Portuguese IRS Reimbursement under the NHR Regime

Learn how remote workers under Portugal’s NHR regime can claim IRS reimbursements, including rental expense deductions, and what you need to know about taxes, VAT, and Social Security contributions.

Understanding IRS Reimbursements in Portugal

If you work remotely in Portugal under the Non-Habitual Resident (NHR) regime, understanding how IRS reimbursements work is key to optimizing your finances. An IRS reimbursement occurs when the tax you have already paid exceeds your actual tax liability for the year. The Portuguese Tax Authority calculates your refund after you submit your annual IRS declaration.

Rental Expenses and IRS Refunds

Rental expenses are among the deductions that may help increase your IRS reimbursement. In Portugal:

• Tenants can deduct 15% of their annual rent, up to a maximum limit.

• Remote workers under NHR may also include rental expenses in their IRS declaration to potentially increase their refund.

• If you do not have a business or freelance activity, you are not paying VAT or Social Security contributions.

Here’s an example:

Annual Rent Paid (€)	Deduction Rate	Deductible Amount (€)	Tax Rate (NHR)	Potential Refund (€)
12,000	15%	1,800	20%	360
18,000	15%	2,700	20%	540
24,000	15%	3,600	20%	720

Example assumes a 20% tax rate on regular income under NHR. The actual refund may vary depending on total income and other deductions.

Steps to Claim Your IRS Reimbursement

1. File Your IRS Declaration: Include all income and potential deductions, such as rental payments.

2. Submit Supporting Documents: Keep rental contracts and receipts for verification.

3. Monitor Tax Authority Response: The IRS calculates any overpayment and schedules reimbursement.

4. Receive Refund: Typically deposited directly into your registered IBAN within a few weeks.

   
   

Example Calculation

Suppose a remote worker under NHR earns €50,000 per year and pays €12,000 in rent:

Item	Amount (€)
Annual Income	50,000
Rental Deduction (15%)	1,800
Taxable Income after Deduction	48,200
Tax Paid (pre-deduction)	10,000
Tax Liability (post-deduction)	9,640
Potential IRS Refund	360

This simplified example illustrates how rental deductions may reduce tax liability and generate a refund.

Why Professional Guidance Matters

Remote workers under NHR often face complexities regarding allowable deductions and reimbursements. Working with a professional tax consultant ensures that:

• All eligible expenses, including rent, are included.

• You comply with NHR rules and avoid overpayment.

• Refunds are maximized wherever possible.

At INLIS Consulting, we help remote workers navigate these rules and optimize IRS reimbursements while ensuring compliance with Portuguese tax law.

Final Thoughts

Even under the NHR regime, careful planning and accurate filing can help remote workers recover a portion of their tax payments through IRS reimbursements. Including rental expenses is a simple yet effective step to potentially increase your refund.

For personalized guidance and assistance with IRS filings, contact INLIS Consulting to ensure your tax matters are handled efficiently.