Several tax incentives have become available to foreign pensioners and retirees that turn Portugal into their new residence. Actually, European pensioners and active expatriates who change their tax residence in Portugal can obtain the status of Non-habitual Resident for a period of 10 consecutive years, which allows:
• A tax exemption for pensioners or retirees
• a special tax rate of 20% for labour income received in Portugal for non-habitual residents that are employed or self-employed or work for a company and their income from activities are considered to be “High added value in terms of scientific, artistic or technical nature”.
There is no double taxation on the income derived from foreign sources, specifically, income of employed and self-employed individuals, property, capital gains, interests, dividends and other capital income, thanks to tax treaties between European countries, nor to inheritance taxes in Portugal.
Three conditions to achieve this status:
• not been taxed in Portugal during the last five years,
• justify a stay of more than 183 days, consecutive or not, during the year,
• have a principal residence in Portugal on 31st December of the previous year.