It is possible to switch to the NHR regime in Portugal even if you are already a tax resident, offering tax benefits like a flat rate on certain income types.
Yes, you can switch to the Non-Habitual Resident (NHR) regime if you are already a tax resident in Portugal, but there are specific conditions and procedures to follow. Here's how it works:
Eligibility Criteria
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New Applicants: To qualify for the NHR regime, you must not have been a tax resident in Portugal for the five years preceding your application. This means if you were previously a tax resident in Portugal, you must have been non-resident for at least five years before applying.
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Application Process: If you meet the eligibility criteria, you can apply for the NHR status. The application must be submitted to the Portuguese tax authorities, typically through the online tax portal. The application can usually be made at the beginning of the year in which you want the NHR status to apply, or within a certain period after establishing your tax residency in Portugal.
Steps to Apply
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Confirm Tax Residency: Ensure you meet the criteria for tax residency in Portugal, which generally involves staying in Portugal for more than 183 days in a calendar year or having a permanent home in the country.
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Submit Application: Complete and submit the NHR application form through the Portuguese tax authority’s online portal or with the assistance of a tax professional.
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Documentation: Provide necessary documentation to prove your tax residency status and that you were not a tax resident in Portugal for the five years prior to your application.
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Await Approval: Once your application is submitted, it will be reviewed by the tax authorities. If approved, you will receive confirmation of your NHR status.
Important Considerations
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Backdated Benefits: NHR status is generally effective from the start of the year in which you apply, not retroactively. This means if you apply later in the year, you will benefit from the regime only from the date of application or the beginning of that year, not from a previous date.
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Professional Advice: Due to the complexities of tax laws and the importance of meeting all eligibility requirements, it’s advisable to consult with a tax advisor or legal professional who specializes in Portuguese tax law to ensure a smooth application process.
In summary, while you can switch to the NHR regime if you are already a tax resident in Portugal, you must meet the eligibility requirements and follow the correct application procedures.