Can I Still Apply for NHR in 2024?
The Non-Habitual Resident (NHR) regime is a highly advantageous tax program for individuals relocating to Portugal who have not been residents in the country for the past 5 years and is ending. This regime, which lasts for 10 years, offers significant tax benefits, including flat rates of 10% on pension income and 20% on income from dependent and independent work in highly qualified activities. Additionally, it often allows passive income (such as dividends, interest, and rental income) from abroad to be exempt from taxation in Portugal, leveraging Portugal’s double tax treaties.
Can I Still Apply?
2024 is the final year to apply for the NHR. To be eligible, you must become a Portuguese tax resident in 2024 and demonstrate that you intended to move to Portugal before 2024. Eligibility can be proven through:
- Employment Agreement: A promise or employment contract, or a secondment agreement, signed by December 31, 2023, intended for duties in Portugal.
- Lease or Property Agreement: A lease or other contract for property in Portugal, signed by October 10, 2023.
- Property Purchase Agreement: A reservation or promise-to-purchase contract for property in Portugal, signed by October 10, 2023.
- Educational Enrollment: Enrollment or registration for dependents in a Portuguese educational institution, completed by October 10, 2023.
- Residence Permit: A valid residence visa or permit until December 31, 2023.
- Residence Permit Procedure: Initiation of the process for obtaining a residence visa or permit by December 31, 2023, including scheduling an appointment or submitting the application.
What If You Became a Tax Resident in 2023?
If you became a tax resident in Portugal in 2023, the deadline to apply for the NHR was March 2024. Applications submitted after this period will be rejected by the tax authorities, because you were a tax resident within the past 5 years.
Are You Locked Out?
Not necessarily. Portuguese arbitration courts have ruled that the NHR registration is declarative rather than constitutive, meaning that the registration itself is not a prerequisite for being taxed under the NHR regime. If you meet the requirements, you are entitled to NHR taxation. Even if tax authorities interpret the law differently, escalating the issue to court may help secure your status as a non-habitual resident. The decisions have been quite consistent.
What If the System Wrongly Identifies You as a 2023 Tax Resident?
If you were not a tax resident in Portugal in 2023 but the system shows otherwise, because you changed your tax address to a Portuguese address last year, you can declare non-residence for 2023. To do so, you must provide evidence that you did not reside in Portugal for more than 183 days and did not have a permanent home there in 2023. If the declaration of non residence is accepted, assuming you meet all other requirements, you can apply for the NHR in 2024.
Need Assistance?
If you find yourself in any of these situations, book a consultation with us to ensure you qualify for the NHR and secure favorable tax treatment for the next 10 years. No matter what your situation is, we’ll do our best to protect your rights. You can also find out more about our tax services by clicking here.