The relocation process involves many aspects, including family aspects, legal aspects and economic aspects. Alongside these aspects, there are taxation aspects of relocation to Portugal that must be considered before leaving Israel. The need to examine the residency of individuals in the process of relocation or immigration to a foreign country is very significant for Israeli residents residing abroad, due to the accompanying tax implications. Seeking tax advice from a tax expert in order to arrange the reporting and payment of tax in Israel is mandatory. One of the main aspects that there is To examine when considering relocation or return from it is the tax aspect, and in particular – the manner of reporting to the Tax Authority on fruitful income generated during the stay abroad or income accrued from capital assets acquired during the stay abroad while avoiding accidents, double taxation and double payment of National Insurance. During the stay abroad, the individual generally has three main alternatives for dealing with the Israel Tax Authority: https://www.bshcpa.co.il/

1. The relocation process involves many aspects, including
family aspects, legal aspects and economic aspects.
Alongside these aspects, there are taxation aspects of
relocation to Portugal that must be considered before
leaving Israel. The need to examine the residency of
individuals in the process of relocation or immigration to
a foreign country is very significant for Israeli residents
residing abroad, due to the accompanying tax
implications. Seeking tax advice from a tax expert in
order to arrange the reporting and payment of tax in
Israel is mandatory. One of the main aspects that there is
To examine when considering relocation or return from
it is the tax aspect, and in particular – the manner of
reporting to the Tax Authority on fruitful income
generated during the stay abroad or income accrued
from capital assets acquired during the stay abroad
while avoiding accidents, double taxation and double
payment of National Insurance. During the stay abroad,
the individual generally has three main alternatives for
dealing with the Israel Tax Authority:
1. Filing tax returns in Israel as an Israeli resident,
reporting and paying tax on worldwide income
(including National Insurance contributions) less
certain expenses (rent, car, flights and other
expenses) in accordance with the Income Tax
Regulation or in accordance with income tax rules
(when an Israeli employee is sent to work abroad
for an Israeli employer) and allowing tax credits
paid abroad.
2. Severance of tax residency according to Israeli law
and at the same time failure to report in Israel the
income originating outside of Israel after the date of
departure (paying attention to the requirement to

2. submit a specification report inaccordance with
Amendment 223).
3. Severance of residency is subject to the provisions
of the tax treaty signed with the destination
country.
The Taxation System in Israel
According to the taxation system in Israel, Israeli
residents are obligated to report all their income,
whether produced in Israel or abroad, and to pay the tax
in Israel for them. This means that an Israeli resident
who has relocated abroad will be considered an Israeli
resident for tax purposes as long as he has not reported
the date of severance of his tax residency to the Israel
Tax Authority. As an Israeli resident, he will be required
to report his income (including income from abroad) and
tax supplementation in the State of Israel. In addition, he
will be entitled to deduct various deductions from his
taxable income according to the provisions of the
regulations for deduction of certain expenses mentioned
below and to claim the tax paid abroad as a credit from
the tax liability in Israel. On the other hand, as a foreign
resident, he may enjoy an exemption from reporting
income from work generated abroad to the Israel Tax
Authority. There are many taxation issues regarding the
conduct of the relocation and his family members vis-à-
vis the tax authorities, The main one is the obligation to
report and pay tax on income generated abroad, and if
there is one, to which tax authority it is required to
report first. Whether to the foreign tax authority or in
Israel or both, and whether there may be a double tax
problem. We will expand on this in the article below.

3. Taxation of employee income in partial relocation
to Portugal
When it comes to moving abroad for a fixed period, the
individual usually retains his status as an "Israeli
resident" for tax purposes. The residency examination is
carried out according to the internal laws of each of the
countries, and in the event that the individual is
considered a resident for tax purposes in both countries,
the residency status will be determined in accordance
with the provisions of the bilateral tax treaty signed
between the countries. As stated, the taxation system in
Israel is personal. In this method of taxation, Every
Israeli resident is obligated to report his income,
whether produced in Israel or abroad. Failure to report
income from abroad to the Tax Authority may lead to
criminal proceedings. Since this is an Israeli resident,
these income will be subject to the regular tax rates
applicable to an individual resident of Israel.
When the stay abroad is temporary, the initial right of
taxation on the income from salary received from the
foreign local employer will usually be to the foreign tax
authority and Israel will have the right of residual
taxation. Since we are dealing with an Israeli resident
who generated income from wages under a foreign
employer, the income will be subject to the regular tax
rates applicable to an individual resident of Israel and in
calculating the tax on taxable income, the taxpayer is
entitled to receive tax credit points from Israel,
Deduction of expenses of stay abroad and credit for the
tax to be paid in Portugal, thus solving the problem of
double taxation. Even if you received the tax relief
according to the NHR track in Portugal, but you are still
defined as a tax resident in Israel, then you are required

4. to complete the tax in Israel. After completing the
process of full disconnection of residency from Israel, it
will be possible to exit the Israeli tax network and save
the completion of the Israeli tax and thus benefit from
the special tax regime in Portugal. When no social
insurance treaty is signed between the countries, there is
exposure to double payment of social security. In Israel,
You will be required to pay a 12% fee on wage income
generated in Portugal.
Taxation of employee income in full relocation or
immigration to Portugal (severance of residency)
The work plan vis-à-vis the Tax Authority depends to a
large extent on the subjective intentions of the
relocation. If a decision has been made to relocate the
center of life for a number of long years or to emigrate
abroad, it is necessary to begin preparation for severing
residency from Israel for both tax and national
insurance purposes, otherwise there may be exposure to
income tax supplementation and double payment of
National Insurance contributions. Staying abroad for
more than 183 days constitutes a presumption in Israeli
law for severing tax residency, But it is not enough to
complete the disconnection process.When a taxpayer
decides to sever residency from Israel, he is ostensibly
exempt from income tax on his income from abroad from
the date of severance of residency, but the Tax Authority
does not easily recognize immediate severance, and
therefore the Income Tax Ordinance was amended,
which establishes, retroactively from the 2016 tax year,
an expanded reporting obligation on individuals who go
abroad for relocation. (Learn more). Until Amendment
223 to the Income Tax Ordinance, individuals who left
Israel could take the position of not reporting the date of

5. departure from Israel to the tax authorities and postpone
the process until returning to Israel. The change
following the amendment raises the issue of residency
even in the years following departure and requires
Israeli residents to provide information to the tax
authorities every year.
It should be noted that the interpretation of the term
"resident" – and especially the date of termination of
residency – is controversial in most cases, including in
cases of relocation. The Tax Authority's position, which is
backed by the ruling, is that this is a process of severing
residency, and only in clear cases will leaving Israel be
considered an immediate severance of residency after
moving abroad. Severance as stated in "day one" may
also be pursuant to Amendment 168 to the Income Tax
Ordinance (New Version), 5721-1961 (hereinafter: the
"Ordinance"), in which the question of severing an
individual's residency and determining the date of his
becoming a "foreign resident" was examined. According
to this amendment, the date of departure will be
assessed according to the day on which the individual
ceases to be an Israeli resident, based on the definition of
"foreign resident" in the Ordinance. If two conditions are
met cumulatively – staying outside of Israel for at least
183 days a year in the tax year under consideration and
the one thereafter, If the center of his life is determined
outside of Israel in the two tax years following the
aforementioned tax years – the individual will be
considered a "foreign resident" from the day he left
Israel (or continued to reside outside it), in the first tax
year in which he resided outside of Israel for more than
183 days as stated. It is important to remember that
beyond "tax residency" status in the foreign country, it
may remove you from the Israeli tax network, but this

6. status will require you to pay tax abroad on your
worldwide income.
Taxation of individuals in Portugal
Residents of Portugal for tax purposes are taxed on their
income worldwide at progressive rates ranging from
14.5% to 48% (in 2023). Non-residents are subject to
income tax only on income of Portuguese origin, which
includes not only the portion of remuneration that can
be allocated to an activity carried out in Portugal, but
also remuneration received from a Portuguese company
or permanent establishment (PE).Nonresidents, on the
Who is considered a resident of Portugal for tax
purposes?
An Israeli who relocates to Portugal and lives there for a
period exceeding 183 days during a period of 12 months
will be considered a tax resident in Portugal and will be
liable to tax there on all his profits worldwide, including
from Israel – subject to a special exemption granted by
Portuguese law regarding new immigrants to Portugal as
stated above. According to the Portuguese tax law in
force from January 2015, an individual is considered a
resident of Portugal for tax purposes if he meets one of
the following conditions:
1. Resides for more than 183 days, consecutive or not,
in Portugal in any 12-month period beginning or
ending in the relevant financial year.
2. He stays less than 183 days in Portugal, but
maintains a residence in Portugal during each day
of the period mentioned above.
As a rule, the taxpayer will become a resident of Portugal
from the first day of his stay in Portuguese territory until

7. his last day of stay in Portugal, with a few exceptions. If
the individual is classified as a tax resident in Portugal,
he will be taxed in the country on all his income, both in
Portugal and outside Portugal – all unless there is a tax
exemption as part of the exemption granted to new
immigrants in the NHR track.If the individual is classified
as a foreign resident (and not as a resident of Portugal),
he will be taxable only on his profits produced in
Portugal.
What is a Non-Habitual Residents tax regime?
NHR)
It appears that the Portuguese government is
considering not extending tax benefits for immigrants
starting in 2024. However, it appears that the legislative
change will only apply to immigrants starting in 2024.
Over the past few weeks, there has been widespread
debate over the proposal to end the tax regime for non-
ordinary residents ("NHR") set out in the proposed
budget bill for 2024. Apparently, the NHRas we've
known it for several years is indeed going to end on
December 31, 2023, With a new regime that erases most
of its benefits (except those related to pension income)
from January 1, 2024 ("NHR 2.0"), but to a different
extent intended for different beneficiaries. Beneficiaries
should, among other things, be employed in start-ups,
companies engaged in research and development or be
engaged in certification of jobs recognized by the
Portuguese government.For the avoidance of doubt,
current NHR beneficiariesand taxpayers, who on
December 31, 2023, are registered as NHR, will be able
to benefit from the regime until the end of the 10-year
period.

8. In general, residents who fall under the
aforementioned tax regime are taxed at a flat rate of
20% on income from work (category A) and income
from independent business (category B) generated
within the borders of Portugal and deriving from
activities of high value to the Portuguese economy
(engineering, technology, science, art, medicine, etc.)
instead of the progressive tax rates listed above. The tax
regime may not benefit low-income earners in the first
tax bracket who are entitled to choose to tax on income
at a rate of 14.5%. The tax regime grants tax exemption
applies to passive income from an external source (e.g.
income from property, interest and dividends), provided
that certain conditions are met. Please note that although
the tax regime grants an exemption on passive income in
the country of residence, it is possible that you will be
taxed in the country of origin.
In most cases, capital gains from the sale of securities are
taxable at a flat rate of 28%. In addition, a uniform tax
rate of 10% applies to pensions of foreign origin as well
as other payments from pension funds and similar
retirement plans. This regimen can be enjoyed during a
period of 10 years. An application for anNHR tax regime
must be submitted online by March 31, of the year
following the year in which the taxpayer changes status
to a tax resident in Portugal. Also, A condition for
receiving tax benefits according to the NHR track is that
the individual owns a permanent residence in Portugal
(an apartment owned or rented by him) at the end of the
year in which eligibility for the special tax regime is
required.
It is important to remember that there are no issues for
tax breaks and exemptions granted under this tax

9. regime, as long as the individual is still defined as an
Israeli resident for tax purposes who is required to
report and pay the full tax required in Israel. If you want
to enjoy the tax benefits granted to new immigrants, it is
important to start preparing correctly forsevering
residency at the time when the decision to emigrate to
Portugal was formulated.
Social Security Contributions in Portugal
Payment of social security contributions on income from
wages – applies at the rate of 34.75% of wages
(consisting of an employee share of 11% and 23.75% is
imposed on the employer). These deposits cover family
benefits, pensions and unemployment benefits. In
addition to social security contributions at a general rate
of 23.75%, employers must buy an insurance premium
to cover work accidents. The premium varies depending
on the job and risk classification.
Digital Nomad Visa in Portugal
There are three categories of Portuguese visas:
 Portugal Temporary Stay Visas, also known as
Schengen Visas, are designed to stay in Portugal for
up to a maximum of 90 days in any 180-day period.
The visa can be obtained for tourism purposes,
family visits, business, temporary work, moving to
the airport or other stay in Portugal of a temporary
nature. Also suitable for digital nomads who wish to
stay in Portugal temporarily.
 Temporary residence visas for a period of more
than 90 days.
 Long-stay visas, designed for stays longer than one
year. This category includes several visas.

10. o D7 Passive Income Visa.The D7 visa is also
known as a pension or passive income visa but
is also suitable for barymouth workers and
digital nomads. This visa is ideal for retirees or
entrepreneurs who want to live in Portugal
without the need for a large financial
investment. The visa is available to those who
can provide proof of passive income such as:
real estate, retirement annuity, salary, etc.
o TheD2 entrepreneur visa is intended for
entrepreneurs, freelancers or self-employed
persons outside the EU, who wish to reside in
Portugal and establish a business or start-up in
Portugal or invest in a business in Portugal.
This visa is intended for small and medium-
sized businesses interested in raising foreign
investments for the development of the
Portuguese economy. To apply, you must
submit a business plan that reflects economic,
technological, and cultural return.
With the D7visa andthe D2 visa, you can benefit from the
incentives under the NHR and benefit from the
incentives of this fiscal regime as detailed above.
The purpose of obtaining tax advice in the process
of relocation to Portugal
The main purpose of tax advice is to examine the point in
time in the relocation process and to analyze the
residency status from the moment of departure from
Israel. The determination regarding the residency status
of the counseling applicants will have a significant
impact on the manner in which it is required to act vis-à-
vis the Tax Authority and report income from abroad.
After determining residency status, all recommended

11. reporting alternatives will be presented to the
counseling applicants, while examining the tax
considerations alongside the alternatives and the tax
exposures in respect thereof. A comprehensive
consultation will be held regarding taxation aspects,
including: Determination of residency status, The
obligation to submit tax returns and reports to the Israel
Tax Authority, the applicability of exit tax on the date of
departure, taxation of income from work (including
allocations of options and RSU's shares), social security
issues, tax review in the destination country, review of
the provisions of the tax treaty with the destination
country, instructions will be given and the way to
properly conduct vis-à-vis the authorities will be
outlined. If necessary, memoranda will be provided
regarding tax implications and exposures derived from
income generated in the target countries, and
calculations of income tax and National Insurance
expected for decision making will be made.
About Our Offices
Our firm has knowledge and 16 years of experience in
the field of international taxation, and in particular –
accompanying Israelis in the process of relocation or
immigration to Portugal. Our firm provides a basket of
solutions on all taxation and social security issues in the
process starting from the decision to leave Israel and
throughout the period of stay abroad. The firm's services
in the field of income tax and national insurance include,
inter alia, tax consulting for Israeli salaried employees in
relocation (under foreign employersor employers who
are residents of Israel), Advising Israeli residents with
investments abroad, accompanying business activities
abroad (self-employed abroad), academics abroad,

12. Israelis on sabbatical who generate income abroad
("Shabtunists"), submitting tax returns, writing
opinions and submitting pre-ruling requests on
complex issues, tax arrangements vis-à-vis the tax
authorities and National Insurance and
representation in discussions. Our firm has a long
list of successes in the field that have yielded the
firm's clients very substantial tax returns.
Our firm is experienced in taxing relocation of Israelis to
countries and cities throughout Europe (Rome/Milan,
Portugal, England, Ireland, Switzerland, Munich,
Amsterdam, Larnaca/Limassol, Romania, Bulgaria,
France, Spain, Greece, Ukraine, Czech Republic)
Relocation to countries in the Americas (New
York/New
Jersey/Minnesota/Florida/California ,Mexico,
Argentina, Toronto/Vancouver/Ottawa), Australia, New
Zealand, Eastern countries (Thailand, China, Singapore,
Japan, India) and African countries. Our firm has a long
list of successes in the field, which have yielded, among
other things, very substantial tax refunds to clients. The
firm was chosen as a leader in accompanying Israelis
who went abroad for the purpose of emigration and/or
relocation and providing solutions in the field of income
tax and national insurance. The writer is a CPA with
extensive knowledge in the field of taxation and lectures
in academic institutions in courses in the field of
international taxation and relocation in particular.
The aforesaid should not be construed as a
recommendation to perform actions and/or tax
advice and/or investment advice and/or advice of

13. any kind. The information presented in the article is
general information only and does not constitute a
legal opinion and/or a substitute for advice that
takes into account the data and special needs of each
person. The author and/or the accountant's
office bear no responsibility whatsoever towards
the readers, and they are required to obtain
professional advice before any action relying on the
aforesaid. Only the provisions of the law, case law or
the directives of the treating institution are binding
and determining. Anyone who makes any use of the
aforementioned information does so at his sole
discretion and responsibility. In any case where the
masculine is written, it also refers to the feminine,
and vice versa, unless explicitly stated otherwise.
https://www.bshcpa.co.il/