In an interview with CNN Portugal on Monday evening, Portugal’s Prime Minister Antonio Costa said the Government planned to put an end to the country’s non-habitual resident (NHR) tax regime next year, as it has served its purpose and is now prejudicing the housing market.
It is unclear whether this will be fully or partially canceled or when the change will come into effect, but there is a chance that the measure will be approved within the State Budget 2024, soon to be brought for debate in Parliament.
Prime Minister Antonio Costa also stated that people who already have NHR status will keep it.
NHR offers tax benefits for 10 years for people relocating to Portugal, with income earned in Portugal for high-added-value activities being taxed at a flat rate of 20% and income sourced abroad being generally exempt, except for pensions, which are taxed at a flat rate of 10%.
So applicants who wish to still take advantage of this tax benefit should, if possible, register as tax residents in Portugal until December 31st and then apply for NHR status.
Naturally, tax residence is easily registered in Portugal once a foreign holds a residence card or certificate (in the case of EU/EEA nationals). However, in cases where a residence card has not yet been issued, and the person is already a resident in Portugal (depending on the specifics of the situation) there may be other ways to accomplish this, considering the law and what our practice has confirmed.
Want to apply to NHR status or know more about this topic? Our team at Lamares, Capela & Associados is ready to assist you. Contact us here.