⚠️ November 7, 2023 update: Due to the surprise resignation of the Portuguese Prime Minister,
there’s decent chance the end of the NHR won’t happen as planned in 2024.
⚠️ November 9, 2023 update: It seems the current government will be able to rule until the 2024 budget has fully passed, meaning the cancellation of the NHR is still unfortunately scheduled for 2024. We should know for certain by November 29 whether the cancellation of the NHR remains part of the final budget, but I wouldn’t rely on it being removed.
Since 2009, Portugal’s Non-Habitual Residence (NHR) tax scheme has been wildly successful at attracting pensioners, skilled workers, and investors to the country’s shores.
However, as an apparent response to the previous weekend’s demonstrations for more affordable housing, Portugal’s Prime Minister António Costa announced on October 2, 2023, that the government is looking to end the NHR program in 2024.
While the government has not yet shared any further details, we’ll likely learn more once they present the state budget for 2024, which is expected in a week or so.
What does the end of the NHR program mean for you?
Keeping in mind that nothing you’ll read on Nomad Gate is legal advice and that you should confirm anything you read here with your own legal counsel, let’s look at what the end of the NHR program means for you and your family.
First, the good news: As the NHR tax status is granted for ten calendar years from when you first become a tax resident of Portugal, if you’ve already moved to Portugal and applied for NHR, you will continue to benefit from the tax status for the remainder of those ten years. In other words, nothing changes for you.
While there’s still uncertainty surrounding when the end of the NHR program would take effect for new applicants, the earliest would be on January 1, 2024.
So, if you’ve moved to Portugal in 2023 but have not yet applied for NHR, you should do so as soon as possible to ensure you’re grandfathered into the program. Typically, you’d have until March 2024 to apply for the status, but in the current situation it would be prudent to do so before the end of the year.
But what if you’re not already living in Portugal?
If you’re an EU/EEA citizen or already have a residence visa for moving to Portugal, you still have time to become a tax resident in Portugal before the end of 2023. While you may not be ready to uproot your family at this very moment, keep in mind that to establish tax residency in Portugal it’s sufficient to acquire a home (which can be purchased or rented) that you intend to use as your residence indefinitely.
In other words, while you should spend some time in that home this year, you don’t need to fully make the move to register as a tax resident and—by extension—apply for the NHR status.
How does this impact Golden Visa applicants and holders?
As a Golden Visa (GV)/ARI permit holder with no plans to live in or become a tax resident of Portugal, this doesn’t impact you at all. The NHR is only relevant for tax residents, and while GV holders have the right to reside in Portugal, they do not automatically become tax residents unless they actually do.
On the other hand, if you’re a GV holder who intends to move to Portugal in the next few years and the NHR tax scheme was part of what made you choose Portugal in the first place, you may want to explore options for establishing your tax residency in Portugal in 2023 (see above). That does not necessarily mean you’ll pay any tax in Portugal or even that you’ll give up your current tax residence at the moment.
If you applied for your Golden Visa in 2021 and earlier but are still awaiting your initial residence permit, you also have the right to settle in Portugal. The process may not be as straightforward (so discuss with your lawyer), but you should still be able to register your residency—including with the tax authorities—and hence apply for the NHR this year.
However, the situation is less clear if you applied for your Golden Visa in 2022 or later. I’m not certain whether there are ways you could already register as a tax resident and apply for NHR, but it’s plausible as legal and tax residence are two mostly independent concepts. I’d urge you to speak to your lawyer to learn what you can do in your particular situation.
I’ll keep this article updated as we learn more and as usual the community forum is a great place to stay updated on every development.
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