Portugal: End of the regime for non-habitual residents

published on 13 October 2023 | reading time approx. 1 minute

The Portuguese government has stated its intention to end the tax regime for Non-Habitual Residents (NHR) at the beginning of 2024. The NHR is one of the most sought-after benefits for those who intend to live or return to live in Portugal.

Created in 2009, it is a special tax regime that offers a reduction in Personal Income Tax (IRS) for 10 years to new foreign residents (of any nationality) and to Portuguese citizens who have emigrated for more than 5 years.

To benefit from this more favorable tax regime, the non-habitual resident must:

Exercise a professional activity considered to have "high added value"; or
Be a pensioner.

The main tax benefits of this regime are as follows:

Application of a flat rate of IRS of only 20 percent on income earned from "high added value" activities; and
The application of a flat rate of IRS of just 10 percent on pensions earned.

According to the government's proposal, those who already benefit from this more favorable tax regime will be able to continue benefiting until the end of the program's 10 years.

Anyone who already meets the requirements to benefit from this status (i.e. has not been a tax resident in Portugal for the last 5 years) and wants to register for this tax regime, will still be able to do so until the end of 2023, benefiting for 10 years, from lower IRS flat rates, both for income from high value-added activities and for pensions.

If you would like to know more about how to register or what the tax implications might be for you, our Tax team can assist you in this process.