Dec 03,2023 I In a surprise announcement in early October 2023, the Portuguese government announced the termination of NHR (Non Habitual Resident) which promoted advantageous tax benefits to an individual for a period of ten years. The announcement was received with surprise as it was made without consultation and there were no warning signs that the regime would be subject to change.
The NHR programme was introduced in 2009 and was enormously successful in attracting a vast number of wealthy foreigners to Portugal who primarily invested in real estate.
In his justification of the termination of the scheme, Prime Minister António Costa said that the regime was “a measure of fiscal injustice that is no longer justified and is a biased form of inflating the housing market, which has reached unsustainable prices”.
This announcement caused controversy on first announcement, leading many foreigners, wishing to take advance of the NHR scheme to accelerate their applications and to panic buy.
Subsequently, the government decreed that they would allow a transition period which will terminate at the end of December 2024. However, applicants must prove that they were already planning a move to Portugal in 2023. This can be demonstrated via a property purchase (completed or in progress), or that a rental lease has been signed, children enrolled into Portuguese schools, or demonstrate proof of employment via a contract.
Those that are already benefitting from the NHR scheme need not panic. The Prime Minister has stated that those who already have it, can keep it.
If you were planning to take advantage of Portugal’s NHR scheme, it is necessary to put your plans into action immediately.
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