NHR Regime in Portugal - Update

With the release on 10 October 2023 of the Draft Budget Law, please read our more recent update by clicking here.

Are the news that the non-habitual residents’ (NHR) regime in Portugal will end really true?

At this stage, the only publicly available information is that during an TV-broadcasted interview on 2 of October 2023 and answering to a question on real estate issues, the Portuguese prime minister announced the intention to close the NHR regime as regards the new entries as from 2024 onwards.

Are there any further details beyond this particular statement?

No. This was a mere statement and not an official government position and was made answering questions. We also have no further information if the intentions are to close only the 20% tax rate applicable to active income or to change or scrap the NHR regime altogether.

If a new law is presented to change the NHR, what would be the timeline?

The Budget Law is set to be presented in two weeks in the Parliament and by then more details are likely to be known. In Portugal, any tax changes need to be approved by the Parliament and only apply as from 1 January of the following year. Generally, the Budget is approved by mid-November, published in December and becomes effective as of 1 January. This should be the timeline expected in this case.

Are there any precedents of changes to the NHR one should be aware?

Yes. During the last and the only significant change to the NHR regime back in 2019, that occurred, the law created a transitory regime whereby the existing registered residents would maintain the regime in place until the end of the 10 years. The new regime on 10% taxation of pension income applied to new non-habitual residents, safeguarding legitimate expectations of those who had or requested the regime before the change became effective.

What as an NHR one should do?

Nothing for now. It is expected that there will be a period of wild speculation and contradictory information. Keep your sources limited to persons with knowledge of the potential changes and expected impacts.

© Kore Partners, 2023

This briefing provides for general information and is not intended to be an exhaustive statement of the law. Although we have taken care to provide accurate information, this should not replace legal advice tailored to your specific circumstances. This briefing is intended for the use of clients and selected recipients. Queries or comments regarding this can be directed to kore@korepartners.com