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Non-habitual residents - new procedures for high net worth activities


Ruling no. 4/2019, of 8 October, issued by the Portuguese Tax Authorities (“PTA”) has altered the procedure for the recognition of the activities performed by non-habitual residents (“NHR”), as high net worth, which allows those individuals to benefit from a reduced personal income tax (“PIT”) rate of 20%, applicable to income derived from their activities recognized as such. This ruling will enter into force on 1 January 2020. 

Up to now, for said activities to obtain the high net worth qualification, a prior recognition by the PTA was required, requested, in writing, simultaneously with the NHR application accompanied by supporting documentation able to attest the activity performed. 

This previously adopted procedure turned out being excessively lengthy and did not prevent the necessity of subsequent controls, as the PTA still wished to verify, in many cases, the maintenance of the fulfilment of the conditions underlying that recognition. 

In light of the above, the PTA changed their understanding on what concerns this matter, adopting a new procedure for the purposes of the recognition of the high net worth status of said activities. 

According to this new position, in order to benefit from the reduced 20% PIT rate, applicable to income from NHRs deriving from their high net worth activity, it is now sufficient for taxpayers to invoke said qualification of the activity in their annual tax return (form Modelo 3), by introducing the code of the high net worth activity in annex L of the same. 

As such, it is no longer necessary to apply before the PTA so that they recognize the high net worth of said activities. 

Nonetheless, this does not preclude the PTA’s right of requesting taxpayers, further to submitting the above-mentioned returns, to present supporting documentation in order to attest the actual performance of the respective activities. However, under the new procedure, the presentation of that supporting documentation should only occur if expressly requested by the PTA. 

In relation to cases where the taxpayers have already applied before the PTA, for obtaining prior recognition of the high net worth of the activities performed under the instructions currently in force, and which, up to now, are still pending, the PTA clarifies, via Instruction no. 20005/2019, of 9 October, that the same should be closed, regardless of the year to which they relate. On the other hand, the PTA clarifies that, cases where divergences were found in the annual tax returns, as well as cases of outstanding tax litigations, should be evaluated and, also, closed.

Teresa Pala Schwalbach

Rita Botelho Moniz


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Teresa Pala Schwalbach