Our lawyers think the NHR will still end as planned because “there is significant political will to pass the budget”
Although (budget) OE2024 was approved on first reading on 31-Oct., if you’re a “glass half full” type of person…
Perhaps what gets voted on 29-Nov. will be a bare-bones, “let’s just get us by until springtime” budget. So middle class tax cuts, more benefits for the poor, the big public investment drive too? And of course unlocking those much-loved EU recovery funds! All (but one?) of the opposition parties were against Budget '24, which might help temper the controversial bits like reducing NHR eligibility to almost nobody. Or at least kick that idea into next year when the new PM’s in power.
That said, the current government was particularly pig-headed about killing real estate GV - submitting the same rejected proposal and passing it on their second try. And they need more tax revenue to pay for all those social goodies. Hence I’m not very optimistic on NHR lasting. But have not yet given up all hope.
…and the realtors are still lobbying 
Real estate wants Marcelo to remove the RNH measure from the Budget
Rodolfo Alexandre Reis / 10 Nov 2023 / jornaleconomico.pt
The real estate sector hopes that Marcelo Rebelo de Sousa can force changes to be made to the current State Budget proposal for 2024, the debate on which will take place between the 23rd and 29th of November, with the main change being the removal of the tax regime. Non-Habitual Residents (RNH).
1 Like
Tiny flicker of hope?
13:24, 10 November 2023, by RTP
“Budget is good for families and for the Portuguese”, says PS
…“Until November 29th, we will continue to debate the specialty until the final global vote. And, therefore, we will continue to work to bring to the Portuguese, with peace of mind, what is a good Budget”.
“The Socialist Party, in essence, without prejudice to the political opinions of each person, at this turbulent moment in Portuguese political life cannot fail to focus on the essential. The lives of the Portuguese and the policies that improve the lives of the Portuguese”.
Regarding the possibility of the PS accepting proposals for changes from opposition parties, the parliamentary leader stressed that “more proposals from the opposition were approved than were presented by the PS parliamentary group”.
Eurico Brilhante Dias also stated “that in the 2022 State Budget alone, the PS parliamentary group approved more opposition proposals than the right-wing PPD/PSD – CDS majority during four years of majority led by Pedro Passos Coelho”.
Portuguese news is reporting that there have been 1864 amendments to the state budget submitted for consideration which is a new record. The report states that the state budget will be discussed starting November 23 extending through the week with debates in the morning and votes in the afternoon. You can read it in Portuguese here (use your favourite translation tool to read it in English):
Story on amendments to the State Budget to be voted on
So, one week to go before we begin to learn the immediate fate of the NHR scheme. It will be a long week.
1 Like
How even the PT immigration professionals misread PT politics. Read the full article for the rest…
Madalena Monteiro, Lisbon
…it was clear to everyone (including myself) that the government’s resignation represented the expiry of the state budget law for 2024, which in turn would have forestalled the extinction of the NHR regime. This was because Article 167 of the constitution effectively states that any legislative proposals tabled by a
sitting government are rendered null and void if that government resigns or falls.
However, since then, the UTAO (Technical Budget Support Unit) has issued a technical note clarifying that since the budget law was already approved in “the generality” (na generalidade), the act in question no longer has the nature of a proposed law for the purposes of applying article 167 of the Constitution.
Instead, the UTAO says, the bill has already taken on the nature of a Decree of the Assembly of the Republic, which implies continuity of the legislative process. Consequently, a final global vote on the state budget law for 2024 (which includes the NHR termination proposal) will now be subject to a vote after all, on November
29th.
For Portugal, a great deal more than the NHR regime is at stake. If the law approving the State Budget were not to be approved, Portugal would immediately lose access to European funds from the Recovery and Resilience Plan (the so-called European “bazooka”).
…
…Considering the gravity of the corruption scandal in which Costa’s faction of the party is embroiled, it is possible that certain elements of the Socialist Party will try to distance themselves from that ignominy by calling for changes to the State Budget Law.
Moreover, considering the uncertainty around who exactly will govern Portugal next, the various parties may enter into a “pact regime” so that the new government, whoever ends up composing after the election in March, can get behind the budget law.
…
The various parliamentary commissions are still discussing the wording of the bill. By the time we get to the final vote on November 29th, the bill will either still include provisions to end the NHR or not.
So don’t open the champagne yet.
2 Likes
In the budget discussion, the NHR has been extended to 2024, but only for the following six situations:
(1) the existence of a promise or contract of employment or a promise or agreement of secondment concluded by 31 December 2023, “the performance of whose duties must take place in national territory”; (2)a lease or other agreement granting the use or possession of a property in Portugal concluded by 10 October 2023 (this is the date on which the government submitted the 2024 State Budget proposal to Parliament); (3)a reservation contract or promissory contract for the acquisition of a “right in rem” over real estate in Portuguese territory signed by 10 October 2023; (4)the enrolment or registration of dependents in an educational establishment located in the country, by 10 October 2023; (5)the existence of a residence visa or residence permit valid until 31 December 2023; and (6) the initiation, by 31 December 2023, of a procedure for granting a residence visa or residence permit with the competent authorities.
The last might be of interest to those on this forum, with ARI currently being evaluated by SEF/AIMA.
7 Likes
Thanks @Onward - couple more articles saying the same, but these are free to read.
Also note this bit:
"The deadline for parties to submit proposals for amendments to the proposed State Budget for 2024 (OE2024) ended this Tuesday, with… The discussion and voting on the document in the specialty begins on November 23rd and ends on the 29th, the date of the final global vote on OE2024."
2 Likes
Yes, I wasnt sure whether the Expresso article was behind a paywall, or not. I tested the link before I posted but put the heart of the text in English, just in case.
1 Like
Thank you @Onward and @PTbound for posting these articles.
We have a reprieve through next year. I was prepared to go down the route of a ghost lease to enable tax residency registration before December 31 with all the additional cost involved but this means it’s unnecessary.
The reprieve forces the issue and we will move to Lisbon next summer.
1 Like
Well… things may change 100 times before the end of this month. Suggest waiting until the dust settles, and do what you need to do (or not do) in December. Which yes with Christmas hols will leave very few working days before year-end.
As the previous article I posted says…
2 Likes
Parliament operates as normal (ie with a majority PS Goverment) until after the budget has been approved. The suggested change to the timeline for NHR status came from the Government, and is likely to be carried. The detailed discussion on the NHR was yesterday. The issue may come up again, but procedurally all parties had their say in the debate.
For those interested in acquiring NHR status, the documentation for the 6 situations listed above - need to be acquired before end Dec 2023. Thereafter (ie before march 2024) one can go on to the Financas site and upload the documents. For example, the certidão de residencia from the Freguesia needs to be done before end 2023 AND whatever proof the applicant has that an application for a residence is already with SEF, needs to show a 2023 (or earlier!) date.
If PS does not return to power, there will be modifications of the budget on major issues. Whether NHR is one of them, is anybody’s guess.
…this post is to disillusion anyone who thinks that the extension allows them to postpone to 2024 what must be done before end Dec 2023! The dates are explicit, and are likely to become part of law.
Hi @Onward
Thank you for this additional insight. I have a question for clarification regarding the six scenarios and the certidão de residencia. Actually, let’s just keep it to the specific topic of this forum: existing SEF applications.
Let’s assume we have proof of an existing SEF application (for example a SEF appointment in February 2023 or a pre-approval acknowledgement from 2022). Your post implies we also need a certidão de residencia dated before 31 December 2023 which means we would need to buy or lease a property and become tax resident before 31 December 2023 so we can apply for NHR before March 2024. Is this not the situation anyway without the new six carve outs?
Surely the six scenarios exist because such a certidão de residencia can not yet exist because the applicant is still waiting to actually move to Portugal pending the completion of the outstanding SEF process. Your post highlights the AND where logic would dictate that it’s an OR. The certidão de residencia OR SEF application proof.
I do not want to become tax resident in Portugal prematurely because I will have to start paying Portuguese tax on my pension income and capital gains on any ETF trades I make before I move there next summer. Hence I do not wish to become tax resident until I actually move. The carve out works for me (obviously I’ll keep an eye on the new government’s actions) but if the budget law states it’s an AND then the carve out achieves nothing.
1 Like
I do not have any personal interest in the NHR. Its not for everyone. Its probably OR for non-EU nationals.
Expert advice (for and against NHR) is here: https://www.eurofinesco.com/library/. See s77a (required documents) and The End of the Non Habitual Residency Program - Screenshot attached.
1 Like
I do not think this direction accounts for the new language in the proposed budget.
Well, with the current SEF/AIMA processing pace of GV applications, a transitional regime that only lasts until the end of 2024 would be insufficient for anyone who applied in the last year or so who don’t wish to move to Portugal (at least on paper) before they have their residence permit in hand.
I hope someone has provided the relevant input to the members of the speciality, as they may not otherwise be aware how long the processing backlog is…
1 Like
My understanding is the same. However the modification to the NHR regime foresees that the applicant should have initiated by 31 December 2023, …a procedure for granting a residence visa or residence permit with the competent authorities.
I imagine that Parliament and all those who vote therein are aware of the SEF delays and I vaguely remember that Costa referred to it recently.
I suspect that the phrasing is precisely to accommodate the fact that many foreigners (for all types of residency applications, not just ARI) may not yet have received their resident permit, but would have initiated the process to obtain such a permit (before 31 Dec 2023). It is this proof of initiation/pre-approval/biometrics and the timeline that appears to count.
I’m quoting IAS’ translation here:
i) Taxpayers who, on 31/12/2023, can be considered residents for tax purposes in Portuguese territory (as well as their household);
ii) And taxable persons who become Portuguese tax residents by December 31st, 2024, and who declare, for the purposes of their registration as NHR, one of the following:
a) Promise or contract of employment, promise or secondment agreement signed by December 31st, 2023, for the exercise of functions in Portugal; or
b) Lease agreement or agreement granting possession of property in Portugal, executed by October 10th, 2023; or
c) Reservation contract or promissory contract for the acquisition of a right in rem over real estate in Portugal, signed by October 10th, 2023; or
d) Enrollment or registration for dependents in an educational establishment in Portugal, completed by October 10th, 2023; or
e) Residence visa or residence permit valid until December 31st, 2023; or
f) Procedure for granting a visa or residence permit, in accordance with the applicable immigration legislation, initiated until 31/12/2023, through:
- requesting an appointment or making an appointment to submit the application;
- submitting the application.
Seems you need to meet both the one of the requirements a) through f), plus the requirement I highlighted directly under ii).
Of course, it could be they would extend that in the future, however as written now you’d still need to become tax resident by end of 2024.
1 Like
Many thanks Thomas & happy for the detail. There is indeed some urgency, for documentation this year …! As well as a declaration of tax residency in 2024.
I believe that item (ii) requires that the person obtain in 2023 the Certidão de Residência. An appointment is made at the Loja da Cidadão and for the Certidão one has to provide proof of residence - on the basis of owning a house, long term airbnb contract, long term utility bill/contract, or active residence permit, etc. Corresponding with items a) to f) of the IAS listing.
I believe @tommigun may have the latest on this, as he went through it recently. The Certidão can be uploaded onto the ATP website.