By Ricardo Chaves

The Portuguese government has made recently a change to their State Budget proposal, concerning the NHR status. The State Budget Proposal will be voted on the 29-11-2023, but as the government has the majority, is likely to be approved.

According to this proposal, all those who started their emigration process to Portugal before the end of 2023, can still apply for the NHR, provided they complete their residency process and become tax residents, before 31-12-2024.

The proof of starting the emigration process can be done through a rental contract, promissory contract, matriculation of children in Portuguese school, employment or self-employment in Portugal, etc.

This alteration aims to protect those who were already in the process of moving but could not complete the residency process before the end of 2023.

Therefore this opens more possibilities for clients to continue the emigration process, or initiate it now and become residents in 2024, it also means that the NHR status will be valid from 2024 until 2033.

At AFM we‘ve created a fast-track residency process to help you. If you wish to move to Portugal, please contact us at: info@allfinance.pt

NHR – Urgent Update

By Ricardo Chaves

⚠ 𝐍𝐇𝐑 𝐋𝐀𝐓𝐄𝐒𝐓 𝐔𝐏𝐃𝐀𝐓𝐄 ⚠

Please be aware that the Portuguese Government has filed today the proposal for the State Budget 2024.

This proposal will be voted by the end of November and when approved it announces that the NHR programme finishes at the end of 2023.

Anyone who is registered as a tax resident or has a residency visa on 31-12-2023 will be able to apply for the NHR, providing they submit their request before 31-03-2024.

Please contact us if you require further information.

Back to Press

By Ricardo Chaves

The Portuguese Prime Minister announced the termination of the Non-Habitual Tax Resident regime in 2024, grandfathering prior entrants (apparently those that enter the regime until the end of 2023).

The Portuguese Government will deliver the State Budget proposal to the Parliament on October 10th. We will have further information about the Government’s intentions at that point. However, it is also possible that the Government only regulates this at a later stage rather than as part of the state budget.

It is impossible to predict when this regime will finish; we will let you know as soon as there are more developments on this subject.

Our advice at this stage is:

1) If you are already in Portugal and have received your residency permit, consider accelerating your tax residency process to apply to the NHR before 31st December.

2) If you are waiting for your SEF appointment, you need to get the appointment before the end of the year to ensure that you are a resident of Portugal before 31st December

3) If you are not yet in Portugal but an EU citizen, consider moving before the end of the year to ensure you can still apply for this regime.

4) If you are a non-EU citizen or cannot move to Portugal before the end of 2023, you should remain calm and wait for the Government to release more information on the regime’s termination date. The date may be the end of 2024 and not the beginning. 

Always remember that Portugal is still one of the best places to live, with no wealth or inheritance tax. Portugal has signed DTAs (Double Tax Agreements) with more than 70 countries and jurisdictions that provide tax relief from international double taxation.

Are there any further details beyond the Primer Minister statement?

No. It was a mere sentence during an interview, and no other comments were made from any official source.

Will they change the NHR, or will they end it?

There needs to be further information on whether the intention is to close only the 10% tax rate applicable to pensions and keep the 20% rate for active income or to change or close the NHR regime altogether.

What would be the timeline if a new law is presented to change the NHR?

The Budget Law will be delivered on the 10th of October, and then there will be more clarity about this government’s intentions. Please note that even if this is on the State Budget proposal, it will still need to be voted and published and usually, it will only be effective after the 1st of January 2024.

Will they keep the rights of those already in the NHR scheme?

Yes. During the interview, the prime minister mentioned that it was only for new applications. At the last significant change to the NHR regime in 2019, a transitory regime was created whereby the existing registered residents would maintain the regime until the end of the ten years. Therefore, any changes should safeguard the rights of those already in the scheme. 

I have NHR do I need to do anything?

You don’t need to do anything for now. There will be much news in the press, but we will keep you informed of any changes that matter to your circumstances.

Back to Press

By Ricardo Chaves

⚠ 𝐈𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐭 𝐧𝐨𝐭𝐢𝐜𝐞: ⚠
The Mais Habitação programme launched by the Portuguese government, was approved in the final vote in Parliament on July 19th 2023.

The President of the Republic has now 20 days to decide to do one of 3 things:
➡ Approve the law;
➡ Veto it, in which case the law is sent back to Parliament for full justification or changes;
➡ Send it to the Constitutional Court, which can veto the law if considered unconstitutional.

𝐍𝐄𝐖 𝐀𝐋 𝐌𝐄𝐀𝐒𝐔𝐑𝐄𝐒 𝐀𝐏𝐏𝐑𝐎𝐕𝐄𝐃 𝐁𝐘 𝐏𝐀𝐑𝐋𝐈𝐀𝐌𝐄𝐍𝐓:
➡ suspension of new AL registrations in the Apartamento and Estabelecimento de Hospedagem categories when implemented in a horizontal property (condominium building), except in low-density areas defined in the Annex of this ordinance: Portaria n.º 208/2017 de 13 de julho;

➡ new AL registrations in condominium buildings require unanimous approval of the condominium or that the habitation license already allows for the AL;

➡ existing ALs in condominium buildings can be closed with a 2/3rds majority vote of the condominium;

➡ existing ALs are not transferable, in case the ownership of the property in a condominium belongs to a company, it’s not allowed to transfer any share capital of the company unless in case of inheritance, without losing the AL license;

➡ existing AL registrations become temporary and must be renewed every 5 years starting in 2030.

➡ existing AL registrations need to demonstrate, within 2 months after the start of the new law, they are active, by showing tax evidence of the activity;

➡ if owners of properties with an AL registration from before 31st December 2022 cancel the AL before the end of 2024, and put the property on the long-term rental market, they will be exempt from tax on such rentals (IRS in the case of individuals, IRC for companies) until the end of 2029;

➡ the new CEAL tax was approved, and this will be taxed at 15%. The CEAL will be published each year and it’s an additional coefficient and applies only to autonomous residential units (not detached houses in the Moradia category or complete buildings). It also doesn’t apply to AL in the permanent residence of the owner, if not active for more than 120 days per year. This means that a property that was not rented may still have to pay 15% of the CEAL as it is not related to the rental income.

𝐂𝐇𝐀𝐍𝐆𝐄𝐒 𝐎𝐍 𝐋𝐎𝐍𝐆-𝐓𝐄𝐑𝐌 𝐑𝐄𝐍𝐓𝐀𝐋𝐒:
➡ The standard rate is now 25% instead of 28%. Al the other rates for longer periods of the contract were also adjusted.

𝐂𝐇𝐀𝐍𝐆𝐄𝐒 𝐈𝐍 𝐂𝐀𝐏𝐈𝐓𝐀𝐋 𝐆𝐀𝐈𝐍𝐒 𝐎𝐍 𝐓𝐇𝐄 𝐒𝐀𝐋𝐄 𝐎𝐅 𝐏𝐑𝐎𝐏𝐄𝐑𝐓𝐘:
➡ Reinvestment of the sale of the property deemed for main residency is valid if the taxpayer has lived in the property (address at the tax office/NIF) in the previous 24 months prior to the sale;

➡ Reinvestment is not allowed if, in the previous 3 tax years, the taxpayer already benefited from this tax exemption/deduction. The taxpayer can still benefit from the reinvestment if he can prove that the previous sale was due to exceptional conditions.

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