Why Portugal Remains a Magnet for Expats Following Updates to the NHR Tax Program

By Joana Mendonça

Portugal’s Non-Habitual Residence (NHR) program, which has been a major draw for foreign investors and retirees moving to the country since it was implemented in 2009, has undergone major changes over the past year and is being phased out for new applicants.

While the original NHR regime offered attractive tax breaks for all non-residents, the 2024 Portuguese budget introduced a modified NHR program, now tailored to attract skilled professionals and individuals in specific sectors. If you’re interested in checking your eligibility for the NHR tax program, we’ve designed a straightforward online test to help you determine if you qualify for the scheme. You can access the test here.

An overview of the new NHR scheme

The revised NHR scheme, effective from January 2024, focuses on three key categories:

Scientific research and innovation: Individuals who are employed or self-employed in research and innovation activities in Portugal, including higher education teaching, scientific research, and technology development, can benefit from a reduced flat tax rate of 20 percent on employment and self-employment income.

Qualified jobs: Individuals holding specific qualified jobs such as engineers, IT specialists, or specialists in cultural activities, can also enjoy a 20 percent flat tax rate on employment income.

Startups: Individuals employed in startups certified by the Portuguese government can benefit from a 20 percent flat tax rate on employment income.

Why Portugal continues to attract international migrants

Despite the changes to the NHR program, moving to Portugal remains an attractive proposition for people from all over the world. Among Portugal’s main advantages is that the nation often ranks highly in worldwide indices for healthcare and quality of life. The nation’s warm climate, with long, sunny summers and mild winters, adds to allure.

Meanwhile, the country offers an affordable cost of living, with the cost of transportation and food considerably lower than in most countries in Western Europe.

Housing also remains relatively affordable when compared with the options available in other Western European countries. Because of this, Portugal’s property market continues to prosper, with many buyers seeking a holiday home or an investment to gain rental income.

The benefits of relocating to Portugal have been evidenced by an influx of American and British expats; more than 100,000 have made the move in the past five years, according to the International Migration Organization.

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