In October 2023, the Portuguese Prime Minister announced the end of the “Non-Habitual Resident” (“RNH”) program, which provided a special tax regime for foreigners not habitually residing in Portugal, effective from 2024.
The tax exemption program was created in 2009 and offered reduced taxation for a period of 10 years to non-habitual residents (those present in Portugal for at least 183 days in a year) with the aim of attracting foreign capital to the country. The regime provided a reduced special tax rate of 20% on income from high-value-added activities, a 10% tax rate on pensions originating from abroad for a period of 10 years, and exemption from taxes on foreign source income.
It is important to note that while the program ends in 2024, the measure is not retroactive. Individuals who have already qualified for it will continue to enjoy the benefits granted during the program’s specified period.
The decision aims to revert one of the consequences of the entrance of foreign capital in the real estate market. The large-scale participation of foreign capital led to increased prices for homes for sale and rent, making it difficult for the Portuguese population to find housing, despite the economic boost provided by the influx of resources.
Despite the discontinuation of the NHR, the Portuguese State Budget for 2024 presented a new program to replace it, the “new tax incentive for scientific research and innovation.” This program is designed for highly qualified workers in the fields of science and technology and is granted in a more limited manner compared to the previous regime.
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Published on October 20, 2023