3rd November 2023
Portugal non-Habitual Residence regime comes to an end, but …

Portugal’s non-habitual residence (NHR) programme will end on 31 December 2023. Prime Minister, Antonio Costa first made the announcement on 2 October and it has now been included in the 2024 Portugal State Budget.


The budget proposal was presented to parliament on 11 October.  It will now go through parliamentary approval.


Portugal NHR closing date 


The budget confirmed that the last date for the non-habitual residence applications is 31 December 2023.


From 1 January 2024, a new – but very limited – regime will start, if approved.  This aims to attract professionals who specialise in certain scientific, teaching and research occupations. The new regime will only provide the reduced 20% rate for employment/self-employment income, and no other tax benefits are offered.   Successful applicants will be subject to full worldwide taxation on income and capital gains, the same as other residents of Portugal.


This sudden announcement, in such close proximity to the closing date, will make it hard for people to become tax resident in Portugal and apply for NHR status before 31 December 2023.


Since Brexit, UK nationals wishing to move to Portugal have to apply for a visa in advance. The expected three-month processing time means arriving before this date is unlikely to be possible, unless someone had already submitted an application.


Current non-habitual residents are not impacted 


If you already have non-habitual residence status, you are not affected by this news.


The budget confirmed that residents who are currently benefitting from NHR programme will continue to do so, until the expiry of their ten-year term.


It is, however, a good prompt for you to confirm if you are taking full advantage of your NHR benefits – for example, taking the opportunity to dispose of foreign assets before your 10-year term ends.


Portugal continues to offer significant tax benefits


Abolishing the NHR is unwelcome news to many and particularly disappointing to those who are not yet in a position to move to Portugal.


But Portugal remains a very attractive place for people to retire to – both in terms of lifestyle and the tax regime, even after NHR.  People were attracted to the Algarve, Lisbon and Porto areas long before the NHR was conceived – indeed we have had an office here for over 25 years – and this won’t change.  Few countries can rival what Portugal has to offer.


From a tax perspective, there is no inheritance tax between families and for more distant relatives it is only on Portuguese assets.  Portugal’s limited equivalent of wealth tax only applies to high value Portuese property.  Investment income can be taxed very efficiently, with some arrangements offering very beneficial tax treatment.


This reform however does emphasise the need for experienced, professional advice, in order for you to fully benefit from all of the tax advantages.


Blevins Franks has decades of experience advising people moving to and living in Portugal and providing effective tax and wealth management solutions.  The taxation system has evolved considerably in that time, and will continue to do so, but our teams of Portugal-based advisers and tax specialists monitor the changes and provide the in-depth personalised solutions our clients need.


Please do not hesitate to contact us if you, or someone you know, has any questions about how to structure your investment portfolio and assets to maximise the benefits of the Portuguese taxation going forward.  We are happy to arrange a no-obligation consultation with one of our qualified advisers if you wish to learn more about Portugal’s tax benefits.


The attraction of retiring to Portugal is undiminished.


The tax rates, scope and reliefs may change.  Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.


Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. This promotion has been approved and issued by BFWML.


You can find other financial advisory articles by visiting Blevins Franks website here