Tax Benefits in Portugal: Your Guide to NHR Program Alterations

14 Dec 2023

Introduction

Portugal's Non-Habitual Residency (NHR) program has long been the country’s main draw for individuals seeking favourable tax conditions. However, recent updates to this popular scheme have brought about significant changes in tax residency requirements and benefits. In this blog post, we'll break down the implications of Portugal's NHR program updates, exploring fiscal policy changes, tax incentives, and alterations to the Golden Visa scheme.

Understanding Portugal's NHR Program

The Non-Habitual Residents (NHR) program is designed to attract new residents to Portugal and has been a key aspect of the country’s efforts to boost its economy. Individuals who qualify for NHR status enjoy financial efficiency, with incentives such as reduced income tax for 10 years and tax exemptions on global income.

Tax Residency Changes and the Closure of the NHR Program

There has been a lot of uncertainty surrounding the future of the NHR Program this year, with Portugal's Socialist government recently altering its proposals on key aspects of the 2024 State Budget. The NHR tax program, originally set to end next year, has received an extension through 2024, with a transitional agreement reached for individuals intending to relocate to Portugal in 2023. As part of the temporary scheme, individuals from any country can benefit from NHR advantages until December 31st 2024, as long as they demonstrate plans to move to Portugal in 2023. These plans could include the purchase of property, enrolment in schools or applying for residency.

Immigration Incentives and Golden Visa Alterations

The significant fiscal updates also bring changes to immigration incentives, affecting the popular Golden Visa scheme. Earlier this quarter, President Marcelo Rebelo de Sousa approved the "More Housing" bill, meaning that securing residency through real estate investments of more than €280,000 is now abolished. Moving forward, investors may only secure residency through the Residency by Investment scheme, and must meet strict criteria. This includes creating ten jobs, transferring capital to research activities, or supporting cultural heritage. These recent legislative changes also mark the end of residency through real estate investment and the transfer of €1.5 million or more into a Portuguese bank account. 

Maximising Tax Benefits in Portugal

Amidst these updates, it is important to note that the appeal of Portugal's tax benefits still endures and the country remains an attractive destination for those seeking favourable tax conditions. To maximise financial efficiency, individuals must stay up to date with the ever changing fiscal picture in the country. It is recommended that residency-seekers request expert guidance to make well-informed decisions.

Conclusion

In conclusion, staying up to date with Portugal's NHR and Golden Visa changes is essential for anyone contemplating tax residency in the country. By understanding the changes in residency criteria, fiscal policies and immigration incentives, individuals can make informed decisions to maximise the benefits still available in Portugal. 

If you require expert guidance in navigating Portugal's tax updates, the team at Portutax are here to help. Get in touch via email at accounts@portutax.com or phone at +351 289 463271. 

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