Dramatic scenes at the top of the Portuguese government have resulted in a last-minute reprieve of its hugely popular Non-Habitual Residency (NHR) tax scheme.
But those wishing to take advantage of its unexpected survival are being urged not to delay in applying, amid claims it could be short-lived due to pressure from both inside Portugal and the European Union.
The NHR tax scheme offers beneficial tax rates for up to 10 years for successful applicants. Designed to attract wealthy investors to Portugal, it had been set to close to new applicants by the end of 2023.
However, the resignation of Portugal Prime Minister António Costa has slammed the brakes on his government’s legislative agenda.
Costa quit amid a corruption probe. He denies any wrongdoing.
But as a consequence, the annual state budget, which included instructions to wind down the NHR tax scheme to new entrants, has been scrapped.
It will come as a huge relief to thousands hoping to take advantage of the scheme but were facing challenges to hit the tight deadlines. There is, in addition, a significant backlog in visa processing at the newly formed Portuguese Agency for Integration, Migration and Asylum (AIMA).
It was reporting 350,000 visa applications were currently stuck in limbo and getting a SEF appointment is taking many months.
Aziz, an NHR tax advisor in Lisbon, is part of Portugal Pathways, which supports people seeking a new life in Portugal by advising on how best to structure their life, income, tax and assets to ensure a smooth transition.
He says the extension should not be relied upon.
He said: “Because the current government has resigned, its legislative programme – which was due to be approved in parliament – has to be declared null and void.
“Which means the proposals to end the NHR tax regime are dead in the water too. But probably not for too much longer.
“By the time things have settled, I think we’ll be well into 2024.
“However, I think it would be a surprise for the NHR tax scheme to survive under a new administration, so while it may be extended – perhaps up to the middle or end of 2024 – I would urge anyone looking to take advantage of the tax scheme to act fast.
“With delays at AIMA and uncertainty as to the NHR’s long-term future, the quicker you can get your details submitted, the better.
“We have seen how quickly things can change and the impact it can have on people’s plans – so while this extension is welcome, it would be unwise to assume it will last for long.”
Steve Philp from Portugal Pathways added: “We’ve gone from a mad dash to get NHR and, separately, visa applications in by the end of the year to a bit of breathing space. But we think it will probably be just that.
“We would advise anyone looking to take advantage of the NHR tax regime to act now. Get advice, but don’t think you can wait six months because the chances are the NHR tax benefits will still close to new applicants at some point in 2024.
“The sooner you can get the ball rolling the more confident you can be in terms of your financial and life planning.
“We have seen incredible pressure on the professional supply chain from law firms, tax advisors, NHR and visa specialists, wealth management and real estate companies. This is unlikely to change at least in the short term as more and more people see the opportunity that was thought lost with the old deadline.”
Anne Brightman, who runs boutique real estate agency the Brightman Group in Portugal, added the move will also give the property market a boost.
She explained: “The anticipated extension of the NHR programme is poised to inject positivity into the property market for 2024.
“Prospective buyers had been more cautious about initiating the process, give the imminent end date. This news will provide the spark to ignite the market again.”
For more information, please contact steve.philp@portugalpathways.io
About Portugal Pathways
Portugal Pathways is dedicated to assisting individuals in optimising their relocation or life strategy in Portugal. Collaborating with leading professional organisations, they provide essential information and advice for prospective and current residents of Portugal
