One of the principal reasons non-European citizens are looking harder at Portugal as a retirement destination is the recent introduction of legislation that eliminates local taxes on foreign pensions and other retirement income.
Under Portugal’s new Non-Habitual Resident (NHR) regime, anyone who has not been resident in Portugal for the previous five tax years is entitled to receive pensions and foreign-source income free from local taxes 10 years if the applicant’s home country has a double-taxation treaty with Portugal (the United States, Canada and the United Kingdom all have such treaties in place).
Registering for the NHR is as simple as signing up with a local tax office once you have acquired the regular residence permits.
To qualify for the NHR regime, an individual must reside in Portugal 183 calendar days, either consecutive or not, in the year of application and subsequent years. Applicants must also, by December 31st of the year they apply, have a permanent residence in Portugal and demonstrate the intention of using it as their primary home.
You can download an info eBook from the Portuguese Receiver of Revenue (Finanças) about the NHR in English, just click here.