Fact: Portugal has been growing increasingly popular among wealthy individuals

In 2024, Portugal ranked in the top 10 counties with the most billionaire inflows. It received 800 millionaires, ending the year with a total of 67,200. A large number considering it has just a little over 10M residents.

Portugal’s quality of life, gastronomy, natural beauty and significance to world history often push other attractions to the periphery of concern.

That said, Portugal has solidified itself over 20 years as an attractive country for efficient and competitive taxation, specifically for migrants from the wider global North. This environment gave birth to the original NHR (Non-Habitual Resident) regime which was certainly the MVP and then the model for other European countries looking to attract similar types of immigration.

So much so, that a lot of people call it a tax haven. But is it really?

What are tax havens?

A tax haven generally refers to a country or jurisdiction that enables multinational corporations and individuals to escape the rule of law in the countries where they operate and live, and to pay less tax than they should in those countries. A famous example is Ireland, through the Double Irish plan that famously allows Apple to have a very reduced effective tax rate. Equally, the Netherlands have the Dutch Sandwich scheme and the two are often used in combination, a ‘Double Irish Dutch Sandwich’ - a tasty and indeed cheap snack for those positioned to leverage it.

Examples in Asia include Singapore and Hong Kong that serve as headquarters for a lot of the American technology firms.

There is often another angle when people think about tax havens, which are the  jurisdictions that specialize in enabling individuals to hide their wealth and financial affairs from the rule of law, more than in enabling multinational corporations to shift tax out of the countries where they operate in order to pay less tax- historically famous examples are Switzerland and the Cayman Islands.

So does Portugal have some of these characteristics?

First of all, Portugal’s incentives don’t focus as much on corporations, but more so on individuals and to benefit from the incentives, they need to become Portuguese tax residents, which is a key difference:

• Tax residency requires you to spend 183 days a year in Portugal: while it’s relatively easy to base a company anywhere in the world, you certainly will not want to spend most of the year in a country solely for tax reasons.

• On top of it, the new NHR 2.0/ (IFICI) also requires that you work for a Portuguese company (even if that’s your own company) or that you teach or do research in a Portuguese University for example.

In conclusion, its benefits are exclusive to people who actually want to come to live in Portugal and are not suitable for complex corporate international tax planning.

It also certainly doesn’t fit the second category of allowing them to hide their wealth and financial affairs. Portugal has a very wide net of treaties to exchange information as well as double tax treaties.

In summary, Portugal is not a tax haven and has great diplomatic relationships with most countries in the world, which will leave you in a much better position in case your home country is wondering what happened to your taxes or is looking to tax your income sourced there.

So, why is Portugal so attractive tax wise?

If you want to come to live to Portugal, you may have access to most powerful tax incentive in the developed world- The NHR 2.0

This will give you:

• A complete exemption on virtually all foreign income.

• No tax on Crypto gains if you hold it for more than one year.

• 20% flat tax on the profits of your work generated in Portugal.

Even if you don’t qualify for the NHR 2.0, if you are under 35, you can still get a personal income exemption until you become 35.

If you are a freelancer, Portugal has a great simplified regime system that very significantly reduces your effective tax rate.

So you are probably starting to see that Portugal has many elements of a tax haven. And in some ways, it is… but in fact we think it’s better. The key takeaway distinction is that Portugal is for living and it offers not only great quality of life, it also offers unlimited travel across the Schengen area with your residency, yes it has some major tax benefits but the life one can live in Portugal is something that few ‘tax havens’ cannot offer.

Want a partner to walk you through it?

Portugal’s new tax regimes are fantastic with the NHR 2.0 being at the very top – but only if you know how to make them work for you. That’s where Touchdown comes in.

We specialise in relocation, tax strategy, and business setup for global professionals landing in Portugal.

Join a growing, connected international community that is thriving in some of the fastest growing corners of the world. Portugal - now; Spain - soon; the rest of the world - to come.

Want to know more? We’ll walk you through it – no jargon, just straight answers. View our fully managed  NHR Service or answer a couple of questions in the Touchdown Advisor to book a free introduction call with our team.