NHR 2024: What has changed?

The Portuguese government has taken significant actions to terminate two prominent foreign investment programs. On the 6th of October, the “Mais Habitação Law” put an end to the real estate avenue to acquiring a Golden Visa, and just two days later, they announced the discontinuation of the Non-Habitual Resident (NHR) regime, with material implications hitting in 2024.

An alternative has been put in place however these are less likely to appeal or apply to Clients of Ingenium Financial and will likely not attract as many talented professionals who would have previously come to Portugal under the NHR program.

The replacement initiative is directed towards those deemed ‘researchers’ and ‘highly qualified workers’. It provides them with comparable requirements and advantages to the previous NHR program. These beneficiaries must establish their residence in Portugal for at least 183 days annually to be eligible for a special 20% IRS tax rate for a period of 10 years. As before, this is only applicable to individuals who have not been fiscal residents in Portugal for the preceding five years.

NHR 2024: Have I missed out on qualifying for NHR?

You may still be able to qualify for the previously popular NHR status but since January 2024 it has become more of a challenge and less certain your application will be waived through what was previously a quick and easy online process.

The Non-Habitual Resident (NHR) status must be applied for with the Portuguese tax authorities by March 31, 2024, if you are already resident for the preceding tax year ending December 2023.

NHR 2024: What are the requirements?

If you expect to become a resident in Portugal by 31 December 2024

or, on December the 31st  2024, you would be able to meet the following conditions to qualify as a tax resident;

Individuals, both foreigners and Portuguese, who have not been tax residents in Portugal in the preceding 5 years, but who have now become Portuguese tax residents and who meet one of the following conditions:

– Having a job offer or an employment contract, secondment agreement, or similar document signed by December 31, 2023, for positions to be carried out in Portuguese territory.

(The work contract element is more likely to be of importance to Portuguese nationals eyeing a return as typical Clients tend to be business owners or retired).

– Entering into a lease agreement or another contract that grants them the use or possession of a property in Portuguese territory by October 10, 2023.

– Having a reservation contract or a promise of acquisition of real estate in Portuguese territory, entered into by October 10, 2023.

– Enrolling or registering dependents in an educational institution located in Portuguese territory by October 10, 2023.

– Holding a residence visa or residence permit valid until December 31, 2023.

– Initiating the necessary procedures for obtaining a residence visa or residence permit by December 31, 2023, including scheduling an interview or submitting an application to the relevant authorities.

NHR 2024: The situation now

As mentioned, the implementation of the 2024 State Budget saw the Portuguese government repeal the NHR regime that previously offered numerous tax advantages, including exemptions on various income types like pensions and dividends.

Nonetheless, it remains feasible to apply for NHR status in 2024, provided that you establish tax residency in Portugal during that year and satisfy specific conditions.

In theory, The Non-Habitual Resident (NHR) status must be applied for with the Portuguese tax authorities by March 31, 2025.

Notwithstanding the mentioned deadline, the Arbitration Court (CAAD) has on several occasions decided that the obligation to apply for the NHR (Non-Habitual Resident) status by March 31st of the year following the year in which the individual became a tax resident in Portugal, is merely a declarative obligation and not a constitutive right, and the non-fulfillment of this requirement cannot result in the failure to obtain the NHR status. So if you don’t file on time, it may not prohibit the application however, the right to request taxation as an NHR can only be realised through the challenge of the IRS tax assessment act of the year in which the registration as an NHR was denied.

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Are you considering moving to Portugal and wondering whether it is still feasible in 2024?

The straight answer is a resounding ‘yes’!

If you are receiving or plan to drawdown from pensions to provide for your life in Portugal, then Portugal is still very much doable.

You must consider making some changes to the way and/or where your pensions are currently structured and held. You will need a good, suitably qualified Independent Financial Adviser to help you. They will be able to guide you appropriately.

Ingenium Financial is a bespoke financial advisory able to devote more time to providing you with an unrivalled personal service.

Contact us to learn more about NHR 2024 and find out how we can help.