The Portuguese Prime Minister António Costa announced yesterday that Portugal plans to end the Non-Habitual Resident (NHR) regime next year, closing it to new applications.
What is NHR?
This scheme, designed to attract foreign workers, offers 0% on dividends from foreign companies, as well as a flat 20% tax rate for “high value-added” workers, which is notably lower than the tax rates for native Portuguese residents, which range from 14.5% to 48%. Since the COVID-19 pandemic began, Portugal, and especially Lisbon, has become a hotspot for digital nomads, primarily due to its friendly tax schemes and the rise of remote work options.
Why end it?
The rise of Portugal’s popularity in international circles has led to a storm brewing on the home front. The growing number of digital nomads and foreign investors has caused a significant increase in properties listed on Airbnb, leading to a reduction in affordable housing for local residents. As a result, many locals are spending a significant portion of their income on rent. Additionally, there have been protests decrying the rise in housing prices and gentrification due to Portugal’s foreigner-friendly policies. Ending NHR is another in a series of steps taken by the Portuguese government in recent months to address this situation, following plans to scrap the Golden Visa programme and changes to AirBnB (Alojamento Local) regulations.
When is it going to end?
While most people have taken Antonio’s Costa announcement to mean that January 1, 2024, will be the end date of the programme, no definite date has been given – in fact, it is likely that the legal process following the announcement will take more time than that. The Prime Minister has also assured that all beneficiaries who are part of NHR before its end will not be affected.
So what now?
Regardless of the date being uncertain, if your plan included Portugal, now is the time to act. We must work under the assumption that NHR ends on January 1st, 2024.
What do I do? Option 1: I’m an EU citizen.
In your case, the process is straightforward. If you’re already in Portugal, now’s the time to register with your local municipality and apply for NHR – if you already haven’t. We can assist you with both of these – get in touch!
If you’re not in Portugal yet, but are planning to move – now is the time! You should consider speeding up the process.
What do I do? Option 1: I’m not an EU citizen.
If you’re not a citizen and need a visa, and your heart is set on Portugal – there is still good chance you’re going to make it in time, for reasons mentioned above. However, there is no guarantee – immigration processes do take time. This is definitely the moment to act, and act efficiently.
If you are considering options other than Portugal, you are in the right place! There are other places in Europe and the world where you can set yourself up in a simple, cost-effective, optimised way, and we will gladly help you find them. Get in touch!
Most importantly
While NHR is important to have – it is even more important to not rush getting it without preceding with a proper plan that will make it work – as planning after becoming a tax resident will be substantially limited and won’t allow for true optimization.
So, in summary –
1. Imminently – URGENTLY plan your actions and business setup.
2. CREATE that setup – you can’t once you are a resident.
3. If you’re an EU/EEA/Swiss citizen – register in Portugal and apply for NHR.
4. If you’re a 3rd country national (US / UK / Non EU) – things are more complex. First, you still need to do steps 1 & 2 URGENTLY. Then, you need a creative solution which allows you to get NHR without having your visa deadline hang over your head. We provide those creative solutions.
