Non-Habitual Resident (NHR) Tax Regime Comes to an End

It has been confirmed that the Non-Habitual Resident (NHR) Tax Regime will end in 2023, as approved by the Portuguese parliament with the final vote of the 2023 State Budget on 29th November.

Nevertheless, individuals who are interested in benefiting from this special tax regime may still do so until the end of 2024, as long as they meet any of the following requirements:

• Promise or employment contract, promise or secondment agreement signed by 31st of December 2023, whose duties must take place in Portugal;
• Lease or other contract granting the use or possession of the property in Portuguese territory concluded until 10th of October 2023;
• Reservation contract or promissory contract for the acquisition of real rights over property in Portuguese territory concluded by 10th of October 2023;
• Enrolment or registration of dependents at an educational establishment domiciled in Portuguese territory, completed by 10th of October 2023;
• Residence visa or residence permit valid until 31st of December 2023;
• Procedure initiated by 31st of December 2023, for granting a residence visa or residence permit, with the competent authorities.

The Non-Habitual Resident (NHR) Tax Regime has been in place since 2009. This regime allows individuals to benefit from a 20% tax rate applied to category A (dependent) and B (independent) income for a period of 10 years. Although this special tax regime has come to an end, the state budget has introduced a new tax incentive for those who teach in higher education or do scientific research, or for those who come to work for startup companies. 

The new tax benefit is also eligible for workers who are "qualified for job positions recognised by the Agency for Investment and Foreign Trade of Portugal, E.P.E., or by IAPMEI - Agency for Competitiveness and Innovation, I.P., as relevant to the national economy, particularly within the framework of attracting productive investment" and "job positions or other activities carried out by tax residents in the autonomous regions of the Azores and Madeira, under the terms to be defined by regional legislative decree" are also qualified for this new tax benefit.

Furthermore, people who work for certified startups are eligible for this new tax benefit. Startups are defined as companies with no more than 250 employees, an annual turnover of no greater than 50 million euros, and less than 10 years in operation. They must also have their headquarters or representation in Portugal, or at least 25 employees within the country. Furthermore, they cannot be a merger or division of a larger company.

These are alternative paths for the Non-Habitual Resident (NHR) Tax Regime for those who wish to benefit from a special tax regime in Portugal.

If you have any further questions or require assistance on this matter or related issues, please feel free to reach out. We will be delighted to assist you.