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Navigating Changes in Portugal’s NHR

Mercan Group is excited to provide you with an important update regarding Portugal’s Non-Habitual Resident (NHR) tax regime. In light of recent developments, including the end of the NHR regime from January 1, 2024, and the introduction of a transition period, we are pleased to announce that the Tax Authorities have issued clarification regarding the transitory regime.

As per Article 236 of the LOE 2024, the NHR tax regime, as previously in effect, will continue to apply until the completion of the 10th consecutive year from the year of registration as an NHR. This provision applies to individuals who fall under the following categories:

a) Individuals who were already registered as NHRs with the Tax Authority (AT) as of January 1, 2024, until the completion of their 10-year entitlement to be taxed as NHRs.

b) Individuals who meet the conditions outlined in Article 16 of the Personal Income Tax Code (CIRS) for qualification as tax residents in Portugal as of December 31, 2023, and apply for NHR registration with effects from the year 2023 by March 31, 2024.

c) Individuals who become tax residents by December 31, 2024, and subsequently apply for NHR registration with effects from the year 2024 by March 31, 2025, declaring their eligibility as NHRs.

To qualify, individuals must meet one of the following criteria:

1) Have a promise or employment contract with duties in Portugal by December 31, 2023;
2) Hold a lease or other property agreement in Portugal by October 10, 2023.
3) Have a reservation contract for property in Portugal by October 10, 2023.
4) Enroll dependents in Portuguese educational institutions by October 10, 2023.
5) Possess a valid residence visa or permit until December 31, 2023.
6) Initiate residence visa or permit procedures by December 31, 2023.

Taxpayers must provide supporting documents when requested by AT services to demonstrate eligibility.

d) Be family members of taxpayers mentioned in paragraphs a), b), or c) of Article 236(3) of the LOE 2024.

For applications submitted after March 31, 2025, NHR status will be effective from the year of application until the end of the 10th consecutive year from 2024, the year of residency in Portugal.

It is important to note that individuals must hold professions of high added value as specified in administrative rule n.º 12/2010, dated January 7th, to access this regime.

We trust that this information will help you better understand the recent changes to the NHR tax regime.

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