Last Call to Apply for the Non-Habitual Resident (NHR) Tax Regime

 Vasco Apolinário Rodrigues | Lawyer

Applying for the Non-Habitual Resident (NHR) Tax Regime under specific conditions is still possible.

The Non-Habitual Resident (NHR) Tax Regime was in place between 2009 and 2023. In 2023, the regime was terminated by the Portuguese Government, and those seeking tax benefits by becoming Portuguese Tax Residents will no longer be able to obtain them.

However, there are still some cases where application for the Non-Habitual Resident (NHR) Tax Regime is possible, namely for those who have:

• A promise of employment contract, or secondment agreement signed by the 31st of December 2023, with duties to be performed in Portugal;
• A lease or other contract granting the use or possession of property in Portuguese territory, concluded by the 10th of October 2023;
• A reservation contract or promissory contract for the acquisition of real rights over property in Portuguese territory, concluded by the 10th of October 2023;
• Enrolment or registration of dependents at an educational establishment in Portuguese territory, completed by the 10th of October 2023;
• A residence visa or residence permit valid until the 31st of December 2023;
• Initiated the procedure for granting a residence visa or residence permit with the competent authorities by the 31st of December 2023.

The main tax benefits under the Non-Habitual Resident (NHR) Tax Regime are as follows:

• 20% flat tax rate for salary or self-employment income if the activity is considered a High Added Value Activity under Portuguese Law;
• Tax exemption on dividends and interest income from foreign sources;
• 10% flat tax rate on pension income.

For those who do not qualify to apply for the Non-Habitual Resident Tax Regime that ended in 2023, it may be possible to apply for the new tax benefit that replaces it.

This new tax regime, established in Article 58-A of the Tax Benefits Code, is directed at promoting high-value activities and includes tax benefits for:

1. People lecturing in higher education and conducting scientific research, as well as participating in scientific roles within the national science and technology system. This includes employment opportunities within entities, structures, and networks, as well as positions and memberships in governing bodies within organisations recognised as technology and innovation centres.
2. Skilled positions within the context of contractual benefits aimed at promoting productive investment, in alignment with Chapter II of the Portuguese Investment Tax Code.
3. Individuals with jobs recognised by the Agency for Investment and Foreign Trade of Portugal, E.P.E., or by IAPMEI - Agency for Competitiveness and Innovation, I.P. as fundamental to the national economy (including those working in the Azores and Madeira, subject to conditions set by regional laws).
4. Individuals engaged in research and development activities, whose expenses are eligible for the purposes of the tax incentive system in research and business development, as outlined in the Investment Tax Code.
5. Individuals moving to Portugal to work for certified start-ups (companies with a staff of no more than 250 individuals, an annual income not exceeding 50 million euros, and a business history of fewer than ten years), provided that the company's headquarters are established in Portugal or have representation in the country. Alternatively, they must have at least 25 employees in Portugal. Moreover, these startups cannot result from a merger or division of a larger company.
6. Job positions or other activities carried out by tax residents in the autonomous regions of the Azores and Madeira.

If you meet the criteria mentioned above, you are eligible to be granted the revoked Non-Habitual Resident (NHR) Tax Regime or the new Tax Benefit of Article 58-A of the Tax Benefits Code.

If you need any help applying for this tax benefit or assistance with other related issues, please contact us. We will be delighted to assist you.