Spain’s "Beckham Law" tax surprise raises alarm bells for NHR tax holders in Portugal

Recent reports from Spain have highlighted a troubling reality for many foreign residents who moved to the country under the "Beckham Law", presenting a timely reminder for Portugal's Non-Habitual Resident (NHR) tax holders.

A special Spanish tax regime that allows qualifying foreign professionals to pay a flat income tax rate of 24% on Spanish-sourced income for a maximum of six years, “Beckham Law” was named after former Manchester United and England footballer David Beckham, who was one of the first high-profile users of the regime.

Unfortunately for Jude Bellingham and Co., the tax regime now excludes professional athletes in most cases.

Despite receiving formal approval and following professional advice, many expats later found themselves pursued by the Spanish tax authority for large back taxes, penalties, and interest. The shock has been profound for those who genuinely believed they were compliant.

Although Portugal is not Spain and the systems are not the same, the principle is clear: preferential tax regimes have time limits and failing to plan before those limits expire can lead to expensive consequences.

Portugal’s Non-Habitual Resident (NHR) tax regime, introduced in 2009, has been one of Europe’s most attractive frameworks providing up to 10 years of favourable tax treatment.  

But year 10 is not simply a date in the distance; it is a transition point. And what happens after NHR ends can materially change an individual’s exposure to Portuguese tax.

This sees NHR tax holders being exposed to the standard Portuguese tax rates, which range from 28% to as high 48%.

According to the Wealthy Expats in Portugal Survey Report, only 27% of NHR tax holders have taken any early action in years 1 to 6 to mitigate future tax burdens.

“NHR was always intended to be a temporary incentive, not a permanent status,” says Paul Stannard, Chairman and Founder of Portugal Pathways. “The expats who face problems are the ones who wait until the end and don’t seek early advice now.”

For many NHR tax holders, one of the most effective ways to prepare for life after the regime ends is to restructure how income and assets are held. One solution used across Europe is the Portuguese-compliant life insurance/investment bond structure.

These policies allow assets to grow tax-deferred while providing flexibility on how and when income is taken. Instead of being taxed annually on investment gains or worldwide income, withdrawals can be structured so that only the growth element is taxable, often at significantly lower effective rates.

For those with pensions, investment portfolios, business proceeds, or trust assets, this type of structure can substantially reduce tax exposure in Portugal while maintaining control and access to capital.

The Spanish cases show how complex cross-border tax positions can become if not proactively managed. Similarly, NHR tax status holders in Portugal can find themselves in the same situation if they don’t seek expert advice early, long before their tax status expires.

Portugal Pathways works alongside leading tax and legal advisers to support individuals in securing long-term clarity and peace of mind while reducing unnecessary future tax burden.

Contact Portugal Pathways today to plan early for the end of your NHR tax status.

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About Portugal Pathways

‍‍Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on estate planning, wealth management, Golden Visa and tax optimisation, including post-NHR / IFICI tax regime planning, as well as private healthcare, money transfers and bespoke relocation and luxury real estate solutions to enhance life and investment in Portugal

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Disclaimer: The information on the Portugal Pathways and Portugal Investment Owners Club (P Club for short) websites and in email communications is for general informational purposes only and should not be construed as legal, tax, or financial advice. You should consult and check with a qualified professional advisor before relying on any information provided on this website or in email communications. As it relates to investments in Golden Visas or other wealth management solutions offered by regulated and professional advisors, it is important to note that past performance is no guarantee of future returns. Private equities can be highly illiquid and come with risk and should always be under professional independent advice. Golden Visa investments need to be held for 6 to 7 years to allow for permanent citizenship/passport in the EU.

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