Important Update for Global Expats and European Pensioners: Portugal’s NHR Tax Relief Program for Non-Habitual Residents, Including Pensioners, Has Been Discontinued
Portugal is, or perhaps was, always a popular destination to move to, chosen not only by retirees for the culture and beauty of its landscapes but also by young remote workers or digital nomads, by families looking for a welcoming destination or by entrepreneurs seeking different incentive schemes.
The Algarve or the cities of Porto and Lisbon or the autonomous regions of the Azores or Madeira are among the most popular destinations.
We have already extensively illustrated how to move to live in Portugal in the guide to residence
Important Update for Global Expats and European Pensioners: Portugal’s NHR Tax Relief Program for Non-Habitual Residents, Including High Value Added professionals and Pensioners, Has Been Discontinued
In fact, the Portuguese government made a significant change of direction and decided to eliminate the preferential regime NHR for non habitual residents, which it said was justified by the fact that the tax advantage was perceived as an injustice to Portuguese pensioners and by the fact that it had a strong impact on the real estate market, both on house sales prices and rents.
Will Portugal still remain an attractive country to live in?
Pensioners will no longer be able to enjoy an advantageous regime that until 2020 allowed them to pay no tax on their pension and then only on 10 per cent of their income. Now pensioners who decide to move will have to pay taxes under the ordinary regime.
As of 2024 for pensioners, the tax relief regime changes significantly with the cancellation of the Non-Regular Resident scheme and therefore taxation on pensions will no longer be at zero or 10 per cent but according to the ordinary rules.
As of 2024 for Pensioners, Portugal’s NHR Tax Relief Program for Non-Habitual Residents, Has Been Discontinued
It remains in place with all benefits for persons who have already obtained the status or who have successfully registered as NHR in previous years or during 2023, before its expiry and in accordance with the envisaged transitional regime
As of 1° 2024, a new ‘Non-Habitual Residency’ (NHR) program, called Incentives for Scientific Research and Innovation, will come into force. It is very limited and intended only for certain qualified and high added-value professionals, which is still being defined, but will probably only include academics in higher education and scientific research and those with a doctorate or qualified workers for productive investments and start-ups.
These people will have a 20% tax rate on professional income received in Portugal and a tax exemption on certain income from foreign sources.
Will this tax change lead to a decrease in Portugal’s attractiveness?
Portugal NHR Pensioners Discontinued
Many, pensioners in particular, will consider a move to countries other than Portugal, but which ones?
Malta and Cyprus, remain two very attractive countries, interesting both from a climatic and territorial point of view, and for the advantageous territorial taxation instead of on a worldwide basis, but Spain also remains at the top of the wish list of many who decide to expatriate.
Italy remains in the crosshairs of both Italians living abroad who have decided to return home and foreigners attracted not only by the country’s cultural and natural beauty but also by a number of favourable tax regimes introduced in recent years, such as a special tax regime for impatriates with an exemption from paying taxes on 70 or 90 per cent of income and a special regime for Neo residents in Italy for individuals with a high income capacity with a flat tax of EUR 100,000.
However, changes are currently being made by the Italian government to the international legislation regulating the tax residence of persons and companies in Italy, which will also involve special tax regimes, leading to a modification and reduction of the benefits now provided.
It is difficult in general to give a list of the best countries to move to or to make a ranking of the best countries to change your life in.
Obviously, there is no one-size-fits-all choice, but it depends on one’s needs, whether one is looking for a job and of what kind, whether one is expatriating alone or with one’s family, whether one is retired, and so on.
In order to evaluate a country to move to live in, you need to take into account various elements, the order or prevalence of which obviously depends on the interests, objectives and personal motivations that drive everyone to move and live abroad, and reading our useful guide to moving and living abroad can certainly help you in choosing a country.
Becoming aware of one’s objectives and how to make a choice to expatriate can be useful, but certainly the assistance of an expert professional at one’s side helps one not to make rash or wrong choices, to understand the path to follow, to overcome administrative and bureaucratic obstacles, to be in order from the point of view of residence and taxation but also health and pension, and to achieve one’s objectives.
Contact Maltaway International Advisory Partners to get Advice for Moving to live in Portugal,
or both EU and non-EU citizens, for the new 2024 tax relief program NHR for NON-HABITABLE RESIDENTS, for transferring your pension to the best foreign jurisdictions contact us here