Euro banknotes and coins in front of the national flag of Portugal

New report indicates ticking time bomb for existing NHR tax holders

New report reveals that as many as 73% of current NHR tax holders in Portugal risk progressive tax rates of between 28% to 48% if they don’t structure their income and assets early enough before the end of their 10-year tax incentive period. 

While Portugal’s NHR tax regime offers many tax benefits, the wealthy expats survey revealed that only a minority of NHR tax holders (27%) are prepared for when their NHR tax incentives expire.

Portugal Pathways tax experts urge NHR tax status holders to be proactive and act, stating:

“Many affluent expats are lulled into a sense of complacency by the NHR tax regime’s low tax rates. They fail to realise that these benefits are temporary, and that failing to plan early enough for the future could have serious financial consequences.

“Once the NHR tax incentive period expires, a large majority of expats become subject to Portugal’s progressive tax system, which can dramatically increase their tax burden to as much as 48%.”

Acting early and seeking professional advisors allows existing NHR tax holders the opportunity to mitigate future tax burdens by optimising tax-efficient structures.

Two people walking down the Algarve beach in Portugal during early morning backlit by the sun.

Mitigating serious tax burden through early planning

Proactive planning within the first seven years of your NHR tax status life can significantly reduce future tax burdens for up to two decades.

Restructuring your portfolio to favour tax-efficient investments, such as capital gains-exempt or tax-deferred options, can minimise tax liabilities.

Leveraging Portugal’s tax deductions and credits for mortgage interest, medical expenses, and charitable donations can further optimise your financial situation.

Marcel Léger, a retired investment banker and existing NHR tax status holder, had this to say about NHR tax planning. “Failing to plan for the future can have serious financial consequences,” he warns. “However, by taking proactive steps, you can safeguard your income, assets, and wealth for the future.”

Don’t wait until it’s too late

Take early action and contact Portugal Pathways expert team for personalised guidance on structuring income, assets, tax, and investments as an existing NHR tax status holder.

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