The importance of early planning for NHR tax holders

Wealthy expats benefiting from Portugal’s Non-Habitual Residency (NHR) tax regime are increasingly reviewing how their tax position may change once the 10-year incentive period comes to an end.

While the NHR regime has historically offered favourable tax treatment for certain types of income, outcomes after the 10-year period depend on individual circumstances, income sources, asset structures, and the law in force at the relevant time. As a result, some expats may be unaware of how their position could evolve if limited planning or review takes place during the NHR period.

Introduced to attract internationally mobile individuals to Portugal, the NHR regime was always designed as a time-limited framework. As more NHR holders approach the later years of their status, questions are increasingly arising around how the transition to Portugal’s standard tax framework may affect them.

In some cases, expats who have not reviewed their position ahead of time have experienced outcomes that differed from their expectations once NHR ended. A widely referenced example involved a Swedish couple whose tax position changed materially after their 10-year period expired, highlighting the importance of understanding how post-NHR rules apply in practice.

According to Steve Philp, Director at Portugal Pathways, this reflects a broader misconception among some expats that the benefits of NHR continue indefinitely.

“Everyone’s circumstances are different, and there is no single outcome,” Philp noted. “However, understanding that NHR is time-limited — and reviewing how the post-NHR framework works at an appropriate stage — can help individuals make informed decisions rather than being surprised later on.”

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To learn more and to arrange a discovery call with an advisor, contact Portugal Pathways here.

A recent survey suggests that many NHR tax holders have not yet reviewed how their tax position may change once their NHR status comes to an end. As the transition to Portugal’s standard tax framework approaches, outcomes can vary significantly depending on individual circumstances, income sources, asset structures, and the law in force at the relevant time.

Early engagement with qualified cross-border professionals can help individuals better understand the considerations that may be relevant to them and assess which planning options, if any, are appropriate in their situation. These discussions often focus on reviewing income and asset structures, understanding how different types of income are treated, and identifying potential inefficiencies or areas requiring further clarification.

Any planning steps should always be based on independent professional advice. While approaches differ from person to person, starting these conversations earlier in the NHR period generally provides more time to explore options and avoid uncertainty as the end of NHR approaches.

UK expat Peter Marshall shared his experience of navigating the NHR regime:

“I didn’t fully appreciate how my tax position might change after NHR until I began reviewing it more closely. Portugal Pathways introduced me to cross-border professionals who helped me understand the issues involved and plan for the transition. While my tax position will change after NHR, having clarity early has given me confidence about remaining in Portugal.”

Individual circumstances vary. This testimonial reflects one person’s experience and is not indicative of typical outcomes.

Portugal Pathways supports expats by providing information and facilitating introductions to appropriately qualified and regulated professionals. Through an initial, no-obligation discovery conversation, individuals can gain a clearer understanding of their position and determine whether further professional advice may be appropriate.

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To learn more and to arrange a discovery call with an advisor, contact Portugal Pathways here.

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Disclaimer: Information on the Portugal Pathways website and in email communications is for general information only and does not constitute legal, tax, financial, or investment advice. Tax treatment, investment outcomes, and residency requirements depend on individual circumstances and applicable law and are not guaranteed. Professional independent advice should always be obtained before taking action.