by buymeprestige 
On Monday, October 10, the Portuguese government presented the 2024 Budget Bill.
This is just the starting point of a process in Parliament that has some important dates:
- General debate: October 30 and 31.
- Parliamentary discussion: between November 23 and 29. At this stage, political parties can propose amendments to the initial version of the Bill. Normally, several amendments are approved.
- Final vote on the document, with the amendments resulting from the parliamentary discussion: November 29. The document becomes final on this date.
Regardless of the above and possible changes, the initial draft of the 2024 Budget Bill suggests that the current version of the NHR Tax Regime for new applications will end on January 1, 2024.
All current beneficiaries of this status (and anyone who manages to register as an NHR until it ends) will retain the same benefits. However, it is important to note that only new applicants who become tax residents in Portugal by the end of 2023 or hold a valid residence visa issued by December 31 will be able to apply.
From January 1, 2024, a modified “new NHR” scheme called “incentive for scientific research and innovation” is proposed for specific categories of professionals:
- Higher education professors and scientific researchers;
- Qualified employment within the specific cycle of contractual benefits for productive investment;
- Research and development jobs, for personnel with minimum qualifications equivalent to a doctorate, to the extent that these costs are eligible for specific R&D tax incentives.
For those who fall into one of these categories (and have not been tax residents in Portugal for the last 5 years), a rate of 20% on professional income earned in Portugal will be available. In addition, these professionals will be able to have exemption on various categories of income from foreign sources, such as employment or freelance income, dividends, capital gains, real estate income or interest.
Even more interesting is a new tax incentive for anyone who, as of January 1, 2024, becomes a tax resident in Portugal (without having been considered as such in any of the previous 5 years) – a 50% exemption from personal income tax for employment and freelance income will apply for 5 years, regardless of the beneficiary’s area of specialization (i.e. there will no longer be high value-added criteria as in the NHR). The exemption is limited to 250,000€ per year of annual income, which means that any income above this limit will be taxed at general tax rates.
These are the key points. Always remember that the Budget Bill is subject to amendments and that this is a preliminary assessment:
- If you are in a position to obtain Portuguese tax residency before December 31, 2023, you should seriously consider moving forward by the end of this year to secure the rules of the current NHR regime for 10 years.
- If you are not in a position to obtain Portuguese tax residency before December 31, 2023, there are still interesting options. In addition to a broader transitional regime to the current NHR rules that may be created in discussions in Parliament, employment and freelance income earned by new tax residents of Portugal will be reduced by 50% for 5 years (up to 250,000€ annual income).
If the current version of the 2024 Budget Bill is approved by Parliament, Portugal will retain a number of other tax incentives in terms of personal income tax and corporate income tax and will remain particularly attractive to investors and expats whose main source of income comes from employment or freelance activities.
In addition, the intention to establish innovation and the start-up ecosystem is reinforced with a corporate tax rate of 12.5% for the first €50,000 of taxable income of qualified entities, and a unique tax regime for stock options.
The State Budget for 2024 promises significant changes to the NHR Tax Regime in Portugal, directly affecting future tax residents. It is crucial to be aware of these changes and, if applicable, consider obtaining tax residency before the end of 2023 to ensure access to the benefits of the current regime. For those who don’t have this possibility, there are still interesting options to explore.
Remember that the information provided here is based on the current version of the 2024 Budget Bill and is subject to possible amendments during the legislative process. Consulting a tax professional in Portugal is essential to obtain the most up-to-date and personalized guidance on the subject.
Ultimately, the evolution of Portugal’s tax regime reflects the country’s ongoing commitment to attracting talent, encouraging innovation and promoting investment, thereby consolidating its position as one of the most attractive destinations for international tax residents. This is a time of transition and adaptation. BUYME Prestige is at your side to help you find the home of your dreams.
