Blog · 2024-03-29

Portugal's NHR regime: making sense of the new rules

What is the NHR?

The NHR (Non-Habitual Resident) is a preferential tax regime that Portugal offers to new residents. It runs for ten years. NHR status lets you lower the tax rate on foreign income and, in some cases, be fully exempt from tax altogether.

What happened?

Late last year, panic spread among people planning to move to Portugal. The media ran headlines about the NHR - the very thing many were relocating for - being scrapped, and claimed that in 2024 only those who had begun the residency process back in 2023 would still be able to apply for the benefits.

What is actually going on?

It is true that paying no tax at all is no longer possible. But the preferential regime has not disappeared.

If you work in IT, scientific research or innovative business, or if you launch a startup in Portugal, your income will be taxed at 20% for ten years. Compared with the standard income tax of up to 48%, that is a very attractive rate. It applies to business owners and even to freelancers and sole traders.

To decide whether a company counts as "innovative," the authorities will rely on business activity codes. CAE is the official classifier. If your company falls into one of the priority sectors - IT, science, innovation and so on - you qualify for the tax breaks even without any additional certification.

As before, you can also register as a sole trader in Portugal and receive payments from projects abroad through it.

If you are a highly qualified professional, you can simply opt into the new NHR successor scheme. The list of eligible occupations has not been published yet and still needs to be approved separately, but it is unlikely to change much - IT and business will certainly be on it.

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