Portugal NHR tax changes – Introduction
Portugal, known for its stunning landscapes and welcoming atmosphere, has been a magnet for foreign individuals seeking a new place to call home.
However, amongst the many attractions, the Non-Habitual Resident (NHR) regime has stood out for several several years as an area of outstanding financial beauty.
I set out some of the attractions in an article a couple of years ago called Portugal the man?
Lisbon, we have a problem…
However, as Portugal grapples with rising home prices and a housing shortage, Prime Minister Antonio Costa recently dropped a fiscal bombshell. The NHR regime, in its current form, will be discontinued for new residents starting in 2024.
While this change might prompt individuals to rethink their plans, those already benefiting from the regime can breathe easy – the favorable tax treatment will continue for them.
But what’s the story behind these changes, and what options lie ahead?
The reasons behind the decision
In a candid interview with CNN Portugal, Prime Minister Costa explained that it no longer made sense to maintain a special tax level for non-habitual residents.
While the regime was initially introduced to attract foreign talent and investment, the Prime Minister believes that continuing it would only perpetuate tax injustice and further inflate the already overheated housing market.
Costa’s emphasis on addressing the housing price surge reflects a commitment to the well-being of both residents and the broader economy.
Rising interest rates, combined with incentives like the golden visa program, attracted property buyers from across the globe, creating an unsustainable housing market.
The impact of this decision
The NHR regime made Portugal an attractive destination, especially for retirees and expatriates keen on optimising their financial positions.
However, the NHR door is about to slam shut.
Firstly, for those considering a move to Portugal, time is of the essence.
If you expedite your relocation before December 31, 2023, then you may still secure the favourable tax treatment.
However, for those who can’t manage to do this, Portugal is not the only player in expat town.
Several alternative jurisdictions beckon with favorable tax regimes for the internationally mobile, well-healed.
Countries like Switzerland, Spain, Italy, and Greece offer expatriates enticing tax regimes.
Additionally, nations like the UAE, Bulgaria and Romania boast lower income tax rates more generally.
If you have been affected by this announcement regarding Portugal NHR tax changes, or are generally thinking of leaving for different shores, and would like to consider your position, then please let me know.