Portugal’s Non-Habitual Resident (NHR) tax regime has been a cornerstone of its appeal to expatriates, offering favourable tax conditions. However, recent political and legislative shifts signal an end to this scheme, albeit with some transitional provisions.
The End of the NHR Scheme
The 2024 State Budget Proposal officially suggests the termination of the NHR status at the end of 2023. This proposal, although pending full debate in Parliament, is expected to pass due to the socialist government’s majority. The final approval is scheduled for end of November 2023.
Transitional Opportunities
Despite the proposed discontinuation, there is a window of opportunity for those still keen on applying. The proposal includes provisions allowing individuals who secure tax residency by December 31, 2024, and those with a valid residence visa by the end of the year, to apply for the NHR program.
Amended Proposal for Transitional Regime
A new amendment has been made to the State Budget by the Socialist Party aiming to provide a transitional regime in 2024. Anyone who has started their Visa process in 2023, and can prove that they started the process in 2023, can still get the in NHR 2024, as long as they finalise their residency until 31st December 2024.The transitional regime, introduced for workers, retirees, and investors, necessitates proof of their preparedness to relocate to Portugal in 2023. To qualify, individuals must provide supporting documentation such as employment contracts specifying physical work in Portugal, not remote work, by December 31, 2023. Additionally, acceptable evidence includes rental agreements, property purchase deeds, or reservation contracts with real estate companies, all dated before October 10, 2023. Enrolling dependents in Portuguese educational institutions before the same date is also valid proof.
Impact of Political Changes
The recent resignation of Prime Minister António Costa, prompted by a corruption scandal, has led to significant political changes in Portugal. President Rebelo de Sousa has addressed the nation, announcing that he accepted Prime Minister’s resignation and plans to dissolve parliament and call for early elections on 10th March 2024. He emphasised that the current government will remain in place until the elections. Additionally, President Rebelo de Sousa declared his intention to safeguard the state budget, which is set for approval on 29th November, with all provisions becoming effective from 1st January 2024.
Act Now To Take Advantage Of NHR
As it’s almost certain it’s coming to an end, it’s a critical time for individuals considering relocation to Portugal. The transitional provisions offer a limited window for eligibility under the NHR scheme. Meanwhile, the evolving political scenario in Portugal could further influence these developments, warranting close monitoring by prospective expatriates and investors.
This article was kindly provided by Blacktower Financial Management Group and originally posted at: https://www.blacktowerfm.com/news/future-of-sustainable-finance/
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