What the potential end of Portugal's NHR tax scheme means for affluent expats

On October 3rd, during an interview with CNN Portugal, Prime Minister Antonio Costa alluded to the potential discontinuation of the Non-Habitual Residency (NHR) tax scheme. He mentioned that it "may be phased out by 2024."

This announcement holds significance for affluent expats and those eyeing Portugal as a future residence. Here's a detailed look into its implications:

Is the NHR tax scheme truly ending?

While the final verdict awaits the legislative procedure's conclusion, the current political environment and previous decisions from the Prime Minister suggest that the NHR scheme's discontinuation is on the horizon.

When will the NHR tax scheme conclude?

Even though the Prime Minister referred to "2024", this doesn't necessarily imply a halt right on January 1, 2024. Legislative processes often take time, and a conclusion around mid-to-late 2024 seems more probable. However, we shouldn't rule out the possibility of the program ending at the onset of 2024.

Will the NHR tax regime completely vanish?

Its future is not set in stone. Historical precedents, like the modifications to the golden visa program due to public outcry, indicate that the NHR might undergo changes rather than being completely eliminated. The primary focus appears to be on the tax exemptions for pension incomes. Potential impacts on attracting talent could lead to tweaks to maintain certain benefits.

Implications for current NHR status beneficiaries

Current beneficiaries may remain unaffected by any changes. Repealing the NHR tax regime would go against Portugal's constitutional principles. Prime Minister Costa has emphasised that existing beneficiaries would retain their status.

For legal residents in Portugal

If you currently have resident status but haven't secured NHR tax status, now might be a good time to apply to insulate against potential modifications. Our team of experts and professional partners in this field at Portugal Pathways can assist you.

For non-legal residents in Portugal

Given the emerging uncertainties, speeding up your legal residency application is advisable.

Contemplating a move to Portugal?

If you're thinking of relocating, acting sooner rather than later could enable you to avail of the NHR tax scheme's benefits. If you tend to procrastinate, now isn't the time. If you're set on relocating, be decisive.

Plan ahead for the NHR tax regime’s conclusion

Irrespective of the NHR's fate, Portugal Pathways remains at your disposal to assist you in refining your relocation or lifestyle strategy in Portugal. Ensure you seek expert advice early and apply before the potential 2024 deadline for new applications. This is equally vital for current NHR tax status holders, as planning now can help optimise their situation post-NHR.

Seeking clarity on your NHR tax status?

Should you have any uncertainties, please reach out to Portugal Pathways or subscribe to our NHR tax regime newsletter for regular updates on what’s going on. We're actively collaborating with top-tier professional entities. If you're currently reaping the NHR benefits, make certain you're well-prepared for any imminent shifts. And if you're evaluating a move to Portugal under a visa scheme, registering without delay is paramount.

Register for our NHR webinar

We invite you to our informative webinar on why affluent expats are vying for Portuguese residency and verifying their NHR tax status.

Scheduled for Tuesday, 24th October 2023 at 10:30 am (GMT+1) Lisbon & London time, this is a golden opportunity to gain first hand insights into the unfolding situation with Portugal's NHR tax policy ahead of its potential 2024 cessation.

Our expert panellists will furnish planning recommendations pre and post the NHR's conclusion and share insights from the forthcoming 'Wealthy Expats in Portugal Survey Report 2023.' This report, to be presented during the webinar, encapsulates conversations with over 1,000 prosperous expats residing in Portugal.

For more information you can check out our guides and FAQs section on the Portugal Pathways website.

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Disclaimer: The information on the Portugal Pathways website 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.

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