Guide to Incentivised Tax Status (ITS) in Portugal?

What is the Incentivised Tax Scheme (ITS)?

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The Incentivised Tax Scheme (ITS) program is a new potential tax regime proposed by the Portuguese government to replace the Non-Habitual Resident (NHR) tax regime. The new ITS tax program is designed to attract wishing to be tax qualified in Portugal.

The main potential benefits of the ITS program include:

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• A flat 20% tax rate on income from employment, and self-employment.
• A 50% tax exemption on professional income, up to a cap of €250,000, for a period of 5 years.
• Exemption from Portuguese wealth tax on assets located outside of Portugal.

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To be eligible for the ITS program, individuals must meet the following requirements:

• Be a tax resident of Portugal.
• Have not been a tax resident of Portugal in the previous five years.

The ITS program is still in the draft stage and is subject to change. However, it is expected to be implemented in 2024.

US citizens in particular are less likely to be affected by the move from NHR to ITS, but it always depends on peoples individual circumstances.

This does not constitute advice as it's just guidance notes from the draft bill from government about the changes. Any formal advice would require a qualified professional to be instructed to give tax advice. Talk to us about instructing one of our tax experts.

To learn more please contact one of our expert advisors...

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Disclaimer: The guidance above should not be fully relied upon and does not constitute formal instructed professional advice. In relation to tax advice in Portugal, please engage and instruct a regulated professional for all tax advice and structured financial planning. Please contact Portugal Pathways if you would like an introduction to one of our professional advisors.

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