The number of foreigners residing in Portugal under the Non-Habitual Residency (NHR) scheme has almost doubled over the past 18 months. More than 23,000 foreign nationals currently benefit from Non-Habitual Residency, which is up 83 percent on January last year.
According to online news site Diário de Notícias (DN), the majority are French, Britons, and Italians, with Swedes and Brazilians rounding off the top five spots. The number of Portuguese emigrants returning to Portugal makes up just six percent of the overall total. The Non-Habitual Residency scheme was launched in 2009 to attract retirees and skilled professionals to Portugal using tax breaks and benefits. Its competitive advantages include taxation related to IRS (personal income tax) on labour income in Portugal at a fixed rate of 20 percent for a period of 10 years, and no double taxation on pension incomes or for employment and self-employment income obtained abroad. To be eligible for Non-Habitual Residency - granted for a non-renewable ten-year period - applicants must have had tax residence outside Portugal in the five years prior to applying (which allows Portuguese emigrants to be included in the equation) and must spend at least 183 days a year in Portugal. From a total of almost 7,000 applications that have been submitted to the national Tax and Customs Authority, only 1,502 were of Portuguese nationality (six percent), DN reports. According to tax consultants overseeing the application processes, DN states, this lag is due to several obstacles in the formalisation of requests, such as when only one half of a Portuguese couple returns to Portugal.