Portugal's Government Backtracks on NHR

06 Dec 2023

According to the Portugal Resident Newspaper, Portugal's Socialist government has reversed its stance on two controversial parts of the 2024 State Budget. Here's a straightforward summary:

No Increase in Vehicle Tax: The government has decided not to raise the IUC vehicle circulation tax for vehicles made before 2007.

Extension of the NHR Tax Regime: The Non-Habitual Resident (NHR) tax regime, which was set to end, will continue through 2024. This extension includes a transitional arrangement for those planning to move to Portugal in 2023.

Criticism of the Government's Decision: The government's sudden change of direction has drawn criticism. Some accuse the ruling Socialist Party (PS) of making these reversals to win public favour before the early elections in March.

Independent Government Action: Despite the ongoing political crisis, the government still has a majority in parliament, which allows it to implement these changes to the state budget independently.

Details of the NHR Temporary Scheme: Under the new temporary scheme, individuals from any country can still benefit from the NHR regime until December 31, 2024. To qualify, they must show they were already planning to move to Portugal in 2023. This could be through evidence such as property purchases, applying for a residence visa, or enrolling children in Portuguese schools.

Creation of the Transitional Regime: This transitional regime for the NHR tax was introduced following an amendment to the State Budget for 2024, proposed by the Socialist Party in Parliament.

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