The End of Portugal's Non-Habitual Residence (NHR) Program Announced

Thank you all for your contributions to this discussion. Our situation is that we have done our biometrics for a Golden visa (by buying an apartment) and are waiting for the final approval. We hope to move to Portugal sometime in the future but it is very uncertain when that would be possible (we live and work in the US). The apartment is finally being finished and we will hopefully be able to rent it out soon. I have several questions:
1)If I get NHR will the tax on my rental be cut into half?
2)What are the steps to go through if I want to apply for NHR on my own while living in the USA? Is 1600 Euros a reasonable fee to pay my lawyer for this?
3) Besides pensions and capital gains, what are some other stuff I would be exposing myself too if I become a Portugal tax resident?
Thank you very much for the input.

@Gundu Yes. This is my experience too. These people tend to want money today when what we want should come under the title of “business development” where they tell us what we can do, how they can help us, and what they will charge.

Neither entity that I have contacted has mentioned the amendment to the budget that gives us until the end of 2024. They just urge me to spend money today with them to lock in tax residency today and there’s a lot of downside to this. I’m even having trouble with my existing suppliers getting a definitive statement on what I will be liable for under NHR given my income streams. NHR is definitely the correct route for me once I’m in Lisbon next summer but I do not want the liability prematurely if it will result in a pension and capital gains tax bill from today.

Anyway, I’m setting up some more calls this week and will continue to try to get some answers. For the record, my tax accountant in Portugal charges €100 to register me for tax residency when I have one of the appropriate documents. Just so you know how much others are ripping you off.

All GV advice from anyone in all of history: rush into it now and give me all your money!

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FWIW

Hi Guys,

I guess we are waiting on 29th Nov to see where this goes, but I wonder if anyone has any inputs on my situation?

I have a residence card that was issued back in June 2023, which shows my lawyer’s address. My NIF shows my foreign address. I intend to move to Portugal in March next year and am interested in applying for NHR. I wonder, if I have to apply within 2023, or can do so after I am there and if I need to apply before Dec 31, what would be the process, given I am not physically in Portugal yet.

Thanks

Well, none of us are tax lawyers or Portuguese accountants here so you are best to get professional advice however from talking to various bodies in Portugal about this (tax lawyers, accountants, relocation firms) I believe that all you will need to do is move to Portugal as planned next March and ask your legal tax representative to change your NIF address to your Portuguese address (either a legally owned or leased property) and then apply for NHR which can be done around the same time. My accountant firm charges €100 for each of these actions which indicates quite how little work is involved.

We don’t have our residency cards yet (biometrics in February 2023 in Lisbon) and will move to Portugal as planned in June/July 2024. Now the transition regime is pretty much in place through 2024 we will change tax residency and apply for NHR when we move just as you will. Of course, something could change after the new government is in place and I will keep and eye on this however if you move in March you won’t be affected by this.

I am in the same boat as you. I was told by the lawyer that a new card will have to be issued by with the updated address and the SEF fees for issuing a GV residence card was 3.865,06€ per card (which is crazy).

You do not need a residence card to update the tax residence address so I do not believe the address on the residence card must be used whether or not it costs €3865.06 to reissue (which I do not believe it costs to simply update an address on an existing valid card but who knows). You can update your tax residency with a legal house purchase deed or lease. That’s why there have been workarounds proposed by some bodies to create ghost leases dated before 31 December 2023 to enable the tax residency change of address in the absence of a residency card. I seriously suggest talking to an accountancy firm that has a NHR specialist about all this because their fees to accomplish such relatively trivial tasks are much lower than lawyer fees. In my discussions over the last few weeks, I’ve been quoted thousands of € by both a relocation agent and my lawyers for the tax registration and NHR registration (on top of the expensive ghost lease fee) while my tax accountancy firm charges €100 for each task. Guess which I will use in June 2024 when I finally move to Lisbon.

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Guys, if you scroll back this thread to literally 9days ago and read the post from @PCERoman you will find all the instructions you need for PT tax residency.

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First article I’ve noticed with results of the OE2024 specifics vote on NHR yesterday. Doesn’t mention any grandfathering of eligibility for another year, but it’s also rather poorly written and perhaps incomplete… looking forward to better articles on the topic being posted here :slight_smile:

For what it does say, this sounds like a hot mess of very subjective “other eligibility” criteria. Who is going to judge if a job is “relevant to the national economy?” The Azores and Madeira also get to tack on more “jobs or other activities.”

OK this one also mentions (limited) grandfathering of eligibility for another year…

…Also approved was the PS proposal that reinforces situations in which people who had already started the process can move to Portugal and continue to benefit from the RNH. …
…people who become tax residents by December 31, 2024… etc, etc.

When will grandfathering of eligibility for another year be confirmed I wonder?

Uncertainty abounds.

I’ve spent some time independently investigating this Article of the OE2024 Budget that revokes the NHR on the Portuguese Parliament’s own web site. This is, of course, all in Portuguese however I lived in China for four years and spending time using online translators is not beyond me.

The NHR legislation is Artigo 143 so that is what you need to look for. It was scheduled for the 3rd Voting Day on 27 November. There is a PDF of the Article itself including the government’s own amendment which enables existing GV applicants to apply for NHR through 31 December 2024 here:

Artigo 143 and Amendments

I suggest that you download this PDF and copy the relevant bits into an online translator. If you really cannot be bothered to do that then here is an online translation of the relevant bit of the Amendment 1802C-2:

[BEGINS]
To the taxpayer who becomes resident for tax purposes by December 31, 2024 and who declares, for the purposes of registration as a non-habitual resident, to have one of the following elements:

SNIP

vi) Procedure, initiated by December 31, 2023, for granting a residence visa or residence permit, with the competent entities, in accordance with the legislation in force applicable to immigration matters, namely through the scheduling or effective request scheduling for submission of the request for granting a residence visa or residence permit or, even, by submitting the request for granting a residence visa or residence permit.
[ENDS]

The ruling party provides a justification for the amendment that includes the following text:

[BEGINS]
Given the repeal of the regime, it is important to create a transitional regime that allows the legitimate expectations of people who have already made the decision to immigrate or return to Portugal to be safeguarded, under penalty of damaging the confidence of those who took that same decision, naturally having the Changing countries has a very material impact on anyone’s life. Therefore, this proposal aims to reinforce the transitional regime, allowing the legitimate expectations of citizens who have already undertaken a series of steps to be taken into account.
[ENDS]

Furthermore, the Amendment 1802C-2 has its own page that I believe is a report on the debate and vote on 27 November in Parliament here:

Outcome of Amendment 1802C-2 debate and vote in Parliament

To avoid anyone getting an aneurysm from anticipation, I will cut and paste the outcome here:

[BEGINS]
State:
Approved by the Commission

SNIP

Date
2023-11-27
Approved
Yes
[ENDS]

Now, I cannot with 100% certainty say that my investigation of the Portuguese Parliament’s own web site on the OE2024 debate and vote is correct but this is where to point expensive lawyers, tax representatives, relocation agents, and indeed journalists when they they profess confusion or - worse - urgency due to claimed ambiguity or their own greed or ignorance. As far as I can see, the transition period for existing GV applicants until the end of 2024 has been passed by Parliament - direct from Parliament itself.

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Excellent, thank you very much.

Editted: My understanding for all the non GV people here who just wish to move to Portugal, for e.g. under a D7 visa, that people can still qualify for NHR as long as they have submitted their visa application to the consulate before 31 Dec 2023 as per paragraph v), and that they apply for NHR before 31 Dec 2024.

Are you saying that you do not think it applies to GV applicants?

I think they’re saying that it applies to more visa types than just the GV. The legislation does not mention any visa type. However, this is a GV forum frequented by GV applicants so I specifically referred to the GV in my post. However, of course, the same legislation can apply to anyone with proof of a valid residency application made before 31 December 2023.

Why did you choose the GV if you are planning to move to PT immediately?

Question for those who know more than I… Say I establish residency. How is a PFIC taxed in PT? I know how it’s taxed in the US, (unrealized gains taxed… don’t get me started…) But, how are gains, realized or unrealized taxed in PT; as applies to NHR?

Alternatively, recommendations for a tax advisor, who is knowledgeable in both PT and US tax law as applies to ex-pats? I

This doesn’t talk about GV specifically though:

and who have a promise or employment contract, a promise or a posting agreement concluded until December 31, 2023