British nationals who were benefitting from the Non-Habitual Residency (NHR) scheme, will no longer be able to do so as policymakers have decided to postpone its closure by the end of 2024.
The NHR regime, which enables third-country nationals to obtain residency if they spend more than 183 days in the country throughout the year, was due to end on January 1, 2024. However, due to Portugal’s government collapsing earlier, as policymakers failed to come to terms regarding the next year’s budget, it was decided for the NHR regime to come to an end in December 2024, SchengenVisaInfo.com reports.
This scheme also includes a tax reduction of 20 per cent of income from high-value-added activities, which include professors, doctors, architects and other professions.
Overseas expats who move to Portugal also have a flat tax of ten per cent on pensions from a foreign source as well as a tax exemption on income that is generated outside the country, including rental payments from tenants if it is taxed in the country of origin.
Portuguese citizens who have lived abroad for more than five years are also eligible to benefit from the scheme.
However, to qualify for the expat tax extension, applicants must show evidence that they want to move to Portugal within this year, which can be done by signing an employment or housing contract.
The Socialist Party in Portugal had planned to terminate the scheme for new applicants as of January 1, 2024, describing it as a “fiscal injustice” and that it no longer made sense. The scheme was initially introduced as a recovery package due to the 2008 global financial crisis.
More than 70,000 people have benefited from the expat tax breaks scheme in the last decade, Portugal Pathways reveals.
Many had made huge investments of time and money into their planned move but had been thrown into uncertainty. This gives them confidence they can proceed as planned.
The state budget for 2024 includes reductions to income tax and targets a budget surplus of 0.2 per cent. Depending on the political stage developments, changes to the scheme can be made after the elections, which are scheduled to take place on March 10.
Recently, the Portuguese parliament agreed to make changes to the tax regime for non-habitual residents, making workers from companies that are certified as start-ups eligible to benefit from the NHR scheme.
In addition, researchers from qualified jobs within the scope of benefits that are considered product investments of the Investment Tax Code will also be eligible for the NHR scheme.