Under Portugal's Non-Habitual Resident (NHR) status, individuals can work in Portugal without restrictions, attracting foreign professionals and investors with tax benefits on foreign income.
Yes, you can work in Portugal under Non-Habitual Resident (NHR) status. The NHR regime is designed to attract foreign professionals, retirees, and investors to Portugal by offering favorable tax benefits, including those for employment income. Here’s how it works:
1. Employment in High-Value-Added Activities
- Reduced Tax Rate: If your work in Portugal is considered a high-value-added activity, which includes professions in scientific, artistic, or technical fields, you can benefit from a flat 20% tax rate on your Portuguese-sourced employment income. This is significantly lower than the standard progressive income tax rates in Portugal, which can go up to 48%.
- Eligible Professions: High-value-added activities include roles in IT, engineering, architecture, medicine, and other specialized professions. To qualify, your profession must be on the list defined by the Portuguese government.
2. Self-Employment
- Self-Employment Opportunities: If you are self-employed, you can also work in Portugal under NHR status. Income derived from self-employment in high-value-added activities is similarly taxed at the favorable 20% flat rate. If your self-employment income is foreign-sourced, it may even be exempt from Portuguese taxation under certain conditions.
3. Foreign-Sourced Income
- Exemption from Portuguese Taxation: If you work remotely for a non-Portuguese employer and your income is foreign-sourced, it may be exempt from Portuguese taxation under the NHR regime, provided that the income is taxed in the source country or could be under a double taxation agreement (DTA).
- Reporting Requirements: Even if your foreign-sourced income is exempt from taxation, you must still report it in your Portuguese tax return. Proper reporting is essential to maintain NHR status.
4. Social Security Contributions
- Mandatory Contributions: While NHR status offers significant tax advantages, you are still required to make social security contributions if you are employed or self-employed in Portugal. These contributions are separate from income tax and are necessary unless exempted by an international social security agreement.
Summary
You can work in Portugal under NHR status, benefiting from a flat 20% tax rate on Portuguese-sourced income if you work in a high-value-added profession. Additionally, foreign-sourced income may be exempt from Portuguese taxation under certain conditions. However, social security contributions remain mandatory.