NHR Regime in Portugal: Updates 2024
Portugal’s stunning landscapes aren’t all there is. Foreigners want to live in the country thanks to its NHR Regime (Non-Habitual Resident), which offers a significant reduction in taxes. And though the Government predicted the end of the NHR in late 2023, there’s still a transitional program called the Incentivised Tax Status (ITS) on the table.
On top of that, Portugal was forced to call early elections. Now, with a new Government about to take on duties, anything can happen. That’s why we’ve prepared a complete guide on the NHR Regime in Portugal (because the answer is no, it hasn’t ended for everyone), including 2024 updates.
What You’ll Learn:
NHR Regime in Portugal: What It Is and Why It Matters to You
Meeting the Criteria for NHR Status
How to Register for the NHR Regime in Portugal
1. Register as a Resident in Portugal
2. Apply for the Non-Habitual Resident (NHR) Status in Portugal
What Happens After 10 YearsNHR Regime in Portugal: What Will Happen in 2024
ITS: The Program Replacing the NHR Regime in PortugalNHR or ITS: One Will Prevail
NHR Regime in Portugal: What It Is and Why It Matters to You
The Portuguese Government created the NHR regime in 2009 to attract foreign investors and professionals. And it’s all because of specific tax benefits – significantly reduced during the first 10 years. Many knew this even before moving to Portugal, which kept attracting more and more people.
However, not every single foreigner can benefit from this regime.
Meeting the Criteria for NHR Status
To qualify for the NHR regime in Portugal, you must meet certain conditions, such as:
You can’t have been a tax resident in Portugal in the last 5 years
Possess the right to live in Portugal as an EU/EEA national or a Swiss one (or through the Golden Visa program or the Digital Nomad Visa 2024)
Fulfill specific criteria related to your professional activity or pension income
Have a place to live in Portugal on December 31 of the year you apply
To maintain the NHR status, you must stay in the country for at least 183 days per year or maintain a property as your habitual residence. But that’s not all. If you practice a profession of high added value (like the ones mentioned below), you can benefit from significant tax exemptions. There’s a complete list you should consult before anything else, but know some of the examples upfront:
Architects, Engineers, and similar
Visual artists, actors, and musicians
Auditors
Doctors and dentists
Teachers
Liberal Professionals, Technicians, and similar
Investors, Managers, and Directors
Are you eligible? Great! It’s time to learn how to register for this regime.
How to Register for the NHR Regime in Portugal
You can’t register for the NHR regime if you’re not a resident in the Portuguese territory. Only then can you choose the regularity in which you stay in the country (and, therefore, apply for the NHR status).
Let’s walk you through each step.
1. Register as a Resident in Portugal
Before registering as a non-regular resident in Portugal, you must register as a resident in the Portuguese territory. Maybe this sounds confusing, but if you think about it, it makes sense – as you can only be a non-regular resident when you’re one already (then, the regularity is up to you).
Many workers choose Portugal as their non-habitual residence while working for remote companies – so you shouldn’t find the registration process difficult, as many have already gone through it.
First, you ask for a Portuguese Tax Identification Number (NIF). Then, you’ll be asked to provide an address and your resident status during the process. Once you register as a resident, you’re good to go. And you can do this at any local tax office or Citizen Spot.
But there’s a deadline. You must register the request as a non-regular resident until March 31 (inclusive) of the year after the one you become a resident in Portuguese territory.
2. Apply for the Non-Habitual Resident (NHR) Status in Portugal
This time, you can complete the process online, as long as you follow these steps:
Register at Portal das Finanças
Click on Registar-se, in the top right corner
Fill and submit the online application with all the requested data
Once you do this, you must wait. You’ll receive a letter with your password at your address (the one you submitted in the application). Once you have that information, it’s time to go back to Portal das Finanças and follow these steps:
Click on Serviços Tributários
Then, on Entregar Pedido
And, finally, on Inscrição Residente Não Habitual
Once you’re on that last page, you must fill in the fields with the registration year you want and the foreign residence country (i.e., where you lived in the previous year). Then, you must declare that you fulfill all the conditions to be considered a non-resident on the Portuguese territory – in the 5 years before the year of the status’ beginning as a non-regular resident.
Wait 48 hours for the request to enter the system. After that, you can follow these steps to check your request’s progress, as well as if it was accepted or rejected:
Click on Serviços Tributários
Then, on Consultar Pedido
And, finally, on Inscrição Residente Não Habitual
Then, all you need is a little bit of patience to know if you’re accepted as an NHR or not. If you are, expect 10 years of reduced taxes, amongst other benefits.
What Happens After 10 Years
You’ve probably asked this out loud.
For now, what’s known is that, after 10 years of NHR status in Portugal, you revert to the standard tax residency rules. But make sure you explore alternative tax strategies to minimize your obligations post-NHR – as the Portuguese Government offers other interesting programs for foreigners looking to establish in the country.
NHR Regime in Portugal: What Will Happen in 2024
The former Portuguese Prime Minister announced the end of the NHR regime at the end of 2023, stating that no applications would be accepted from January 1, 2024. However, early elections came through, and a new Government took place.
So, the question remains: will the NHR status truly end? Well, it depends. If you follow certain criteria and have registered as a resident in Portugal in 2023, you can still apply – as stated in the State Budget’s Article 236.º.
What can happen is a transitional regime, voted as part of the budget legislation on November 29, 2023. This means that if you applied for the NHR regime and haven’t been taxed in Portugal for the past 5 years, you can still apply until March 31, 2024.
That deadline can move to March 31, 2025, if you meet at least one of these criteria:
Have an employment contract signed by December 31, 2023
Have a lease agreement or other contract for the use/possession of property signed by October 10, 2023
Have a contract to buy a property in Portugal signed by October 10, 2023
Have children enrolled or registered in a school in Portugal by October 10, 2023
Have a residence visa or permit valid from December 21, 2023
Have an application for a residence visa or permit started by December 31, 2023
Be a member of the household of anyone who meets the above criteria
ITS: The Program Replacing the NHR Regime in Portugal
At the end of 2023, the Government approved the State Budget, which introduced a new program – called the Incentivised Tax Status Program (ITS), also known as the Tax Incentive for Scientific Research and Innovation.
If you qualify, you’ll benefit from a flat tax rate of 20% on your income earned in Portugal (and though it isn’t possible for everyone, some may also benefit from tax exemption on foreign-earned income, which can include dividends, interest, capital gains, and rents).
To qualify for this new program, you must meet all of these requirements:
Become a tax resident in Portugal
Not have been a tax resident in the last 5 years
Earn income in specific professional categories
You’ll be eligible for the ITS if you’re a teacher or scientist or hold a qualified job, such as:
Industry or manufacturing-related activities
Tourism or related activities
IT and related activities
Agricultural, aquaculture, fish farming, farming, and forestry activities
Information technologies, audiovisual, and multimedia production
Defense, environment, energy, and telecommunication
Shared service centers’ activities
Or even if you’re a:
Highly qualified professional working under a qualifying entity
Professional working for recognized Government agencies (like AICEP, EPE, IAPMEI, or IP)
Professional working for a company relevant to the Portuguese economy (or related to investment)
Professional working for a startup (certified by law)
Professional working in Madeira or Azores, meeting the requirements set by either region
Now it’s time to wait and see what the new Government will do.
NHR or ITS: One Will Prevail
Regardless of the name or criteria, the truth is some program must remain. Establishing a company in Europe matters and companies have already understood that – with many opening hubs in Portugal.
That means businesses need people, i.e., new teams established in Portugal.
And that’s where programs like the NHR regime or the ITS enter the scene. Those and other Government incentives will be around for a long time, as Portugal’s invested in attracting foreign investment in the next years. Let’s wait and see what the future holds.
Disclaimer: The information provided in this article is for informational purposes only. Therefore, it shouldn’t be seen as financial or legal advice. We encourage you to seek professional guidance tailored to your circumstances.
