Portuguese Prime Minister António Costa has revealed that the special tax regime for new non-habitual residents (NHR) will come to an end in 2024. In an interview with TVI and CNN Portugal, Costa justified this move, emphasizing that the government has chosen to discontinue "a measure of fiscal injustice" that is no longer deemed necessary and has contributed to an unsustainable housing market with skyrocketing prices.
Costa explained, "In 2024, special taxation for non-habitual residents will end. Those who currently benefit from it will retain this status," referring to foreigners residing in Portugal who already enjoy tax advantages under the NHR regime.
The Prime Minister argued that the NHR measure for habitual residents had served its purpose and was no longer relevant. He stated, "There was a time when it was necessary. This measure made sense. In the first ten years, 59% of people who had benefited remained in Portugal, despite the regime having ended. But at this point, it doesn't make sense anymore."
The NHR regime, introduced in Portugal to attract foreign investors and retirees, provided significant tax benefits to individuals who became tax residents in the country. These benefits included exemptions on certain types of income, such as foreign pensions and some business income, for a 10 year period.
The decision to end the NHR regime was announced just several days after Portuguese President Marcelo Rebelo de Sousa officially signed into law the highly debated "Mais Habitação" ("More Housing") bill. This bill introduces significant changes to the Portuguese Golden Visa program, effectively banning the real estate investment option.