NON-HABITUAL TAX RESIDENTS REGIME

SUMMARY I. NON-HABITUAL TAX RESIDENTS REGIME II. III. REQUIREMENTS AND DURATION OTHER FEATURES OF THE REGIME A. INCOME OBTAINED IN PORTUGAL B. INCOME OBTAINED OUT OF PORTUGAL V. CONCLUSION 3 15 www.tfra.pt

I. NON-HABITUAL TAX RESIDENTS REGIME A more favorable tax regime aiming to attract production inputs. Taxation scheme with specific characteristics. Independent of the golden visa. Approved by Decree-law no. 243/2009 of December 23 rd. The taxation scheme is based in the taxation of individuals, Portuguese tax residents, enhanced with exemptions and reduced rates. Distinguishes between domestic and foreign source income. 4 15 www.tfra.pt

II. REQUIREMENTS AND DURATION Not having tax residence in Portugal during the previous 5 years (a tax residence certificate may be requested) Acquiring Portuguese tax residence: Living more than 183 (consecutive or not) days in Portugal OR Having, on the 31st December of a given year, a house in such conditions that allow to presume the intention to hold and occupy it as his habitual place of residence. Apply for the registration as Non-Habitual Tax Resident until 31 March of the following year to the year of registration as resident (e.g. 2014 registration until 31 March 2015). Scheme applicable for a 10 years period. 5 15 www.tfra.pt

III. Other features of the Regime Taxation under the regime applicable to the tax residents (worldwide income taxation principle) Income Statement There is no obligation of declare assets and rights (exception: the bank accounts held abroad) Tax residents for the purpose of the DTTs 6 15 www.tfra.pt

A. INCOME OBTAINED IN PORTUGAL Taxation at a 20% flat rate, on income deriving from the following activities: Architecture, engineering or geology; Theater, ballet, cinema, radio and television, singing, sculpture, music, painting; Auditing and tax consultancy; Medicine and Dentistry; Teaching in Higher Education; Psychology; 7 15 www.tfra.pt

A. INCOME OBTAINED IN PORTUGAL Taxation at a 20% flat rate, on income deriving from the following activities (continuation) Archeology, biology, liberal professions, technical professions in general, and other similar professions in computer science, information services, news agency, scientific research and development; Design; Management and administration of companies promoting productive investment, if related to electable projects with agreements granting tax benefits under the Investments taxation Code, and Performance of senior roles in companies. 8 15 www.tfra.pt

A. INCOME OBTAINED IN PORTUGAL (continues) When none of the above activities corresponds to the activity undertaken, the Portuguese general scheme for residents is applicable: Maximum rate of 54,5% for higher income amounts; Withholding tax at 28% rate of : Interest Dividends Capital gains Income from immovable property 9 15 www.tfra.pt

B. INCOME OBTAINED OUT OF PORTUGAL Interest Dividends Capital gains Income from immovable property Business income Employment income Exempt from taxation whenever: a) Income may be taxed in the source state, under a Double Taxation Agreement entered into by Portugal and the source state, or 10 15 www.tfra.pt

B. INCOME OBTAINED OUT OF PORTUGAL (continues) Exempt from taxation whenever (continues): b) Income may be taxed in the source state, according to the OECD Model Tax Convention (excluding blacklisted jurisdictions) which therefore includes cases where no Double Taxation Agreement was entered into. Employment income Exempt from taxation whenever: a) Income is taxed in the source state, according to the Double Taxation Agreement entered into between Portugal and the source state; or 11 15 www.tfra.pt

B. INCOME OBTAINED OUT OF PORTUGAL (continues) Employment income Exempt from taxation whenever: b) Income is taxed in the source state, whenever this income may not be deemed obtained in Portugal, under article no. 18. of the Personal Income Tax Code, if a Double Taxation Agreement is not into force between Portugal and the source state. Pension income Exempt from taxation whenever: a) Income is taxed in the source state, according to the Double Taxation Agreement entered into between Portugal and the source state; or 12 15 www.tfra.pt

B. INCOME OBTAINED OUT OF PORTUGAL (continues) Pension income Exempt from taxation whenever: a) Income may not be deemed as obtained in Portugal, under article no. 18. of the Personal Income Tax Code. 13 15 www.tfra.pt

V. CONCLUSION B. INCOME OBTAINED OUT OF PORTUGAL (continues) Tax rules for non-habitual residents is extremely attractive, has proven a success, especially in the French and Scandinavian markets. It is not a remittance scheme as the English or the Sweden schemes, but it consists in several tax benefits for these residents. Specialized monitoring and a case-by-case analysis are necessary to ensure these benefits are enhanced. 14 15 www.tfra.pt

LISBON FUNCHAL LUANDA MAPUTO LAWFIRM@TFRA.PT WWW.TFRA.PT