Portugal’s tax benefits for non-residents (NHR) have made the country a preferred destination for immigrants since their introduction. Under the NHR program, immigrants have enjoyed a uniform tax rate of 20% on their personal income for over a decade, particularly appealing to those earning more than €80,000 annually – in contrast to Portugal’s standard maximum tax rate of up to 48%. In 2023, however, this attractive tax regime was terminated as the Portuguese parliament decided that it no longer served the national interest. In response, the NHR 2.0 scheme was launched to refine and continue certain benefits under a new framework.
Transitional arrangements for existing cases
Despite the official end of the original program, there is hope for people who have initiated their move to Portugal by the end of 2023 to fall under the old NHR scheme. Provided they have taken certain steps by then, such as purchase contracts, school registrations or residence applications, they may be able to benefit from the old regulations.
Restart with NHR 2.0
For those interested in moving to Portugal post-2023, the launch of NHR 2.0 as of January 1, 2024, opens up new opportunities. This revised program aims to maintain the majority of the previous benefits, but with changes to pension income. It marks a significant change in the qualifications and benefits available.
Advantages for existing NHR beneficiaries
Individuals who already have NHR status are not affected by the changes and can continue to benefit from the program until their ten-year period expires. However, it is advisable to examine the options for future tax planning in order to possibly benefit from more favorable tax rates.
Key points of the NHR 2.0
The revised program maintains a 20% tax rate for employment and self-employment income, and exempts certain types of foreign income, including dividends, interests, and rental earnings. NHR 2.0 also promotes jobs in scientific research and innovation, which represents a change in strategy from the broad-based approach of the predecessor program.
Target group of the NHR 2.0
The NHR 2.0 scheme is now aimed more specifically at academics, researchers and professionals in highly skilled employment, as well as significant investors and start-up stakeholders who meet certain criteria.
Steps to achieve NHR status 2.0
To be recognized as a non-resident (NHR), interested parties must either spend most of the year in Portugal, purchase a property or work in the country for the Portuguese state. For others, it is essential to secure a residence permit through long-term visas, such as the Portugal Golden Visa, D7 or D2, which now include updated investment criteria.
Summary
With the introduction of NHR 2.0, it is important for people considering a move to Portugal, as well as current residents, to be aware of the latest tax changes. The changed tax regime offers new opportunities and challenges for anyone considering the sunny mainland, enchanting Madeira or the fascinating Azores.
For further information or questions about NHR status, we offer a free initial consultation. https://www.drwerner.com/en/contact/
