Prime Minister Antonio Costa has announced plans to abolish the Non-Habitual Resident (NHR) regime in Portugal.
Update from 2024
Portugal introduces an NHR program 2.0. You can find more information here:
Update from 11/14/2023
Update to the article “Portugal discontinues the NHR system!” by Philipp M. Sauerborn:
Latest developments in Portugal’s NHR program
In a surprising twist, the Portuguese government has decided to temporarily suspend the planned abolition of the NHR (non-habitual resident) program at the end of 2023. This decision was taken following the unexpected resignation of Prime Minister António Costa, who resigned from office in the wake of corruption allegations. This development has led to the NHR program being retained for the time being, although its future remains uncertain.
Despite this extension, experts such as Dr. Werner und Partner recommend that potential applicants apply for the NHR program immediately. The current political situation in Portugal and pressure from the European Union suggest that the program will not be continued in the long term. The consulting firm DW&P is registering an increasing number of inquiries, which underlines the urgency and high level of interest in the program.
Continue in the text
The NHR system offered tax incentives to qualified individuals and retirees for 10 years, attracting foreign residents as well as investors.
Now the NHR program is scheduled to end soon. This appears to be a desperate attempt by the government to counteract the escalating housing market and rising cost of living.
No new applications for the NHR program will be accepted after the end of 2023. All those already in the NHR program can breathe a sigh of relief: they can continue to enjoy the privileges until the respective end of the 10-year period, Costa said.
According to media reports (https://fortune.com/2023/10/03/portugal-less-friendly-digital-nomads-country-plans-end-foreign-tax-breaks-antonio-costa/), this will make Portugal less attractive for foreigners and especially digital nomads.
Although some of my readers may find this a blow, let me say: the NHR system is not always the best tax system for many people, including many digital nomads.
Malta – often is a better option:
- Incorporating a company in Malta: https://philippsauerborn.com/en/malta-limited-definitive-guide/
- Or the digital nomad visa for Malta: https://www.drwerner.com/en/perfect-for-digital-nomads-malta-digital-nomad-visa-2023/
Why all this?
The lucrative tax incentives attracted investors and individuals from all over the world to Portugal. The government hopes that measures such as this will curb rising real estate prices, making property affordable again for Portuguese citizens.
In a similar attempt to curb the exploding real estate market, the government earlier this year phased out parts of the Golden Visa initiative: Read more
Conclusion
Whether this attempt to counteract a renewed crisis makes sense remains questionable. What is certain is that this measure – and the one shortly before it to phase out the Golden Visa initiative – will affect Portugal’s ability to attract workers. Malta seems to be a suitable solution not only because of the volatile situation in Portugal.
If you have questions about the status of the NHR or the Malta solution, I invite you to schedule a free initial consultation with me and my team: https://philippsauerborn.com/en/contact/
