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38 vale do lobo LiVing

Portugal has created a special tax regime (NHR) for new residents which is also ap-plicable to Portuguese citizens living abroad for many years. This tax regime for new resi-dents is a key factor to be assessed prior to spending two different stages of life over-seas: assignment or retirement. Under the NHR regime, these can take place in sunny surroundings while benefiting from an at-tractive tax regime.

Overview of the Regime

NHR individuals shall benefit from the special Personal Income Tax (“PIT”) regime for a ten year period.

Under this regime, individuals qualifying as non-habitual residents are eligible for spe-cial income tax rates applicable to Portuguese sourced income (i.e., 20% for Portuguese sourced employment and self-employment income derived from high value added ac-tivities) and may benefit from potential tax exemptions on foreign sourced income (i.e.,

among others, on dividends, interest and oc-cupational pensions).

Accordingly, foreign source dividends and interest shall be exempt from PIT, if: • They may be liable to tax in the country of source, according to the applicable tax treaty or according to the OECD Model Tax Convention, as interpreted according to the Portuguese comments and reserva-tions made to its articles (this works even if, under domestic tax law, they are not taxed); and

• They are not deemed derived in Portugal in accordance with Portuguese sourcing rules nor deemed obtained in a tax haven.

In relation to foreign sourced occupation-al pensions, these shall benefit from a PIT ex-emption if they are liable to tax in the source country in accordance with the provisions of a tax treaty or are deemed not to be derived in Portugal in accordance with the Portuguese sourcing rules.