Since the launch of the “Golden Visa” scheme in 2012 and the “Non-Habitual Residents” tax regime, Portugal has become one of the most popular locations in Europe for EU and non-EU nationals to consider moving to.
Portugal is a beautiful country, bordering Spain and the Atlantic Ocean. With only a two-and-a-half-hour direct flight time, individuals can travel to the UK relatively quickly from Portugal.
Portugal is part of the EU, and there are therefore no restrictions on EU or Swiss citizens moving there, including those moving from the UK. The Golden Visa is a residence programme available to non-EU citizens.
The Golden Visa Programme for Non-EU Individuals
By obtaining a Golden Visa, individuals can qualify for a residency permit in Portugal for up to five years. This allows them and their family to travel freely within most European countries. The visa can lead to permanent residence and Portuguese citizenship. After six years of being a Portuguese resident, the main applicant has a right to apply for a passport.
To be eligible for a Golden Visa the applicant must fulfil ONE of the following financial criteria:
A minimum investment of €1 million in Portugal (deposit in a bank account, or shares or quotas in a company or companies); OR
An investment of €500,000 in real estate; OR
The creation of at least 10 jobs (temporary work contracts are eligible and the worker does not have to live in Portugal if social security is paid) OR
Investment of a minimum €350,000 in a project relating to cultural or scientific research; OR
The purchase of a property built at least 30 years ago, or located in an area designated for urban renewal. The property, including the costs of rebuilding and/or renewal, must equal a minimum of €350,000; OR
Investment of a minimum €250,000 to support artistic productions and/or national heritage projects organised through the central or local Portuguese authorities; OR
Investment of a minimum €500,000 to purchase shares in investment funds or venture capital companies that are being used to support small and/or medium size companies in Portugal that have generated viable business development plans.
In addition, individuals investing in a region with a low population density (less than 100 habitants per km2), or with a GDP 75% or less than the national average, benefit from a 20% reduction in the specified investment criteria. The two exceptions are the capital transfer of at least €1 million to a Portuguese bank account or a Portuguese company and the investment of a minimum €500,000 to purchase shares in investment funds or venture capital which is being used to support small and/or medium size companies.
The Non-Habitual Residents Programme
EU and non-EU individuals who become resident in Portugal for tax purposes, may apply for the “Non-Habitual Residents Programme”, provided they have not been resident in Portugal for the previous five years.
NHR Programme – Tax Advantages:
Tax exemption on foreign source income when certain conditions are met.
Reduced tax rate of 20% on personal income tax for certain categories of employment.
It is possible for non-EU individuals to apply for the Golden Visa and Non-Habitual Residents Programme simultaneously.
Tax Advantages Available to Companies in Portugal
Portuguese companies are subject to tax on their worldwide income. Branches of non-resident companies are only taxed on Portuguese-source profits.
The Portuguese corporate income tax rate is 21% on the mainland and 5% on the island of Madeira.
Corporate tax is charged on a company’s profit, although some exemptions may apply in relation to passive income under the Participation Exemption Method.
Other Tax Benefits
Portuguese companies registered in the Madeira Free Trade Zone, known as MIBCs, enjoy several tax benefits, in particular the reduced rate of 5% corporate tax, guaranteed until 2027, and:
In addition, companies licensed to operate in Madeira have access to most of the Double Taxation Agreements.