Non-Habitual Resident Status (NHR)

The NHR Tax Regime is undergoing significant changes in the near future. The State Budget proposal presented by the Portuguese Government to the Parliament foresees the end of the special tax regime for Non-Habitual Residents (NHR) in 2024.

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However, the NHR regime will continue to apply to taxpayers who meet specific conditions:

– Individuals who are registered as non-habitual residents when this law takes effect (anticipated on January 1st, 2024) and continue to benefit from this status throughout the full ten-year period provided for in the regime.

– Individuals who fulfill the conditions for registration as non-habitual residents by December 31st, 2023, or who hold a valid residence visa on that date.

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Despite the upcoming changes, the NHR Tax Regime continues to offer several benefits, including:

* Exemption of amounts received for service provision from outside the country if they are taxed at source or in another country, applicable to technical, scientific, artistic, or industrial and intellectual property income.

* A 20% Personal Income Tax (IRS) rate on income generated from works in technical, scientific, or artistic areas, valid for 10 years.

* A fixed 10% tax rate on the value of pensions received from abroad for a 10-year period, regardless of their taxation status in the country of origin.

* Passive income, such as dividends, interest, rental income, and capital gains from securities sourced in Portugal, subject to a flat IRS rate of 28% under general terms.

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And the scheme can still be requested by:

* Foreigners or Portuguese who have not been tax residents in the country in the last 5 years and who want to transfer their residence to Portugal

* Persons who are tax residents in Portugal in the year they will apply for registration in the scheme. In this case it is necessary to have stayed in the country for 183 days or, if you have stayed less time, be able to prove a bond of residence.

* After registration, the scheme is applicable for a period of 10 years – valid from the year in which the registration was made as a resident in Portugal. After that time, it cannot be renewed.

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Individuals can still apply for NHR status if they become tax residents in Portugal until December 31st, 2023, before the changes come into effect. This provides a window of opportunity to benefit from the NHR Tax Regime before it concludes in 2024.