Perhaps you’ve heard of the more well-known and well-adopted NHR program in Portugal. This post will focus on the NHR regime in Cape Verde or Cabo Verde in Africa.
To be specific, our discussion points include:
- NHR Meaning
- NHR Rules, Qualifications, and Application Process
- Non-Habitual Resident Tax Regime in Cape Verde
- NHR Portugal vs Cape Verde
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What is NHR?
The Non-Habitual Resident program in Cape Verde is a unique tax system intended to draw in foreigners, such as retirees, high-net-worth individuals, and digital nomads who have just made the move to the nation.
This scheme is an enticing alternative for people wishing to relocate, as qualifying persons can benefit from tax exemptions or reductions on various categories of income like potential tax-free status on overseas income.
Those who are interested must course their application via the proper government processes and provide the required paperwork to establish their eligibility.
Who can apply for NHR in Cape Verde?
Applicants usually have to meet certain residency requirements and provide proof of their recent relocation to Cape Verde in order to be eligible for NHR status.
In particular, those interested must not have lived in Cape Verde for the five years preceding their application for non habitual resident status.
How to file for NHR in Cape Verde
You can register as a non-habitual resident at a tax office till March 31 of the year after you become a Cape Verde resident.
Once you apply, the tax authorities will automatically verify whether you satisfied any requirements that would have qualified you as a resident for tax purposes for the five-year period. These requirements could include:
- being registered as a resident
- filing tax returns as a resident
- getting income from employment
- being eligible for tax exemptions while residing in Cape Verde
Non-Habitual Resident Tax Regime in Cape Verde
For the first ten years, you can enjoy a flat 10% tax rate on income earned from within Cape Verde as a Non-Habitual Resident, as opposed to the regular 34% rate.
Moreover, depending on double taxation arrangements between Cape Verde and other nations, you might also be subject to non habitual resident tax exemption.
Rental income, capital gains, revenue from intellectual property, and income from high-value services are all part of this levy break.
It’s crucial to remember that NHR designation is only good for 10 years in a row and cannot be extended.
NHR Portugal vs Cape Verde
By providing advantageous tax conditions, the NHR programs of Portugal and Cape Verde aim to draw in high-net-worth individuals and expats. Qualifying persons may be eligible for tax breaks or reductions on specific categories of income sourced overseas under both programs.
Applicants cannot have been tax residents of either country for the five years prior to applying for NHR status.
While Portugal previously gave a flat 20% tax rate on qualified income from Portuguese sources for a comparable period, Cape Verde offers a flat 10% income tax rate for the first ten years of NHR status.
Portugal has previously announced the termination of the scheme. Except for a few circumstances, the country was supposed to end its NHR program for new applicants from January 1, 2024.
Plans to end the NHR tax regime, however, have been put on hold as a result of the resignation of former Portuguese Prime Minister António Costa under a corruption probe. As such, it was anticipated that the NHR system will be around through at least year-end 2024.
Portugal’s new government reportedly eyes the reintroduction of the tax breaks under the so-called NHR 2.0 framework for skilled foreign residents.
For qualifying individuals, this effort will continue to offer a flat tax rate of 20% on salaries and professional income; affluent expat retirees and certain income categories, such as dividends and pensions, will not be eligible.
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