PORTUGUESE (NHR) TAX REGIME - IMMINENT CHANGES
30 January 2020
Non-habitual resident tax regime will change as of the 1st of March, 2020
The Portuguese Socialist Party (that backs the Government in parliament) following the presentation of the national budget for 2020 has announced a proposal that will change the non-habitual resident tax regime as of the 1st of March, 2020. This Proposal in its broader terms was already endorsed by the Portuguese government so with a certain degree of certainty this changes will soon be materialized into law.
As such new tax residents in Portugal (those who registered as such from the 1st of March, 2020) will start paying 10% tax on his foreign pensions whereas now there is an exemption on said income. Those who are already tax residents in Portugal and those who will register as such until the 29th February, 2020, will keep the exemption until the end of the 10 year tax break given by the NHR regime.
The exemption is maintained for those who already have it, but it will likely be reduced for those who arrive in Portugal from the 1st of March, 2020.
No other significant changes are foreseen for the NHR regime, so the current tax exemption on foreign dividends, interest, rents, salaries and capital gains from immovable property will continue as it is, making the Portuguese NHR regime still one of the most competitive and advantageous tax regimes in Europe for individuals.
More than 70,000 Alojamento Local units in Portugal are at risk of losing their licenses, which could lead to the cancellation of their short-term rental status.
A new legal change is now in effect in Portugal: Decree-Law No. 85-B/2025 introduces key updates for foreign residents, including permit validity extensions.
