In September 2023, Portugal Prime Minister Antonio Costa unexpectedly announced that the Non-Habitual Resident (NHR) tax regime available to expatriates will no longer be available for new entrants, effective January 1, 2024. The decision was framed as a method to control housing prices, with Costa noting the special regime is “a measure of fiscal injustice, which is no longer justified, and which is a biased way of inflating the housing market, which has reached unsustainable prices".  

The regime will continue to apply for individuals already benefitting until their 10-year period ends, or they cease to be Portugal residents. A transition period has been established for individuals who can prove a prior intention to move to Portugal during 2024, such as an employment contract (signed before December 31, 2023), a lease/real estate purchase agreement (signed before October 10, 2023), or a dependent education enrollment certificate (issued before October 10, 2023). In addition, if an individual received a residence permit prior to December 31, 2023, they may still apply for NHR status until March 31, 2024.

The abolished scheme will still be available for a very limited set of applicants: university professors, research scientists, and employees of projects classified by the Portuguese government as “startups”.

There is currently a draft proposal to replace the NHR with an Incentivized Tax Scheme (ITS) which would provide similar, but limited, benefits to expatriates. Debate and negotiations are anticipated to occur during 2024.


The NHR regime was introduced in 2009 during the global financial crisis as a mechanism to attract foreigners to live and work in Portugal. Under NHR, qualifying expatriates benefit from a flat 20% tax rate on Portuguese-source income and are exempt from taxation on most foreign-source income altogether, for a period of 10 consecutive years. The scheme also taxes foreign-pension income at a flat 10% rate, and exempts taxes on gifts, inheritance, and wealth, making Portugal an attractive destination to foreign retirees. The top marginal rate for non-NHR individuals is 48%.

The regime was available for applicants of any nationality, provided they remained a tax resident of Portugal for the qualifying period and were not residents of Portugal in any of the five preceding years prior to application. According to data from the Tax and Customs Authority, the annual amount of tax exempt under NHR exceeded EUR 1 billion in 2021.

Global Mobility Impact

In Summary:

  • NHR status already granted: no impact; NHR status remains in effect for the granted 10-year period.
  • NHR application submitted: if tax residency and a residence permit are acquired prior to January 1, 2024, the deadline to request NHR is March 31, 2024.  
  • Obtaining tax residence during 2024: NHR is not available unless meeting narrow exceptions.

In the immediate term, Global Mobility should identify any individuals who have moved to Portugal at the beginning of 2024 to verify if NHR status is available under the transition period rules. If so, ensure that an application is filed prior to the March 31, 2024 deadline.

In the interim, companies that were previously sending equalized individuals to Portugal and benefitting from the NHR scheme should anticipate an increase in Portuguese tax costs for individuals transferring after January 1, 2024. Although the proposed ITS scheme may provide similar benefits, the final details and effective date are still to be determined.

AIRINC has removed the ability to elect the NHR scheme for new assignments inbound to Portugal within the AIRLinc suite of tools and calculators. The AIRINC Tax Team will continue to monitor the legislative developments in Portugal, and update as needed.  


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