Is the Non-Habitual Resident (NHR) tax regime coming to an end?

The Portugal’s Non-Habitual Resident (NHR) tax regime establishes, under certain conditions, IRS exemptions on some types of foreign sourced income, as well as a limited 20% taxation of income in relation to employment and self-employment income, in both cases, if derived from high value-added activities, according to a list published by the Portuguese Government.

On October 2nd, the Prime Minister made a significant announcement regarding the NHR. There are plans to terminate this tax scheme in 2024. While specific details are currently limited, we know that the comprehensive changes are expected to be unveiled in the State Budget for 2024, which will be released in the upcoming weeks.

For anyone contemplating applying for the NHR scheme and in the process of relocating to Portugal, we strongly recommend taking swift action. Ensure that you come and update your tax status as soon as possible and submit your NHR application before the year’s end to secure the tax benefits for a period of 10 years (even though, right now we aren’t sure if the end date would be on the end of the year or, at the normal due date, 31 of March of, in this case, 2024).

While EU citizens can expect a smoother immigration process, it is important to be aware that non-EU citizens will need to initiate the Immigration process to register as Tax Residents in Portugal and apply for the NHR tax regime. Therefore, meticulous immigration planning with proper advisory becomes paramount.

Almeida, Dias & Associados offers several services for clients wishing to become residents in Portugal, which may require contacts with the Tax Authority, Parishes and City Halls, the Foreigners and Borders Office and the Social Security Institute.

For more information, please contact us by any of the available communication channels.

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the pontential end of the NHR