Europe's Premier Fiscal Incentive ... until 2024

Are you considering relocating to the beautiful Algarve region of Portugal or other parts of this stunning country? If so, you'll want to know about the Non-Habitual Residency (NHR) scheme, a tax programme that could make your transition even more enticing. Read on to understand the NHR scheme, who can apply, how to apply, its many benefits, and recent changes that could impact your decision.

But before you settle down to read, it’s important to note that the NHR scheme will not be available for long. In an interview in October 2023 with CNN Portugal, the Prime Minister of Portugal, António Costa, made a significant announcement, stating that it is no longer viable to sustain the Non-Habitual Residency (NHR) regime, which has been in effect since 2009. Although nothing can be 100% certain until legislation has been passed, it appears likely that the NHR scheme will be discontinued in 2024. It may not come into effect immediately on January 1st, 2024, but by mid-to-late 2024 the following benefits will be off the table, so if you want to benefit from the below advantages of becoming an NHR resident the time to act is now.

What is the Non-Habitual Residency (NHR) Scheme?

The NHR scheme is a tax incentive programme in Portugal designed to attract individuals from around the world to become residents, particularly in regions like the Algarve. Established in 2009, this initiative offers a unique opportunity for new residents to benefit from a range of tax advantages.

Who Can Apply for NHR?

New Residents: The NHR scheme primarily targets individuals who have not been tax residents in Portugal over the previous five years. If you are considering moving to Portugal, you are an ideal candidate.

Foreign Pensioners: Retired individuals can greatly benefit from the NHR scheme. It offers a 10-year tax break on pension income received from abroad, including generous tax exemptions.

Professionals and Skilled Workers: Highly qualified professionals and skilled workers in various fields can also take advantage of the NHR scheme. You could be eligible for substantial tax reductions if you work in high-demand sectors like technology, finance, or healthcare - check out the full range of professions above.

How to Apply for the NHR Scheme

Applying for the NHR scheme is a straightforward process. The key steps include:

Residency Registration: First, you must establish your tax residency in Portugal. This involves obtaining a Portuguese tax (NIF) number, registering as a resident, and ensuring your main residence is in the country.

NHR Application: After gaining tax residency, you need to apply for the NHR status. This step involves submitting the necessary documentation to the Portuguese tax authorities.

Benefits Enjoyment: Once approved, you can begin enjoying the benefits of the NHR scheme, including significant reductions on taxes related to your foreign income.

The Benefits of the NHR Scheme

The Non-Habitual Residency scheme offers numerous advantages:

Tax Exemptions: NHR beneficiaries enjoy tax exemptions on foreign-sourced income, including pensions, rental income, and royalties, for a period of 10 years.

Reduced Tax Rates: For those engaged in high-value-added activities, like professionals and skilled workers, Portugal offers a reduced tax rate of 20% on income earned in Portugal.

Double Taxation Relief: Portugal has double taxation agreements with many countries, ensuring you won't be taxed on the same income in multiple jurisdictions.

In conclusion, Portugal's Non-Habitual Residency scheme offers a fantastic opportunity for individuals looking to relocate to this beautiful country. With a focus on attracting foreign residents, this programme provides substantial tax benefits, especially for retirees and professionals. We will update our website with any changes, but if you want to ensure you don’t miss anything, sign up for our monthly newsletter below and keep ahead of the game.