A newly published report, the "Wealthy Expats in Portugal Survey Report 2024," uncovers a critical tax planning oversight and lack of cross-border structuring of affluent expats income and assets among many of those based in the Algarve who are existing NHR tax holders.
Despite enjoying the numerous tax benefits early on in their NHR tax status, most affluent expats have failed to take early action or seek professional advice within their first 1-7 years, potentially facing progressive tax rates of 28% to 48%, if not acted on.
The survey of over 1,000 expats indicates that many wealthy international families in Portugal enjoying NHR tax status face potential financial risks if they do not structure their income and assets for the long term early in their 10-year NHR tax benefit period.
A spokesman for Portugal Pathways, an online platform supporting affluent expats in Portugal, said: "We were alarmed that so many NHR tax holders in Portugal were blissfully unaware that they needed to take professional advice as early as possible to mitigate future tax burdens.
‘’We have had several people contact Portugal Pathways who are 8 or 9 years into their NHR tax benefit. We introduced them to the right professional advisors, but because they left it so late, they struggled to mitigate significant tax hikes at the end of their NHR tax status."
The report also highlights that international families who have moved to Portugal to enjoy the lifestyle, cost of living, culture, healthcare, safety, and security often delay managing their finances, assets, and income for long-term protection, not just under NHR.
Peter Valance, based in Quinta do Lago, said: "This came as a real shock to us. We have been living in the Algarve for five years, enjoying the lifestyle and low tax status that NHR gave us. Only recently did we take professional advice from a cross-border wealth manager and tax expert.
‘’Luckily, we caught it in time and now have a plan to mitigate these high taxes. If we had left it another year or so, it would have been very hard for us to afford to stay in Portugal. For anyone in our position, our advice is to talk to an advisor early on in your NHR tax benefit period. You can then build a plan and return to enjoying life in Portugal with peace of mind for the future."
Niall Macdonald, a wealth manager based in Portugal, said: "It's not really a surprise that people put this off as they would rather be enjoying life than talking to professional advisors about tax, but it is crucial that they do so early on when they get NHR tax status."
The report reveals that up to 73% of the estimated 72,000 expats with NHR tax status in Portugal could face a significant increase in tax burdens once their NHR status expires, with potential tax rates rising to 48%.
Portugal Pathways offers to arrange a free no obligation discovery call to NHR tax holders seeking clarity about their situation with professional advisors and also you will receive a free copy of the latest ‘Wealthy Exapts in Portugal Survey Report 2024/25’. Early action is crucial, as unmanaged future tax issues can significantly impact long-term financial security.
By implementing a personalised cross-border structured plan for their income and assets, many affluent NHR tax holders can continue to enjoy their lives without the unintended consequences of failing to seek professional advice and ensuring peace of mind for the long term in Portugal.
