Portugal’s special tax regime for Non-Habitual Residents (NHRs) enables qualifying entrepreneurs, professionals, retirees and high net worth individuals to enjoy reduced rates of tax on Portuguese-source income, while most foreign-source income is exempt from Portuguese taxation, for a decade.
Portugal’s Non-Habitual Resident (NHR) tax regime provides several benefits to new tax residents. Introduced in 2009, NHR aims to attract retirees, investors, highly skilled professionals, and entrepreneurs to Portugal. This includes both foreign nationals and Portuguese citizens.
NHR lasts for a period of 10 years and cannot be extended or renewed. You can benefit from NHR for each year that you are a tax resident in Portugal.
Portuguese policymakers have agreed to change the tax regime for non-habitual residents, which enables only workers from companies certified as startups to be eligible for benefits from the NHR scheme.
According to local media, the NHR scheme is expected to come to an end as the State Budget Proposal for 2024 (OE2024) is under discussion. This scheme will now be accessible only to people with income from careers such as high education and scientific research, Almossafer.com reports.
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.
The measure, recommended in the state budget for the upcoming year, sparked criticism from some actors, especially inspectors who considered it ineffective. The same is expanded to include jobs that can benefit up to 20% at an IRS rate for a decade.
PCP and Bloco de Esquerda voted against the proposal, while PSD and Livre abstained.
The tax incentive for scientific research and innovation will be accessible to people who have not been residents in Portugal for at least five years and can become tax residents and get jobs in startups under the law.
Companies that have less than 250 workers are at issue since they have an annual turnover that does not exceed #50 million and have been operating for less than ten years. In addition, companies that have their headquarters in Portugal have less than 25 employees.
The tax scheme will also include “qualified jobs recognized by the Agency for Investment and Foreign Trade of Portugal or by IAPMEI, as relevant to the national economy, especially in the context of attracting productive investment.
The socialist proposal also includes extending the regime to the jobs and other activities carried out by tax residents in regions like the Azores and Madeira, as the regional legislative decree defines. The 20% rate applies to income in categories A and B.
Discussions and voting on the state budget for 2024 were concluded in November.
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