Supposedly with the Non-Habitual Resident status in Portugal you do not pay IRS for 10 years if your salary comes from a foreign company.
This is not true.
If we had known this, we probably would have looked for another country to have tax residency. That is, we would not be in Portugal.
In fact, as soon as we became residents and before opening the independent activity, we consulted an accountant who confirmed that “we wouldn’t pay taxes on that money for 10 years”.
Ideal, isn’t it?
The time came to make the tax return statement and we called Finanças so they would guide us to do it.
As you could see in a previous post, they gave us bad advice and we had to pay an accountant to fix the problem.
The accountant explained to us that even with the Non-Habitual Resident status we had to pay IRS because we were residing in Portuguese territory.
The only option not to pay IRS in Portugal was because of the agreement to avoid double taxation, but this is normal for any country since you are not going to pay taxes for the same income in two countries.
For the first fiscal year of independent activity Diego had to pay 10.2% and from the second year onwards he would start paying 20% + social security.
In other words, by living in Portuguese territory, Diego paid taxes like any Portuguese who registered an independent activity.
According to the calculations we had made, it might be advisable to pay taxes in Portugal only for the first year also because you don’t have to pay social security.
Diego asked his co-workers in Poland, and they paid only 12% IRS being residents.
In other words, Portugal was far from being the best place if you want to pay low taxes.
I believe that those people who say that they pay 0 taxes having their tax residence in Portugal are either lying or doing some kind of scam (which is super easy to do in Portugal).
Then if you read the documentation regarding the Non-Habitual Resident status, there are a lot of exceptions so depending on the activity and your profession it may not benefit you at all.
Compared to Spain, it is much cheaper to be self-employed in Portugal, but it still doesn’t make up for the hassle of coming to live in Portugal and buying a house here. Not to mention living at the mercy of criminals and swindlers.
What did this mean for us? That we had to look for a better place to be tax residents; if I already had in mind that the residency in Porto was going to be short-lived, after learning about the reality behind the non-habitual resident status, the desire to leave Portugal became more of a necessity.
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