29/11/2023
The Portuguese Parliament today voted in favor of the 2024 Budget Law, effectively terminating the Non-Habitual Resident (NHR) tax regime.
The new law introduces a rule to uphold legitimate expectations and introduces an innovative incentive scheme aimed at attracting individuals to Portugal, particularly those involved in scientific research and innovation.
Key Highlights
End of NHR for New Tax Residents After 2023
From January 1, 2024, the NHR regime will no longer be available for new tax residents. However, those already enrolled in the NHR regime as of December 31, 2023, will continue to benefit from it for the remainder of their 10-year eligibility period.
Transitional Opportunity Until December 31, 2024
A special provision has been set for individuals who become Portuguese tax residents in 2024. They can still access the previous NHR regime if they meet specific criteria, such as having employment contracts or property agreements in Portugal initiated by certain dates in 2023.
New Tax Incentive for Scientific and Research Professionals
Starting January 1, 2024, new tax residents who have not lived in Portugal for the past five years may be eligible for a tax incentive tailored to scientific research and innovation-related activities. This includes roles in higher education, specific high-value sectors, and startups. Eligible persons can benefit from a 20% tax rate on their income from these activities for ten years, subject to conditions and they won’t have to pay taxes on certain types of foreign income.
Extension to Autonomous Regions
The New Tax Incentive also includes jobs or activities conducted by tax residents in the Azores and Madeira, with specifics to be determined by regional legislative decree.
Tax Department
Sofia Quental | Inês Grácio | Flávia Almeida | Catarina Amaral
