If you’re considering a move to Portugal or are already a resident, you’ve likely heard of the Non-Habitual Resident Tax Scheme (NHR) and its enticing benefits. For years, it has been a magnet for those seeking favorable tax conditions in this European country. However, recent developments suggest that the NHR scheme might be on the brink of change.
As a result, individuals contemplating obtaining this status or planning a move to Portugal are urged to expedite their actions and ideally complete the process by December 31st.
Why is this significant?
Under the NHR scheme, qualifying individuals, particularly retirees and expatriates, have enjoyed a range of tax advantages. These include exemptions on foreign-sourced income and reduced tax rates on specific Portuguese income, making it an attractive option for those seeking to optimize their financial strategies while enjoying the Portuguese lifestyle.
Prime Minister’s Hint: The Potential End of NHR
On October 6, 2023, Portugal’s Prime Minister Antonio Costa hinted at the potential end of the NHR scheme during a CNN Portugal interview, raising questions about the future of this tax program suggesting it “may be phased out by 2024.”. While the NHR’s fate is still uncertain, understanding the potential changes and their implications is crucial for anyone planning to benefit from Portugal’s tax-friendly environment.
Key Insights from Portugal Pathways
Portugal Pathways, a renowned source of insights and expert advice for those impacted, offers critical information regarding the NHR scheme’s future:
- Is NHR Ending? The discontinuation of the NHR scheme is probable given the current political trend and the Prime Minister’s past decisions. However, a final decision awaits the conclusion of the legislative procedure.
- Timeline for NHR’s Conclusion: The NHR might not end immediately on January 1, 2024. A mid-to-late 2024 cessation is more likely, though an early 2024 discontinuation remains possible.
- Potential Modifications: The NHR might not vanish entirely. Past policy reversals, such as with the golden visa program, suggest potential modifications. The scheme’s focus on tax breaks for pension incomes may undergo changes to retain essential benefits.
- Current NHR Beneficiaries: Changes to the NHR may not impact current beneficiaries. Prime Minister Costa emphasized that existing statuses would be maintained.
- Legal Residents in Portugal: Legal residents without NHR status are advised to apply soon to safeguard against potential alterations.
- Non-Legal Residents: It’s crucial to hasten the legal residency process due to uncertainties.
Exclusive NHR Webinar:
Portugal Pathways is hosting a webinar on Tuesday, October 24, 2023, at 10:30 am (GMT+1) Lisbon & London time. This event presents an unparalleled opportunity to understand the evolving scenario of the NHR tax regime. Expert panelists will share insights from the ‘Wealthy Expats in Portugal Survey Report 2023,’ featuring perspectives of over 1,000 affluent expats.
Take Action with DBi:
For those considering the implications of these potential NHR changes and the impact on their financial strategies, Doing Business International (DBi) is here to provide guidance and expertise. Our experienced team can help navigate the evolving landscape and ensure your financial plans align with the latest developments. Contact us now at: firstname.lastname@example.org or fill in the contact form below.
*Insight knowledge provided by Mrs. Sofia – Partner Portugal DBi & Tax Specialist