The Non-Habitual Resident (NHR) status is a tax regime offering more favorable tax treatment for beneficiaries. It aims to reduce the tax burden on income sourced in Portugal and provide exemptions for foreign-sourced income (if taxed or taxable abroad) on Personal Income Tax (IRS). This applies to various income categories (A – employment; B – self-employment; H – pensions; E – capital income; F – rental income; G – capital gains) over a 10-year period.

To benefit from this tax regime, taxpayers must become fiscal residents in Portugal, provided they have not been fiscal residents in the previous five years. For example, to become a fiscal resident in 2022, one must not have been a resident in 2017, 2018, 2019, 2020, or 2021.

A person is considered a fiscal resident in Portugal (Article 16(1) of the CIRS) if:

• They have stayed in Portuguese territory for more than 183 days, consecutive or non-consecutive, within a 12-month period starting or ending in the relevant tax year; or

• They stayed fewer than 183 days but have a home in Portugal suitable for habitual residence.

The regime’s main goal is to attract qualified professionals in high-value activities and retirees receiving foreign pensions.

Initially established by the Investment Tax Code (Decree-Law No. 249/2009, of September 23), the NHR tax regime underwent modifications, including changes to Articles 16, 22, 72, and 81 of the IRS Code. These were complemented by Ordinance No. 12/2010, of January 7, amended by Ordinance No. 230/2019, of July 23, approving a new list of High-Value-Added (HVA) activities for Articles 72(10) and 81(5) of the IRS Code.

The regime, as we know it, was revoked by the 2024 State Budget Law, effective January 1, 2024 (Art. 317(b) of Law No. 82/2023, of December 29).

This raises the question: what happens to those already benefiting from this tax regime?

The State Budget Law for 2024 revoked the NHR tax regime starting January 1, 2024. However, a transitional provision ensures the regime continues for 10 years for those already registered as NHR.

Transitional Rule Details

Clause (a) specifies that those already registered as NHR taxpayers with the Tax Authority (AT) as of January 1, 2024, retain the right to benefit from the regime for the remaining part of the 10-year period.

“(a) On the date of this law’s enactment, those already registered as NHR taxpayers in AT records retain the right to the regime for the duration specified in Articles 16(9–12) of the IRS Code.”

Thus, existing beneficiaries maintain their rights until their 10-year period is exhausted, starting from the year they became residents in Portugal and were registered as NHR with the Tax Authority.

Post-2024 Eligibility and Terms

Clause (b) of Paragraph 3 of the transitional rule states:

Taxpayers who became fiscal residents in Portugal by December 31, 2023, and had not been residents in the previous five years (e.g., fiscal residency in 2023 but not in 2018–2022) can register as NHR until March 31, 2024, and benefit from the regime for 10 full years.

Clause (c) of Paragraph 3 allows:

Taxpayers who become fiscal residents in Portugal by December 31, 2024, without being residents in the prior five years, and who can prove that their intention to move to Portugal was already planned in 2023, may apply for NHR status. The supporting documents required are:

• A work contract, assignment agreement, or agreement for secondment executed by December 31, 2023, for work in Portugal;

• A rental or other property use agreement in Portugal signed by October 10, 2023;

• A reservation or purchase agreement for real estate in Portugal signed by October 10, 2023;

• Enrollment of dependents in a Portuguese educational institution completed by October 10, 2023;

• A valid visa or residence permit as of December 31, 2023; or

• Initiation of a visa or residence permit application with the competent authorities by December 31, 2023.

To enjoy the 10-year NHR benefit, taxpayers must register with the Tax Authority as NHR by March 31, 2025. In this case, the first benefit year is 2024, and the last is 2033.

If registration occurs after March 31, 2025, taxpayers may still benefit but only from the year of registration onward, for the remaining period. For instance, if a taxpayer becomes a fiscal resident in Portugal in 2024, meets all requirements, but registers as NHR on May 1, 2025, their benefit starts in 2025 and ends in 2033, reducing the regime to 9 years.

In case you meet the requirements for the transitional Portuguese NHR regime, our at will be available to assist. We will provide the necessary advice throughout the process and analyze your income to identify opportunities for maximizing tax efficiency.