A Portuguese tax break regime aimed at European Union citizens created in 2009 to attract talent and investment is to be reviewed. It has even been dubbed “Portugal’s best kept (tax) secret”.
The non-habitual residents tax regime, known simply as NHR, which has mostly attracted pensioners from France and Scandinavian countries because the government offers them significant tax exemptions and reductions on pensions, was last reviewed in 2012.
Now the Ministry of Finance under Mário Centeno is reviewing it again with the aim of making it more attractive to overseas professionals who have the qualifications that the country needs.
The proposal to review the NHR regime is to go to the Council of Ministers soon, according to Mário Centeno in an interview he gave to TVI.
“We are reviewing it to attract the type of qualified professionals that the country needs to grow,” he said.
Mário Centeno added: “It is a temporary and contained regime to attract the kind of professionals that we need to grow new professions in new technologies.”
The revision will be sent to the Council of Ministers within the next few weeks in compliance with EU regulations.
The NHR regime offers professionals with skills considered high-value-added to enjoy a special IRS tax rate of 20% while pensioners whose pensions are paid by another country are exempt from paying IRS tax if there is a Double Taxation Agreement and the retired individual elects Portugal as its taxable country of residence.
This IRS exemption policy on pensions has led to criticism from some nordic countries such as Finland and Sweden.
According to the latest official data available, the number of people benefitting from the NHR regime in January 2019 was 27,367.
Of that amount only a small fraction of 2,141 signed up to the NHR regime on the back of value-added professions.
The NHR regime is valid for up to 10 years for the successful applicant after which normal tax regimes apply.
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