtain the NHR status which means
that those wishing to apply for the regime must
i register as non-resident taxpayers (optional in some cases)
ii obtain residence permits (for non-EU nationals) or long-term residence certificates (for EU
nationals)
iii register as tax residents
iv request the password to access the tax authoritiesrsquo website and
v only then apply for the NHR status
Applications must be submitted until March 31 of the tax year following that in which Portuguese
tax residence is acquired From August 2 2016 onwards the applications have to be submitted on
the tax authoritiesrsquo website
Moreover individuals must submit a statement whereby they solemnly declare that they have not
fulfilled the criteria necessary for being considered a Portuguese tax resident during the preceding
five years22
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Proof of Portuguese Tax Residence
As of the moment an individual is registered as a Portuguese tax resident he will not be required
to provide evidence of hisher residence to the Portuguese Tax Authorities since in principle
they will not challenge such status
However the Portuguese tax residence could be challenged by an income source State especially
if one spends time in that State In this regard a number of precautions are advisable
i keeping a calendar that tracks onersquos days of stay in Portugal and in other countries
ii avoiding short-term rentals and frequent address changes within the Portuguese territory from
the moment one becomes a tax resident herein
iii ask for invoices with the Portuguese tax number (NIF) on a recurring basis when one acquires
productsservices in Portugal
The latter will allow the individual (a) to better prove hisher effective presence in Portugal if
challenged (b) to benefit from certain deductions on the Portuguese tax assessment if heshe has
taxable income at standard tax rates and (c) also make himher eligible for a State lottery
23
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
24
Value for money in real estate investments (which
have undergone significant decreases since 2008)
12Investments
In comparison with other major European
countries Portugal is highly affordable (17)
13Cost of Living
(17) - httpwwwnumbeocomcost-of-livingcountry_resultjspcountry=Portugal
Why Portugal
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
25
An official guide on the NHR Regime
from the Portuguese tax authorities is
available in English here
httpinfoportaldasfinancasgovptNRr
donlyresD0C80C76-3DA8-4B90-A1E4-
FF53BD34EF950IRS_RNH_ENpdf
An official guide on the request of the
password to access the tax authoritiesrsquo
website is also available in English here
httpinfoportaldasfinancasgovptNRr
donlyres278F9580-C488-4AC4-AD0F-
B1508A52F0880senhasenglishpdf
Standard legal and tax step plan on becoming a Portuguese non-habitual tax resident
1 Advice on double residence and taxation of income and wealth
2 Obtain a Portuguese non-resident taxpayer number (appointing a tax representative if necessary) ndash Optional in some cases
3 Legal assistance in the purchase or lease of real estate
4
Obtain a residence permit (for non-EU nationals) from the Foreigners and Borders Service or a long-term residence certificate (for EU nationals) from the local city council
5 Register as resident taxpayer
6 Request the password to access the tax authoritiesrsquo website
7 Submit an application to the NHR regime
8 Obtain Portuguese tax resident certificates and file a non-resident tax application in the country of origin
9 Activate the Electronic Post Box
10 File annual tax returns
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
26
Portugal has a high quality
health system offering
both public and
private healthcare
14Health System
For instance according to the
2016 OECD Health Statistics
the average life
expectancy in Portugal in 2014
was 812 years (18)
(18) - httpstatsoecdorgindexaspxDataSetCode=HEALTH_STAT
Why Portugal
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Taxation of capital income summary OECD Model
Characterization
NHR
ndash foreign source income
taxation in PTShares distribution of profits to
the shareholdersDividends Exempt
Shares alienation Capital gains Not exempt (28 rate)
Bonds Interest Exempt
Bank deposits Interest Exempt
Investment Funds redemption
and alienation Capital gains Not exempt (28 rate)
Investment Funds distribution
of profitsDividends Exempt
Insurance without guaranteed
capitalOther Income Not exempt (28 rate)
Insurance with guaranteed
capitalInterest Exempt
27
Assuming that (i) Investment Funds are considered persons for corporate income orcapital tax purposes and residents of a Contracting State (ii) income derived from thedistribution of profits by Investment Funds is subject to the same tax treatment asincome from shares (iii) redemption of Investment Fundsrsquo participation units or shares isnot treated by the Source State as a distribution of profits
In short plain-vanilla dividends and interest are exempt from IRS under the NHR regimecapital gains on shares and investment funds are not
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Taxation of capital income the issue of capital gains
Law nr 152010 of June 26 has abolished a long standing IRS exclusion for capital gains
on shares held for more than 12 months This has relevant consequences for the NHR
regime as its tax exemption for capital gains was built with that exclusion in mind and in
such a way that it is only applicable to capital gains that may be taxed in the source State
under the rules of a tax treaty entered into by Portugal (or if no treaty exists according to
the rules of the OECD Model Tax Convention)
This implies that most capital gains (maxime on foreign shareholdings and other
securities) will remain taxable in Portugal as normally both Portuguese tax treaties and
the OECD Model Tax Convention establish in this case that the residence State has
exclusive competence to tax Deviations from the OECD Model namely those enabling
the source State taxation of Capital Gains on securities or Other Income will interestingly
enable NHR exemptions to encompass those items of income
28
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Taxation of capital income some pitfalls
29
Tax transparent entities ndash those not considered standard taxpayers for corporate income tax purposestheir income flowing directly to their owners shareholders The qualification characterization of theseentities and their income in a cross-border context may raise complex issues for the NHR regime and evenhinder the possibility to obtain exemptions
Tax haven entities ndash those blacklisted as such by a Portuguese Ministerial Order Definitely to avoid notonly their income will not be exempt under the NHR regime but it will also be taxed at a 35 autonomousrate Furthermore a shareholder of a tax haven entity risks the application of Portuguese ControlledForeign CompaniesrsquoEntitiesrsquo (CFC) rules [you will find the said Portuguese Ministerial Order and ourinfographic on these rules here [httpwwwslidesharenetRPBArpba-infographic-international-tax-transparency-controlled-foreign-entities] Finally losses on the sale of shares securities autonomouswarrants and certificates are not deductible when the counterparty in the sale operation is located in atax haven
Derivatives ndash their presence in investment portfolios may generate income characterized as capital gainswhich as already explained is not normally NHR exempt In practice it is possible to offset income andlosses in derivatives issued in the same foreign country but it is not feasible to offset such differences onthose with different originating countries This implies a taxation of the aggregate positive income foreach issuing country (line-by-line inclusion) and a denial of deductibility of the aggregate negative loss foreach issuing country (line-by-line disallowance) One cannot achieve a taxation or deductibility of theoverall positive net income loss of all derivatives of the various countries
Foreign exchange ndash Pure foreign exchange gains ie those deriving from spot currency transactions arenot liable to IRS in Portugal However foreign exchange gains or losses embedded in assets or rights maybe taxable due to the need to report income in Euro for IRS purposes
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Taxation of capital income conclusion
30
So-called ldquoDividendsrdquo and ldquoInterestrdquo arising from foreign companies that are not in themselves taxed (eitherbecause they are not liable to Corporate Income Tax or because they are in tax havens) may also not be exemptunder the NHR regime
The wealth management area is complex as (i) there are lots of types of financial instruments (ii) when dealingwith foreign products one has to make an effort to understand them and to qualify their income for purposes ofthe NHR regime (iii) Portugal has different baskets for capital income and capital gains and many limitations onthe offsetting of losses (iv) this tax compliance even if there is an income exemption of the product under theNHR regime is in itself an extra burden represented by the tax consultantsrsquo time fees
Despite the NHR regime being frequently marketed as a ldquoworld of easerdquo it is very important to (i) properly plandirect financial investments (NHR educating the asset manager) or (ii) depending on the type of investmentsthe size of the financial portfolios and also on the number of annual operations of purchase and sale to bemade it may be worthwhile to consider setting up wealth management products structures namely throughthe use of wrappers envelopes (such as unit-linked life insurance portfolio management companies certificates) that hold the financial portfolio enabling a more pure ldquomathematicalrdquo or ldquoaccountingrdquo profit to beachieved creating a veil between the investor (and hisher IRS statement) and hisher investments avoiding theprevious slide complexities and allowing for the investments not to be tax reported to be tax deferred untilthere is a withdrawal of funds from the insurance policy itself or a dividend distribution from the company In anunit-linked insurance policy when the withdrawal occurs there may exist some small taxation under the NHRregime but there will just be one line of income to report in the IRS statement (annual insurance policy fees willnevertheless apply) In a company the dividend should be NHR exempt (but of course management andaccounting fees will apply) Regarding the certificates the income derived from them as long as the certificatesin question assure the holder a minimum value above the subscription amount should be NHR exempt If that isnot the case the income so derived will be taxable at a 28 autonomous rate
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
31
15Economic Progress
Successful conclusion of the Troikarsquos (International Monetary
Fund European Central Bank and European Union) financial
assistance program (2011-2014) on May 17 2014
16Political Stability
Portugal is a developed
democracy with political and
social stability
Why Portugal
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Pension Income vs Capital Income
32
Pensions are odd animals
There are many types of pensions and not all things that one may believe as suchwill be so eg special retirement products or retirement bank accounts mayqualify as capital income and not as true pensions
Income qualified as a pension by the source State may not meet therequirements of the tax treaties or even the Portuguese IRS Code definitions ofpension As the NHR is a Portuguese unilateral regime for relief frominternational double taxation the income qualification for this purpose may haveto be made in accordance with Portuguese domestic law and not in accordancewith tax treaties or the source Statersquos view
For instance income of investment products provided by an insurance companywhere (i) the funding contributions were exclusively made by the beneficiarywith no link to a previous employment orand (ii) the capital is not guaranteedorand (iii) there is the possibility of redemption may not be exempt under theNHR regime depending on the tax treaty in force
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Pension Income and the possibility ofrenegotiationtermination of the double tax treaty(DTT) between Portugal as my residence Stateand the Pension source State The likelihood of a unilateral termination of an existing DTT is very reduced
A renegotiation of DTTrsquos in force between Portugal and other States is currently an issue with two Nordiccountries and is driven by the double non-taxation of private pensions allowed by the combination ofthe NHR regime with DTTrsquos following the OECD Model Tax Convention
In the case of Finland that led its Government to request an amendment to the private pension article ofthe DTT which was already accepted by the Portuguese Government
Sweden has also expressed the desire to revise the same provision in its DTT with Portugal andnegotiations are expected to begin soon
These amendments will in principle allow Finland and Sweden as source States of private pensions toimpose tax on them (Swedenrsquos existing DTT with Portugal already allows Swedish taxation ondisbursements made under the Swedish Social Security legislation and paid to Portuguese tax residents)
However it is important to realize that the amendment (Finland) or possible amendment (Sweden) of aDTT does not mean that Portugal will unilaterally change its domestic NHR regime namely by starting toimpose tax on foreign-sourced pension income
Currently no other State has publicly signaled a will to revise its DTT with Portugal
33
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Direct or indirect purchasing of real estate
Property Transfer Tax of up to 6 (at higher rates but with a cap of 6 if not for permanent
housing as in an acquisition by a company) and Stamp Tax of 08 on the price or taxable value
(whichever higher)
Property Ownership Tax of 08 for rural real estate and between 03-05 for urban real estate
(exemption for permanent housing if the taxable value does not exceed euro 125000 for households
with a IRS taxable income not higher than euro 153300 on purchase for resale by companies
entrepreneurs during 3 years)
Stamp Tax on 5 or more year term financing of 06 but exemption applies to interest paid on
permanent housing loans
The State Budget Law for 2017 enacted in substitution of the 1 ldquoLuxuryrdquo Stamp Tax on housing
real estate with a taxable value above 1 million an Additional to the Property Ownership Tax
(ldquoAPOTrdquo)
34
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Direct or indirect purchasing of real estate
This new APOT applies to owners usufructuaries or superficiaries of urban property for housing
purposes or building land located in Portugal on January 1st of the relevant year
Single owners with residential real estate or land for construction in Portugal above euro 600000 of
taxable value (Valor Patrimonial Tributaacuterio or VPT) are liable to APOT at a 07 rate on the
surplus of the euro 600000 If the sum of the taxable values exceeds euro 1000000 the surplus is
subject to a marginal rate of 1
Owners which are married or in a civil partnership and choose the joint taxation regime ndash for
purposes of the APOT ndash are only liable to APOT if the sum of the taxable value of their real estate
is above euro 1200000 The APOT applies a 07 rate on the surplus of the euro 1200000 If the sum
of the taxable values exceeds euro 2000000 the surplus is subject to a marginal rate of 1
If the taxpayers obtain income attributable to immovable property subject to the APOT the latter
may be deducted from the IRS due in respect of rental income (Schedule F) or business income
obtained from rental or hosting activities (Schedule B) 35
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Direct or indirect purchasing of real estate
If a company holds real estate the APOT rate will be applied on the full taxable value of the real
estate at a rate of 04 ndash not only on the surplus of a threshold
If the owner is a company and the real estate is simply used by its shareholderdirector or any
member of the corporate bodies of such company (including their respective spouses
ascendants or descendants) the tax rate will be of 07 on its full taxable value If the sum of
their taxable values exceeds euro 1000000 the surplus is subject to a marginal rate of 1 In our
opinion if the real estate is leased by the company to the shareholder or director the tax rate will
be of 04
Taxpayers may choose for Corporate Income Tax purposes (i) to deduct APOT as an expense or
(ii) to deduct the APOT from the tax due limited to the fraction corresponding to the income
generated by that real estate in the context of rental or hosting activities and up to that tax due
36
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Direct or indirect purchasing of real estate
Numerous punitive measures on acquisition and holding of Portuguese real estate by a
blacklisted tax haven company ndash namely APOT rate of 75 on the sum of the taxable values of
the real estate without possibility of deducting the charge for Corporate Income Tax purposes
Sale of shares in a foreign (tax resident) company holding Portuguese real estate does not trigger
Property Transfer Tax Stamp Tax IRS Corporate Income Tax
Sale of shares in a Portuguese (incorporated) company holding Portuguese real estate does not
trigger Property Transfer Tax Stamp Tax except if it is a Sociedade por Quotas (private limited
company) and one of the quotaholders obtains 75 of the capital or the number of holders is
reduced to 2 quotaholders married or living in a civil partnership So 74 26 Lda ownership
structures are common
Portuguese tax treaties with the Netherlands Belgium and Luxembourg envisage exclusive taxing
rights for the residence State on the sale of land rich companies
37
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Inheritance and gift
Inheritance and gifts are subject to Stamp Tax in Portugal However inheritance and gifts between
close family (spouses living partners children grandchildren parents and grandparents) are
exempt assets outside Portugal are not even taxable and when tax is due on the Portuguese
assets (between siblings cousins uncle and nephew etc) it is so at a low rate ndash 10 when an
inheritance 10 plus 08 when a gift of real estate is concerned
As of November 2015 the Socialist party with the parliamentary support of three far-left parties
(the Left Block the Communist and the Green parties) has formed a new government The
Socialist party has proposed in its electoral program the reintroduction of inheritance taxation
between spouses and direct line descendants for ldquohigh valuerdquo estates (in principle those with a
taxable value above 1 million Euros with a rate of 28 applying to the surplus) but ldquotaking into
account the need to avoid phenomena of multiple inheritance taxationrdquo It is therefore likely that a
mild form of inheritance taxation may be re-introduced in Portugal but it is not clear how it will
target NHR with non-Portuguese assets due to the caveat in commas
38
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Inheritance and gift
Accordingly changes to inheritance taxation (which is currently very generous as inheritance
between direct family is exempt assets outside Portugal are not taxable and when tax is due on
Portuguese assets it is so at a low rate - 10) seem much more likely than a change of the NHR
regime as the Government Program intends to tax the cases that are now exempt (most notably
in inheritances between direct family) However the relevant aspects remain fully uncertain (for
instance if foreign assets will or not be taxed if donations will or not be taxed in the same way as
inheritances how should the euro 1000000 be valued etc) Developments on this issue therefore
have to be monitored
39
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Received by Inheritance Gift
Movable property
Located in Portugalclose family 0 0
other people 10 10
Not located in Portugalclose family 0 0
other people 0 0
Real estate
Located in Portugalclose family 0 08
other people 10 108
Not located in Portugalclose family 0 0
other people 0 0
Movable property subject to registration license or
inscription
Registered in Portugalclose family 0 0
other people 10 10
Not registered in Portugalclose family 0 0
other people 0 0
Credit rights or rights with an economic content (over
individuals or legal entities)
When the debtor has its residence head office effective management or a permanent establishment in Portugal and in any
case provided that the beneficiary is a Portuguese resident
close family 0 0
other people 10 10
When the debtor does not have its residence head office effective management or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
40
Inheritance and gift Stamp Tax as it applies today
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Received by Inheritance Gift
Shareholdings
In a corporation whose head office or effective management is located in Portugal or which has a permanent establishment in Portugal and in any case the beneficiary being a Portuguese
resident
close family 0 0
other people 10 10
In a corporation which does not have its head office its effective management in Portugal or a permanent establishment in Portugal
Or if the beneficiary is not a Portuguese resident
close family 0 0
other people 0 0
Monetary values deposited in bank accounts
In an institution whose head office effective management is in Portugal or which has a permanent establishment in Portugal
close family 0 0
other people 10 10
In an institution whose head office and effective management is not in Portugal and which has not a permanent establishment in
Portugal
close family 0 0
other people 0 0
IndustrialIntellectual property rights (and related rights)
Registered or subject to registration in Portugalclose family 0 0
other people 10 10
Not registered nor subject to registration in Portugalclose family 0 0
other people 0 0
41
Inheritance and gift Stamp Tax as it applies today
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Other inheritance and gift aspects
Inheritance or gift will give rise to a new date of acquisition and an assessment of tax value
relevant for Stamp Tax and for future IRS capital gains (date of acquisition and original acquisition
value by deceased are lost)
In brief regarding inheritance or gift of real estate located in Portugal
Directly held real estate
i) Close family is exempt from Stamp Tax
ii) Other situations involving the gratuitous disposal of Portuguese assets are taxed through Stamp Tax
Real estate held through companies The inheritance or gift of
i) A foreign (incorporated) company even towards Portuguese residents is not liable to this tax (assuming
its effective management is not in Portugal and that the real estate is not a permanent establishment of
the company otherwise above exemption 10 rate applies)
ii) A Portuguese (tax resident) company towards non-Portuguese residents is not liable to this tax
iii) A Portuguese (tax resident) company towards Portuguese residents above exemption 10 rate
applies
42
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
43
17Peaceful Country
According to the 2016primes
Global Peace Index Portugal
ranks 5th out of 163
countries (19)
(19) - httpstaticvisionofhumanityorgsitesdefaultfilesGPI20201620Report_2pdf
Why Portugal
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Compliance Submission of yearly tax returns
44
When tax residence in Portugal is acquired no entry wealth statement has to be made
Furthermore in Portugal there is no wealth tax nor any annual wealth statement
However IRS forces taxpayers to disclose foreign bank accounts (at least those directly held) in
the annual tax return There is no need to declare the amounts held in such accounts therein
Only the BIC and IBAN of such accounts should be declared The Portuguese bank accounts do
not have to be reported in the annual tax return in the same way as the foreign accounts
Therefore a yearly tax return must be submitted until May 31 of each year starting from the
year following the one in which Portuguese tax residence is acquired
In this tax return all worldwide income obtained in Portugal or abroad has to be declared
(even if exempt under the NHR regime) For income obtained outside Portugal not exempt
under NHR regime tax levied abroad will be considered creditable (with some limitations)
against the IRS
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
45
18Portuguese Passport
Citizenship
If the head of the household qualifies for residency
in Portugal all the dependents will automatically
qualify so with no any additional costs
Moreover Portugal has one of the worlds most
valuable passports (20) and the Portuguese
Citizenship was ranked as the 16th most valuable in
the World by Quality of Nationality Index (QNI) (21)
(20) - httpswwwpassportindexorgbyRankphp(21) - httpsnationalityindexcom
Why Portugal
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
The Portuguese NHR Regime
For more information on our Residence Planning Services please visit our
microsite wwwnonhabitualtaxresidentcom or scan the below QR code with your
smartphone
Should you require further information on this issue please check our Information
Note on this subject available at httpwwwslidesharenetRPBAthe-non-habitual-tax-
resident-regime-rpba30102014
46
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
The Portuguese NHR Regime
Proper legal advice is recommended before any decision is taken
to become a Portuguese tax resident and more so if one wishes
to take full advantage from the NHR status RPBA has an in-
depth knowledge and expertise on this regime
To book a consultation or to obtain our professional fees on this
subject please e-mail us (Ricardo da Palma Borges and Marta
Carmo) ricardorpbapt martarpbapt
47
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
Chambers amp Partners ndash Ricardo Band 2 RPBA Band 3 (2017 2016) and Ricardo Band 1 RPBA Band 3 (2015 2014 2013)
Legal 500 ndash Ricardo and Bruno are Recommended Lawyers RPBA Band 3 (2017 2016 2015 2014 2013)
World Tax ndash Ricardo mentioned RPBA Tier 3 (2017 2016 2015 2014)
Best Lawyers ndash Ricardo recognised as Tax Law Lawyer of the Yearrdquo (2017) and ranked under the Tax Law practice area and the Tax
Planning subspecialty (2016 2015 2014 2013 2012 2011)
Corporate LiveWire - Ricardo da Palma Borges chosen as the winner of the Finance Award for Tax Lawyer of the Year ndash Portugal
(2017) Ricardo da Palma Borges chosen as the winner of the Finance Award for Excellence in Tax Planning ndash Portugal (2016)
International Tax Review - Bruno Botelho Antunes and Ana Rita Pereira listed in the International Tax Reviews Tax Controversy
Leaders guide (2017) Ana Rita Pereira listed in the Women in Tax Leaders guide (2017)
World Transfer Pricing ndash Ricardo mentioned RPBA Tier 3 (2016)
Whorsquos Who Legal ndash Ricardo ranked as a top lawyer in the Corporate Tax Lawyers directory (2016 2013)
Expert Guides ndash Ricardo da Palma Borges recognised in the ldquoTaxrdquo edition of the Expert Guides which annually identifies the best tax
lawyers in each country (2016)
Global Law Experts ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2017) RPBA Tax Law Firm of the Year in Portugal (2016)
Tax Directors Handbook ndash Ricardo mentioned RPBA Tier 3 (2015)
Corporate Intl - RPBA Boutique Tax Law Firm of the Year in Portugal (2016)
Corporate Intl Magazine Legal Award ndash RPBA Boutique Tax Law Firm of the Year in Portugal (2014)
Acquisition International Tax Award ndash RPBA Portuguese Tax Law Boutique Firm of the Year (2015)
Acquisition International Legal Award ndash RPBA Boutique Law Firm of the Year ndash Portugal (2014) 48
Recent Tax Recognition
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
49
General warning disclaimer copyright and authorised use
In the preparation of this presentation every effort has been made to offer current correct and clearlyexpressed information However the said information is intended to afford general guidelines only Thispresentation reflects information current at 3 October 2017
This presentation is distributed with the understanding that RICARDO da PALMA BORGES amp ASSOCIADOSSOCIEDADE DE ADVOGADOS SP RL is not responsible for the result of any actions taken on the basis ofinformation herein included nor for any errors or omissions contained herein
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is not attempting throughthis work to render legal or tax advice and the information in this presentation should be used as a researchtool only and not in lieu of individual professional study with respect to client legal matters
Portuguese domestic legislation foreign legislation EU Directives and tax treaties have anti-abuse provisionsand each actual client structure should be analysed taking those into account
RICARDO da PALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RL is the copyright owner ofthis presentation and hereby grants you a non-exclusive non-transferable license to use this presentationsolely for your internal business provided that you do not modify its content in any way and that you do notretain any copyright or other proprietary notices displayed on such content You may not otherwisereproduce modify distribute transmit post or disclose the content on this presentation without RICARDO daPALMA BORGES amp ASSOCIADOS SOCIEDADE DE ADVOGADOS SP RLrsquos prior written consent
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15
(+351) 212 402 743
geralrpbapt
wwwrpbapt
wwwlinkedincomcompanyrpba
wwwslidesharenetrpba
15