Non-Habitual Residency

Madeira’s Non-Habitual Residency scheme is a special taxation regime, available under certain eligibility criteria, to ex-pats and remote workers who have recently moved to Portugal and Madeira.

NHR Status grants certain tax privileges and exemptions for a period of ten years.

 

Madeira’s stunning landscapes, temperate climate, varied gastronomy, and low crime rate make the Island an attractive destination for those looking to work remotely, live, and invest in Portugal. Created in 2009, the Non-Habitual Residency Scheme was designed to promote foreign investment by offering special tax conditions for ex-pats who want to live in Portugal either full or part-time.  

Tax residents in Portugal can access the NHR scheme, provided they have not been a personal income (IRS) taxpayer in Portugal in any of the five years before moving to the country.

*Whilst some people make the mistake that NHR is a form of visa, like the D7 or Golden Visa, it is important to note that NHR is a tax regime and not a residency permit. Applicants must first obtain residency separately, before submitting an NHR application.

Minimum Requirements
  • Be over 18 years of age
  • Acquire Tax residency in Portugal
  • Not held tax residency in Portugal in any of the previous 5 years.
What do I need to apply for NHR?
  • EU Passport or Residency in Portugal
  • Proof of Fiscal Address in Portugal
  • NIF – Portuguese Tax Identification Number
  • Bank Statements, with a substance minimum of EUR 9500 over 12 months.
When can I register for NHR?

If you arrive in Madeira between the 1st of April and the 31st of December, you have until March 31st the following year to apply for Madeira’s Non-habitual residency scheme. If you arrive between 1st January and 31st of March, you have until 31st March the following year to register.

NHR Status and tax benefits

Professionals in high-added value professions will pay tax at a rate of 20% on qualifying earnings in Madeira Portugal or foreign sources

Unlock your Portuguese Residency

Unlike a visa, NHR Status is a special tax regime designed to offer benefits on overseas income, as well as income generated in Portugal 

Tax Incentives over 10 Years

0% Tax on foreign income where dual taxation treaties exist and 0% tax on foreign-sourced Dividends, Crypto and wealth tax  

Visa-free Schengen Travel

With Portuguese residency, benefit from access to the 26-nation European bloc, EEA, and visa-free travel to 183 nations around the world

As part of Madeira’s Non-habitual residency scheme all residents are subject to personal income taxation. Any income generated in Madeira is subject to a rate of 20% income tax, provided you fall into a list of High Value-Added Activities with ‘Technical, Scientific or Artistic Character

Similar to employees, freelancers and self-employed individuals are required to fall into the high-value category to benefit from NHR. Typically you would be subject to 20% income tax plus social security contributions if no tax is paid on the income where it was earned.

 

Definition of High Value-Added Activities
  • Managing Directors and Executive Managers of companies
  • Directors of Hotels, Restaurants, and commerce
  • Administrative Service Directors
  • Physicians, Dentists and Stomatologists
  • ICT Specialists
  • Authors and Journalists
  • University Professors
  • Creative and Performing Artists
Capital Gains, Dividends and Passive Income

Capital Gains, interest, dividends, income from intellectual property and other forms of passive income are exempt from taxation in Madeira and Portugal, provided they are taxed in the country they are obtained in, and Portugal has a double taxation treaty in place. If the income has been obtained in a country considered by Portuguese law to be a ‘tax haven’, then an aggravated tax rate of 35% is applied.

Pensions and retirement for Non-Habitual Residents

Net Pension Income earned by NHR citizens is taxed at a flat rate of 10% for ten years. Portugal has treaties in place with EU member countries and Social-Security agreements with some non-EU member countries. Through the UK/Portugal Tax Agreement, most UK Pensions are taxable only in Portugal at 10% for the first 10 years through the Non-Habitual Residence Scheme. Always consult with a financial advisor to ensure your pension is managed in the most efficient way possible.

MIBC – Madeira International Business Centre

The Portuguese Autonomous Region of Madeira benefits from one of the most favourable tax regimes in Europe. The Madeira International Business Centre (MIBC) or Madeira Free Trade Zone (Zona Franca da Madeira) as it is commonly known, offer businesses and corporations a range of tax benefits, designed to attract foreign investment to the region.

  • Reduced 5% corporate tax rate for income obtained outside Portugal.
  • Reduced flat rate of 20% for salaries of workers with activities considered of high added value (see above)
  • Exemption from withholding tax on the payment of services, royalties, and interest to non-resident shareholders and on other forms of remuneration such as shareholder loans, capital advances, or allowances
  • Reduced rates of stamp duty, property taxes (IMI and IMT), local authority taxes, autonomous taxation, and other fees and costs

See our article on the Madeira Free Trade Zone here.

What are the benefits of Madeira’s NHR? 

0% Tax on Cryptocurrency – Cryptocurrency gains are considered as any other currency, and therefore not subject to tax.

0% Tax on Dividends – Foreign Sourced Dividends are taxed at 0%

0% Tax on Wealth – Unlike other European countries, Portugal has a 0% Wealth Tax

0% Tax on foreign income – As determined by the OEDC (applicable Tax Treaty) if no Tax Treaty is in force between Portugal and the country of source.

20% Tax on self-employment - Freelance and valued self-employed professionals are taxed at 20%

No requirement for minimum stay – If an EU Citizen owns or rents a place to live in Portugal, there are no minimum stay requirements.

Fast Track access to a European Passport – After 5 years of living in Portugal, you can apply for Portuguese Citizenship

Requirements for Madeira’s NHR Scheme

To apply for Non-Habitual Residency, you must meet the following criteria: 

Minimum Requirements:
  • Be over 18 years of age
  • Acquire Tax residency in Portugal
  • Not held tax residency in Portugal in any of the previous 5 years.
What documents do you need to apply for NHR?
  • EU Passport or Residency in Portugal
  • Proof of Fiscal Address in Portugal
  • NIF – Portuguese Tax Identification Number
  • Bank Statements, with a substance minimum of EUR 9500 over 12 months.
When can you register for NHR Status?

If you arrive in Madeira between the 1st of April and the 31st of December, you have until March 31st the following year to apply for Madeira’s Non-habitual residency scheme.

If you arrive between 1st January and 31st of March, you have until 31st March the following year to register.

Once you miss the application deadline, you will no longer be eligible for Non-habitual residency status.  

 

Why Madeira?

One of Europe’s most popular Island destinations

Just 900km from Lisbon, Madeira is an island paradise providing a high quality of life, low cost of living, sub-tropical climate and low crime rate. An ideal destination for your family, during your retirement, or to move your company operations.

Tax Incentives for new company formations in Madeira’s IBC

The Madeira International Business Centre (MIBC), or Madeira Free Trade Zone as it is commonly referred to, offers a series of benefits for new companies formed in Madeira, predominantly tax benefits approved by the European Union and guaranteed until at least 2027. Learn more about Madeira’s IBC in our Blog.

 

Our Services

Company Formation

Madeira Company specialises in the incorporation and registration of new businesses and companies in Madeira and Portugal. We have an experienced team ready to assist you with all aspects of company formation. Whether you choose a Public (S.A) or Limited (LDA) company, our team offer thorough guidance and expert support with name registration and approval, certificate of incorporation, fiscal number, and opening a company bank account.

Tax Consulting

Our dedicated team offers advice on compliance with local taxation requirements, and assistance in tax refunds and tax litigation. Madeira Company works with you to mitigate your tax risks and improve the efficiency of your local and international operations in Madeira. Our in-house team of experienced tax professionals are ready to assist with Personal Income Tax, Non-Habitual Residency and Fiscal Representation.

Accounting

Madeira-based Bookkeeping and accounting services, including VAT, Profit Tax returns and the preparation of financial statements. Our expert team can discuss the level of support required for your business. We will assist you with VAT and tax returns to your local authority, periodic and annual reporting as well as your End of Year accounting. Contact us today to find out how our team of experienced accountants can help you and your business.

Contact Us

info@madeiracompany.com

+351 291 625 894

MC Contabilidade, Rua das Pretas 43, Andar 3, 9000-049 Funchal, Portugal

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