Tax Returns in Portugal for Foreign Residents IRS – Mod.3

May 8, 2024 | AT Autoridade Tributária e aduaneira | 0 comments

If you are considering moving to Portugal as a foreign resident, it is important to understand the tax system and tax implications. Here you have relevant information about tax returns in Portugal for foreign residents:

Non-Habitual Resident (NHR).

The NHR program in Portugal is a tax system designed to attract foreign professionals and depositors. It was severely restricted by the end of 2023. Some key aspects of the NHR, for those who were able to obtain it before 2024, are:

NHR means “Non-Habitual Resident”. Applicants can benefit from tax exemptions and reduced rates for a period of up to ten years.

To qualify as an NHR, you must be considered a tax resident in Portugal each year during that period.


  • Money transfer to Portugal without charges.
  • Exemption from wealth tax.
  • Favorable treatment of personal tax income for 10 years.
  • 20% flat rate for certain Portuguese source income
  • Tax exemption in Portugal for several income sources from most countries in the world (not black listed)

Necessary Documents.

  • Tax returns from the last 5 years.
  • Rental contract or proof of ownership in Portugal.
  • Declaration confirming that you have not been a tax resident in Portugal in the last five years.

Tax Rates

Non-residents are subject to a flat 25% tax rate on their Portuguese source income.

Residents are taxed on a progressive rate which can go up to 48%. Those with NHR status can benefit on exemption on most income from abroad, as well as a reduced 20% flat rate for salaries or free-lance work from added know how activities.

In summary, the NHR program offers significant benefits for those who wish to reduce their tax burden while residing in Portugal. If you are considering this option, make sure you meet the requirements and get professional advice to maximize the benefits.

Don’t hesitate to contact us US Tax Consultants-Know2Grow Phone: +351 211 380 833


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