For Ultra High Net Worth (UHNW) non-domiciled individuals (non-doms) moving to Portugal, the tax implications under the country’s updated Non-Habitual Residency (NHR) 2.0 regime offer a range of significant benefits, particularly for those seeking to optimize their tax liabilities.
The Appeal to UK and US Citizens
Exemption on Foreign-Sourced Income: One of the most attractive features of NHR 2.0 is that foreign-sourced income—including dividends, interest, capital gains, and rental income from real estate outside Portugal—is fully exempt from Portuguese personal income tax (PIT), even if remitted to Portugal. This is a major advantage for UHNW individuals with substantial international investments.
Portugal vs Other Destinations
Tax Exemptions: Portugal’s NHR 2.0 offers one of the most comprehensive exemptions on foreign-sourced income, making it highly competitive with countries like Monaco and Switzerland. Unlike Monaco, which has zero income tax but extremely high property prices, Portugal offers a more balanced cost-of-living-to-tax-benefit ratio.
Wealth and Inheritance Taxes: Portugal has no wealth or inheritance taxes, similar to Monaco and the UAE. This makes it attractive for UHNW individuals concerned about passing on wealth without significant tax burdens.
Duration of Benefits: While Portugal’s NHR benefits last only 10 years, Italy offers a longer period (15 years) under its flat-tax regime. However, Italy’s regime is more expensive (€100k-€200k annually), making Portugal a more affordable option for many.
In summary, for UHNW non-doms leaving the UK due to changes in the UK’s tax regime, Portugal offers a highly attractive alternative with its generous tax exemptions on foreign income and favourable treatment of local earnings under NHR 2.0.
