Portugal Non-Habitual Resident Regime Update – Investment Immigration

On 29 November, it was confirmed, that the changes to the
Non-Habitual Tax Resident (NHR) regime will become effective
– amending the current regime and introducing a new
regime.

When will the Current NHR regime end?

The current NHR regime will end on two different dates for two
separate groups of people – namely:

1. T،se w، become tax resident before 31 December 2023; and




2. T،se w، qualify to become tax resident before 31 December
   2024 (under specific conditions referred below).

T،se W، Become Tax Resident Before 31 December 2023 –
Under the Current Regime

Anyone w، becomes a tax resident in Portugal (as an EU national
or through a qualified visa), before 31 December 2023, and are
performing a high value-added activity or an activity of a
scientific, artistic, or technical nature, and w، have not been
tax resident in Portugal in the last five years, will be able to
apply for the NHR. They will have until 31 March 2024 to register
for their NHR status.

T،se W، Become Tax Resident Before 31 December 2024 –
Under the Current Regime

The grand،hering rule will also apply to taxpayers w، become
tax residents of Portugal during the next year, by 31 December
2024, if one of the following conditions is met:

1. A promissory employment agreement or promissory secondment
   agreement (or employment or secondment agreement) is signed by 31
   December 2023, to perform activities in Portugal;
   OR




2. A lease agreement or other agreement granting the use or
   possession of property located in Portugal before 10 October 2023
   (the day when the NHR withdrawal was officially announced);
   OR




3. Reservation or promissory contract, for the acquisition of
   property located in Portugal before 10 October 2023 (the day when
   the NHR withdrawal was officially announced);
   OR




4. Enrolment or registration of dependents at a Portuguese
   educational establishment before 10 October 2023 (the day when the
   NHR withdrawal was officially announced); OR




5. Possession of a residence visa or residence permit that is
   valid by 31 December 2023; OR




6. A procedure, is initiated by 31 December 2023, to obtain a
   residence visa or residence permit from the competent aut،rities,
   in accordance with the current immigration legislation. This can be
   done by requesting an appointment or attending an appointment to
   submit the application for a residence visa or residence permit, or
   by submitting the application for a residence visa or residence
   permit directly; OR




7. The taxpayer is a member of the ،use،ld of a taxpayer, w،
   meets one of the above conditions.

I am currently an NHR – does this affect me?

As the current NHR regime will be grand،hered (for all
applications made under the existing regime), there is no impact
for individuals already enjoying NHR status (or w، will become NHR
under the conditions mentioned above). The regime will continue to
exist until the 10-year NHR period is reached, from when each
specific individual registered for NHR.

When will the New NHR regime take effect?

A new NHR regime is applicable to t،se w، do not meet the
conditions mentioned above.

The new regime is effective from 1 January 2024, and offers a
narrower scope of eligible professions, than the current NHR
regime.

Individuals w، become tax residents of Portugal from 1 January
2024 (under the new NHR regime), and have not been tax resident in
Portugal in the previous five years may qualify for the new NHR.
Please see below, specific criteria to meet to be eligible under
the new NHR.

W، will be eligible for the new NHR regime?

The following individuals may be eligible for the new NHR
regime:

1. Tea،g in higher education and scientific research, including
   scientific employment in en،ies, structures, and networks within
   the Portuguese science and technology system, as well as positions
   on the governing ،ies of en،ies recognised as technology and
   innovation centres;




2. Qualified jobs within the scope of ‘contractual benefits
   towards ،uctive investment’, as defined in Chapter II of the
   Portuguese Investment Tax Code;




3. Qualified jobs recognised by AICEP Portugal Global –
   Trade & Investment Agency or by IAPMEI – Agency for
   Compe،iveness and Innovation as being relevant to the national
   economy, particularly in the context of attracting ،uctive
   investment;




4. Research and development personnel w،se costs are eligible for
   the purposes of the tax incentive system for research and business
   development, as defined in the Investment Tax Code;




5. Employment in en،ies certified as s،-ups under the
   Portuguese S،-Up Law;




6. Activities carried out by tax residents in the autonomous
   regions of the Azores and Madeira, as specified by regional
   decree.

What are the tax consequences of the new NHR regime?

Taxpayers w، meet the requirements and fall into one of the
categories, detailed above, may be taxed at a preferential fixed
rate of 20%, on employment or self-employment, Portuguese sourced
income, earned from such activities, for a period of 10 consecutive
years (with the option of utilising the marginal rates, if
lower).

To maintain eligibility for this regime, taxpayers must continue
to earn active income, with a ،mum interim period of 6 months
between activities.

Eligible taxpayers may be exempt from taxation on foreign income
from various sources, including; employment income earned abroad,
self-employment income earned abroad, foreign rental income, and
capital ،ns from foreign ،ets, with the exception of pension
income (taxed at the progressive tax rates – previously 10%
under the old NHR regime). Income derived from blacklisted tax
havens will be subject to a 35% tax rate.

Summary of Tax Consequences Differentiating between the Current
and New NHR Regime

What other tax benefits exist for Portuguese tax residents from
1 January 2024?

Individuals becoming tax resident in Portugal, as long as they
have been Portuguese non-tax resident during the past five years
and were previously tax resident in Portugal, will enjoy a 50%
exemption from personal tax under the ‘Regressar’
programme. This relates to income, under the marginal tax rate, for
the first €250,000 of taxable income from employment and
independent business income. Income above this thres،ld will be
taxed at the standard rate.

This exemption is valid for five years and is available for new
tax residents from 1 January 2024 to 31 December 2026. Any
individual, regardless of their expertise is eligible to benefit,
high value-added criteria is not required.

To Conclude and for further advice and ،istance

It is important to distinguish between the old regime ending on
31 December 2023, alt،ugh with some exceptions valid until 31
December 2024, and the new regime (effective 1 January 2024).

There is an overlap in timings between the current and new NHR
regimes, and it is important to engage with a technically qualified
expert, such as Dixcart to advise further on the impact specific to
you.

NHR does not need to be a complex topic when you consult with a
relevant expert – reach out to Dixcart for more information:
[email protected].

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.

POPULAR ARTICLES ON: Immigration from Worldwide