NHR status can greatly affect your family's tax situation with favorable treatment on income, including exemptions and reduced rates.
The Non-Habitual Resident (NHR) status in Portugal primarily affects the tax situation of the individual holding the NHR status, but it can also have implications for their family members, depending on various factors:
1. Individual Taxation
- NHR Status is Individual: The NHR status is granted on an individual basis. This means that each family member needs to apply separately for NHR status if they wish to benefit from the same tax advantages. One family member's NHR status does not automatically extend to others.
2. Tax Implications for Spouses
- Spouse’s Tax Status: If your spouse does not have NHR status, they will be taxed according to the standard Portuguese tax regime. However, if both spouses apply for and obtain NHR status, they can both benefit from the favorable tax regime, potentially reducing the overall tax burden on the family.
- Joint Filing Considerations: In Portugal, married couples can choose to file taxes jointly or separately. If one spouse has NHR status and the other does not, it might be beneficial to file separately to maximize the tax benefits available under the NHR regime.
3. Taxation of Family Income
- Family Income: NHR status provides tax benefits primarily on foreign-sourced income and certain types of Portuguese income. If family members have their own income sources, such as employment or investments, the tax treatment will depend on whether they have NHR status or are taxed under the regular Portuguese tax regime.
4. Children’s Tax Situation
- Dependent Children: If your children are dependents and do not have independent income, their tax situation will not be directly affected by whether or not you have NHR status. If they do have income, such as from part-time work or investments, they would be taxed according to the standard Portuguese tax regime unless they also apply for NHR status (if eligible).
5. Inheritance and Gift Tax
- Inheritance and Gift Tax: Portugal does not have a traditional inheritance tax, but there is a stamp duty on Portuguese assets passed to beneficiaries. NHR status does not affect this tax directly. However, if you are a non-habitual resident, your worldwide assets (outside Portugal) are not subject to Portuguese stamp duty.
Summary
NHR status in Portugal is granted on an individual basis, meaning each family member must apply separately to benefit from the tax advantages. The tax situation of your family members will depend on whether they have NHR status and whether you choose to file taxes jointly or separately. NHR status can potentially reduce the overall tax burden on your family, particularly if both spouses hold NHR status.