The Sunset of Portugal's NHR Regime
Recent announcements from the Prime Minister of Portugal have set the stage for the end of the Non-Habitual Resident (NHR) regime in 2024. This has sent ripples through the expatriate and business communities, as the NHR has been a cornerstone in attracting global talent and investment to Portugal. Here’s a quick rundown of what you should know.
What Is the NHR?
The NHR regime (a tax program ) was designed to make Portugal an attractive destination for professionals, retirees, and entrepreneurs by offering significant tax benefits (income tax) for foreigners and Portuguese citizens who were living abroad in the previous 5 years).
These benefits include a 20% flat rate of income tax for certain types of income (way lower than Portugal's 48% maximum regular personal tax rate), and tax exemptions or reductions on foreign income, such as pensions, dividends, interest, royalties and capital gains.
Why Is It Ending?
Though the Prime Minister didn't detail the reasons behind the phase-out, the regime has been under scrutiny for potentially contributing to income inequality, and increase the house crisis in Portugal.
What Does This Mean for Current NHR Holders?
Current NHR holders are safe, their benefit remain intact. The changes will only apply to the new ones, who haven't yet secured NHR status.
Next Steps
With the regime coming to an end, those considering a move to Portugal should act quickly. The application process can be lengthy as the rush before closing increases.
Even if you miss the NHR window, Portugal remains a country rich in opportunities and lifestyle benefits—but without the NHR, the financial equation will undoubtedly change.
In conclusion, the upcoming discontinuation of the NHR regime marks a significant change in Portugal’s approach to attracting foreign residents, following the end of the Golden Visa program.
While the precise impacts are still unclear, what is clear is that anyone considering benefiting from the NHR should move swiftly and judiciously.