A temporary tax regime applicable to ex-residents (both Portuguese and foreign citizens who have already lived in Portugal) who wish to return to the country and acquire a resident status. This regime is established under the terms of Article 12-A of the Personal Income Tax (IRS) Code and allows taxpayers to benefit from a partial exemption of IRS on income from employment and self-employment.
Under this regime, only 50% of the relevant income is subject to taxation. This regime is applicable in the year in which the candidate becomes resident in Portugal and in the following four years.
Requirements
To benefit from this regime, an individual must:
- ecome tax resident in Portugal in an eligible year under the applicable legal framework (as defined in the State Budget laws in force at the time of return);
- Not have been resident in Portuguese territory during the three years prior to the year in which they become resident;
- Have been resident in Portugal before the aforementioned period of non-residence;
- Have a regularized tax situation;
- Not benefit from, nor have applied for, the Non-Habitual Resident (NHR) regime or any equivalent regime applicable at the time.
How to obtain
This benefit is automatic, which means that it does not depend on prior recognition. Its application results directly from the law as soon as the taxpayer becomes resident in Portugal and meets the relevant legal requirements.
However, when filing the IRS return (Modelo 3), taxpayers must indicate in the appropriate annexes that they intend to benefit from this regime.
Regarding employment income, taxpayers should invoke their status as former residents returned to Portuguese territory and communicate such status to the income payer, so that withholding tax is applied only to 50% of the income.
Regarding self-employment income, taxpayers should invoke the above-mentioned status by including a reference to the applicable legal provision (Article 12-A of the IRS Code) in the relevant documentation.
