During the first decade of this millennium, it would have been hard to imagine that towards the end of the second decade Portugal would be recognised as one of Europe’s economic success stories. One important factor in this state of affairs has been the country’s efforts to attract overseas investment.
In terms of sheer numbers, it would be hard to argue that the Non Habitual Resident (NHR) regime has not been a major driver of investment in the country and it has perhaps been the most symbolic move in a brave new era of “fourth way” politics for the country.
Investment begets investment
The NHR tax break regime, which came into force in 2009 as a way to attract talent, investment and retirement-age wealth from other countries in the European Union, has played a massive part in ensuring that investors who might otherwise have considered settling in Spain, France or Italy have decided to call Portugal their home.
In recent years, there has been uncertainty about whether the regime would continue to operate and whether it was consistent with the economic philosophy of Portugal’s centre-left government. However, it now looks like not only is NHR here to stay, it is going to be reviewed with a view to making Portugal even more attractive to overseas professionals and investors.
Mário Centeno, the country’s Minister of Finance, recently announced during a television interview on TVI that he would be taking a new set of proposals for extending the NHR regime to the Council of Ministers for review.
The proposals, he said, have been put forward with a view to attracting the calibre of experts and professionals that the country needs for growth.
Furthermore, he added, that in keeping with the country’s burgeoning reputation as a centre for tech investment, he would be looking to attract investment in new technologies.
Skilled workers and retirees wanted
As it stands, the NHR regime already provides highly skilled professionals the opportunity to enjoy a flat rate tax of 20%, while qualifying pensioners who draw pensions from another country are exempt from all Portuguese tax, providing that they nominate Portugal as their country of tax residence.
It is widely reported that official figures show more than 27,000 individuals are currently enjoying NHR status in Portugal (as at January 2019), the majority of these being retirees. Just over 2,000 of the current NHRs are reportedly classed as high-value professionals – so it is easy to see why both Prime Minister Costa and Minister of Finance Centeno are keen to expand the scope of the regime in order to stimulate further investment and growth.
Portugal, it would seem, is thankfully still riding a wave of recovery that traces its origins to the bailout years of 2011-2014, with favourable macroeconomic conditions, alongside the balanced and steady approach of Costa’s fourth way, proving the central force. Like all waves, however, this momentum is unlikely to be sustained forever, but with the continuation and likely expansion of the NHR regime, coupled with sustained growth, the here and now represents a time of ripe opportunity for investment.
Eurozone excellence with a top team captain
Portugal is increasingly seen as a model for successful fiscal policy. Mário Centeno is currently serving as the president of the Eurogroup of finance ministers and in December 2017 former German finance minister Wolfgang Schäuble even went so far as to dub him the “Cristiano Ronaldo” of EU finance.
Against this background, non-habitual residents should have every confidence in the country’s ongoing investment opportunities. However, as this confident economic climate is unlikely to last forever, now is surely a good time for NHRs to review their finances, and the many unique opportunities and tax breaks that are currently available to them.
The first step for successful financial and wealth management planning in Portugal should be to seek the services of experts with local knowledge and significant years of experience behind them.
Blacktower Financial Management in Portugal
Blacktower has offices in Lisbon and the Algarve and can help you consider the best way to structure your finances, taking advantage of the many benefits that you enjoy as an NHR. Contact us today to arrange a review of your finances.
BLACKTOWER IN PORTUGAL
Blacktower’s offices in Portugal can help you manage your wealth to your best advantage. For more information contact your local office.
The above does not constitute advice and guidance should be sought from an independent tax adviser before making decisions.
By Manuela Robinson
Manuela Robinson is the Joint-Country Manager of Blacktower in Portugal. With offices in Quinta do Lago and Cascais.
[email protected] | 289 355 685
Blacktower Financial Management (International) Limited is licensed by the Gibraltar Financial Services Commission. Licence 00805B. Blacktower Financial Management Limited is authorised and regulated in the UK by the Financial Conduct Authority.