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Portugal NHR Dividends From Blacklisted Countries Taxed?

NOTE: The advice given on this page is for informational reasons only and should be checked with your qualified tax advisors, you should not rely on any information held herein for your personal tax status.


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We have been asked to qualify a common confusion for many about the NHR status with regards the use of offshore companies in tax havens and receiving dividends, at which rate would these be taxed for NHR. The question was: can one receive dividends from a company at the zero rate based in a tax haven such as Panama.


Top Accountants Misunderstand Portuguese Tax Code!


Unraveling obfuscated semantic statements made within the Portuguese Non Habitual Resident Tax Code…


When reading the PT tax code specifically for the NHR program, there are some common areas of the code that have resulted in some confusion among the professionals who purport to understand and advise on its practical usage and implementation. As such there are common cases where misinformation is leading to mistakes, which are resulting in huge and unnecessary tax liabilities, over payment of taxes and unwaranted professional fees. 


Are dividends from entities located in blacklisted tax havens tax exempt under the NHR Prgram? 


Confusion arrises from the following statement within the PT tax code:

As referenced here in English:


Income in category B (Self Employment), E (Capital Income), F (Real State Income) and G (Increase in Wealth) – Art 81, paragraph 5 of the CIRS Income in category B (Self Employment), obtained through high added value rendering of services of a scientific, artistic or technical nature, or from intellectual or industrial property, as well as, from providing information regarding an experiment carried out in the commercial, industrial or scientific areas, and those in category E, F and G, obtained abroad by non-regular residents, are exempt if alternatively:

a) They are taxed by the source State/nation, according to the convention to terminate double taxation entered into by Portugal and the source State; or 

b) They can be taxed in another country, in cases where the convention to terminate double taxation has not been held into under the terms defined by the OECD Model Tax Convention on Income and Capital, as long as it is not a territory subject to privileged tax systems (defined by Ordinance n. 292/2011, November 8) and, as long as the corresponding income, cannot be considered to have been obtained on Portuguese territory, as per Art. 18., n. 1 of the CIRS of the Personal Income Tax (IRS) Code.


Confusion arises when speaking to professionals within the sector whom practice international tax planning with regards the intent and meaning of the PT tax code, which can be somewhat ambigiuos and as such confusion has arisen in practice with advice being conflicting on major aspects of the code among all the top accountants and Lawyers in the field!

For example while interpreting the above statements there are two very conflicting points of view and opinions about subsequent tax liabilities that are commonly espoused by professionals within the field, these conflicting opinions believe that either:

1) that certain income (specifically dividends are being looked at in our example) derived from ALL countries deemed to be tax havens as listed on Portuguese tax haven blacklisted of over 80 countries (such as Panama) will be taxed at the higher rate of tax (35%) , OR 

2) that certain income (specifically dividends) derived from countries who are tax havens but whom have a double tax agreement with Portugal (such as Panama) are tax exempt (0%) under the NHR program.

As such we commonly get differing opinions when talking to top accountants and written on the websites from Deloitte, KPMG, PWC, and other specialists who claim to be authorities in international tax matters who work within the Portuguese NHR program etc. which differ from one another with regards the above two versions and interpretation of the code. 

For example, 


Blevins Franks

Blevins Franks Financial Management Limited is authorised and regulated by the Financial Conduct Authority in the UK, for the conduct of investment and pension business

Blevins Franks has been providing specialist, professional financial advice to British expatriates for decades, and has earned a reputation as the leading international tax and wealth management advisers to UK nationals living in Europe. We provide integrated tax, wealth management and estate planning services to private clients in Portugal and the UK.

We are a substantial, well established company, with 20 offices across six countries 


In their article regarding this specific matter they state:  


Non-Habitual Residence Scheme

We receive many enquiries from people who are attracted to move to Portugal because of its Non-Habitual Residents scheme. For those who are eligible, the scheme can provide substantial tax advantages for the first 10 years of tax residence, with tax exemptions applying to employment, pension and investment income if certain conditions are met.

With regards to overseas investment income, under the scheme dividends and interest are exempt from tax in Portugal, provided the income:

  1. may be taxed in the state of source under a double tax treaty, or
  2. may be taxed under the terms of the Organisation for Economic Cooperation and Development (OECD) Model Tax Convention and is not regarded as arising from a Portugal source.


It is important to note, however, that this excludes income generated in one of the blacklisted tax havens. Those applying for the Non-Habitual Residents scheme may need to review their investment holdings if they wish to receive the full tax benefits.


This is clearly stating their opinion, that blacklisted tax havens (there are over 80 blacklisted countries listed by PT finances) are NOT exempt from tax under the NHR regime and this opinion has also been shared directly to us by the top accountants at KPMG, Deloitte, PWC etc. 

HOWEVER, controversy and confusion arises over this aspect (among others) of the NHR Program and this opinion is NOT shared by everyone, nor does this opinion reflect what is logically stated on the tax code which we will get into shortly. 


Belion Partners

Belion Partners are a multidisciplinary team of highly qualified experienced professionals that assist individuals, families, businesses and institutions with investments and/or residence in Portugal, from the planning stage down to day-to-day operations, delivering to each of them the integrated solution that best solves a particular problem.


In their article regarding the specific matter of tax on dividends from offshore blacklisted countries, they state:  



Income derived from tax havens also deserves some consideration: if the tax haven has a double tax convention with Portugal, no restrictions apply; but if the tax haven is blacklisted and does not have such a convention, then some types of income derived thereof will be excluded from the tax exemptions enjoyed by an NHR

Income from tax havens Under the Portuguese personal income tax code, profits derived from eligible services, royalties or income from know-how, investment income, rental income and capital gains sourced from blacklisted tax havens that do not have a double tax convention with Portugal (see Appendix 2) are excluded from the special tax exemptions granted to the NHR. However, there are several so-called “tax havens” that are either white-listed (this is the case of all EU member states) or else have a convention with Portugal and are therefore especially white-listed for the purposes of the NHR regime (but beware of the anti-abuse clauses). The most obvious “offshore tax havens” that are white-listed for the purposes of the NHR regime are the following: 

Whitelisted tax havens with double tax agreements with Portugal:


These view points as written by Belion Partners (supporting a 0% rate) Vs Belvin Franks (supporting a 35% rate and shared by many ‘top’ international accountant firms) are at polar opposites in their understanding of the code and given they are both claiming to be highly respected experts in international tax planing, whomever you choose to advise you could either have disastrous effects on your wealth if they are wrong, and conversely increase your net worth by millions of Euros in some cases if you choose correctly and they are right. So which one did you choose and which of the two viewpoints does the PT tax department adhere to?  

The logical interpretation dictates that either (one or the other) of the two statements need to be true for dividends from the white listed countries who have double tax agreements with Portugal, to be tax exempt, not both of the statements; providing CFC rules are met along with other anti-abuse clauses!  Clearly logic gate classes explaining AND | OR | XOR | NOT | NAND | NOR | XNOR, etc. were missed by many who attended International tax accountancy school and the (0% rate) should be applied to dividends derived from entities based in whitelisted tax havens whom have double tax agreements with Portugal.  

There are other qualifying aspects to consider, such as the Portuguese CFC rules (Introduced by Decree-Law no. 37/95, of 14 February) ( rules, but as long as the entity meets these rules and the entity does not trade in securities, banking, insurance, IP, rental of assets, (otherwise refereed to as passive business), nor trade with residents of Portugal, while it does conduct legitimate business and has “genuine economic activities” in the member state of the entity, then the said shareholder whom does not have direct control over the business decisions, should qualify for a tax exemption on dividends as a NHR of Portugal, however, be careful of the clause about undistributed profits!



Interested in applying for the NHR Program? See here for more details: Non Habitual Tax Resident Status in Portugal

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