Update (November 30, 2023): The state budget has been approved and the government has announced an NHR transition period. Anyone who can show proof of intent to reside in Portugal by the end of 2023, will be able to apply for NHR status throughout all of 2024.
On October 3, 2023, the Portuguese government announced its plans to end the popular NHR tax program in 2024.
In an interview with TVI/CNN, Prime Minister Antonio Costa explained that the NHR program “is a biased way of inflating the housing market, which has reached unsustainable prices”.
Costa mentioned his government’s plan to cancel the program in 2024, although there isn’t an exact date yet.
What is NHR?
Short for “non-habitual resident”, the NHR program in Portugal is a special tax regime set up in 2009. It offers new residents of Portugal preferential tax treatment for 10 years. This includes a flat rate of 20% tax on employment income within Portugal, plus tax exemptions on several types of foreign income. To be eligible for NHR, you must have not lived in Portugal during the five years immediately before applying.
Costa also pointed out that many new residents who used the NHR program decided to stay in Portugal even after their 10 year period ended.
This announcement to end NHR comes on the back of much discussion of the current housing crisis in Portugal.
Just weeks ago, the Portuguese government passed the Mais Habitacão bill, designed to ease the situation by creating more affordable housing for all.
That bill has also brought major changes to Portugal’s Golden Visa program, as real estate investment is now no longer a viable route to residency.
The NHR program has come under fire for encouraging high-earning foreigners to relocate to Portugal and receive preferential tax treatment.
This unequal situation is widely viewed as unfair, especially in a country where taxation is otherwise high. NHR has also been blamed for the housing crisis.
Left-wing parties in the government have been calling to end the NHR for a long time. They believe it represents “fiscal inequality” and makes Portugal look bad internationally.
So what does this mean for those planning a move to Portugal?
At present, the plan to end NHR has only just been announced. So far, there’s no exact date when it will end.
To be safe, if you’ve already got residency in Portugal, you should submit your NHR application as soon as possible.
Those who submit it before the end of this year should be protected from any changes in 2024.
If you already hold NHR status, then you should be safe. The government has already said that it will maintain the status for existing NHR holders until their 10 year period ends.