Portugal

Portugal has become one of the most attractive destinations for tech professionals with equity compensation, thanks to its Non-Habitual Resident (NHR) regime. This guide explains how your stock options and RSUs will be taxed.

The Non-Habitual Resident (NHR) Regime

The NHR regime offers significant tax benefits to individuals who become Portuguese tax residents and haven't been resident in the previous 5 years.

Key Benefits

• 20% flat rate on Portuguese-source employment income (vs. up to 48% standard)
• Potential exemption on foreign-source income if taxed at source
• Available for 10 years from registration
• No wealth tax
• Favorable treatment of pension income

How RSUs Are Taxed

Under NHR (Portuguese-Source)

If you work for a Portuguese company or the RSU income relates to work performed in Portugal:

Under NHR (Foreign-Source)

If the RSU income relates to work performed outside Portugal for a foreign employer:

• May be exempt if taxed in the source country
• Otherwise taxed at 20% flat rate
• Requires careful documentation of work location

Standard Rules (Non-NHR)

Stock Options Treatment

Incentive Plans

Portugal has favorable rules for approved stock option plans:

1. Taxation deferred until exercise or sale (depending on plan type)
2. 50% exclusion available for qualifying plans held 1+ year
3. Capital gains rate (28%) may apply to portion of gain

Exercise and Sale

ESPP Considerations

Employee Stock Purchase Plans are generally treated as employment income:

• Discount at purchase is taxable as employment income
• Subsequent gains taxed as capital gains (28%)
• No specific ESPP exemptions in Portuguese law

Social Security

Portuguese social security applies to employment income including RSU vesting:

• Employee contribution: 11%
• Employer contribution: 23.75%
• NHR status doesn't exempt you from social security

Note: EU social security coordination rules may apply if you're covered by another EU country's system.

Exit Tax Considerations

If you leave Portugal:

• No specific exit tax on unrealized gains
• Ensure vesting dates align with residency periods
• Document your departure date carefully

Planning Strategies

1. Time Your NHR Application

Apply for NHR before significant vesting events if you're newly relocating to Portugal.

2. Document Work Location

For NHR foreign-source exemption, maintain records of:

• Where work was performed
• Employment contract terms
• Tax paid in source country

3. Consider Stock Option Timing

If your company offers both RSUs and options:

• RSUs provide certainty but immediate taxation at vesting
• Options with 1+ year hold may qualify for 50% exclusion

Required Filings

Key Takeaways

1. NHR offers a 20% flat rate on Portuguese-source employment income for 10 years
2. Foreign-source RSU income may be exempt under NHR if taxed at source
3. Stock options may qualify for a 50% exclusion if held 1+ year
4. Capital gains are taxed at a flat 28%
5. Social security applies regardless of NHR status
6. Document work location carefully for NHR benefits