NHR 2.0. via Startup

The 2024 state budget introduced a new tax benefit aimed at attracting highly qualified professionals and fostering scientific and industrial research in Portugal. This led to the creation of the "incentive regime  for scientific research and  innovation," also known as NHR 2.0.

‍

There are several options for applying for this regime, one of which is by setting up a start-up company in Portugal.

‍

Application requirements for NHR 2.0 via a Startup

Regarding the eligibility of this program for startups, the tax incentive (NHR 2.0) is applicable to individuals who:

• Establish residency in Portuguese territory on or after January 1, 2024;
• Have not been tax residents in Portugal during any of the previous 5 years;
• Have not previously used the NHR regime Non-Habitual Tax Residents);
• Have not previously used the the tax regime for former residents;
• Are employees or members of statutory bodies of entities certified as Startups, and receive remuneration as such.

‍

Tax Benefits

The benefits of the NHR 2.0 status are valid for 10 years and consist, on the one hand, of the taxation of income earned as employees or members of the statutory bodies of the company certified as a startup at the special tax rate of 20%.

And, on the other hand, on the possible exemption from taxation in Portugal of foreign source income, irrespective of whether they are taxed in the source country or not. No exemption applies on pension income and income paid or made available by entities domiciled in a country, territory or region subject to a clearly more favourable tax regime (the so called “tax havens”).

‍

Final Considerations

The NHR 2.0. presents an opportunity for individuals and companies relocating to Portugal, and the changes to the applicable laws regarding exemption methods significantly enhance the attractiveness of this incentive compared to the previous NHR regime. This is particularly evident in the expanded application of exemptions to movable capital gains and income from employment and self-employed work sourced abroad, as effective taxation in the source jurisdiction is no longer required.

‍

At Over the Sea (OTS), we have a team of experts specialised in NHR and international taxation. We are available to help you understand the tax impact of a potential change of residence to Portugal, taking into account your individual circumstances, and to develop a tailored solution to meet your needs.