Claims decision “could lead to the cancellation of investments in Portugal”
Portugal’s Association of Real Estate Developers and Investors (APII) has slammed the government’s decision to scrap the ‘non habitual residents regime’, which it believes has contributed to the unsustainable inflation of prices on the housing market.
For APII, this is “yet another one-off measure by the government, devoid of any logic, which will drive even more talent and highly qualified labour out of the country”.
According to Lusa, APII is thus “demanding clarification” on the government’s intentions, adding that, in its opinion, this move “could lead to the cancellation of investments in Portugal”.
In a statement given to the State news agency, the organisation insists that it wants “explanations from the government as a matter of urgency on what changes it intends to make to this regime, when they will be implemented and, above all, what real impact this will have on the country’s economy.”
“This announcement creates uncertainty“, APII goes on. It “could lead to the cancellation of investments in our country and prevent the return of highly qualified Portuguese who are abroad in the diaspora, who were counting on this regime to return and work in Portugal.
“NHRs create wealth, companies and jobs“, says APII (…) “measures like this reduce the attractiveness of our country, harming economic development.
“We are talking about a basic measure for the country’s economy, which has greatly contributed to attracting investment and human capital in the post-financial crisis period. We believe it is important to carry out an assessment of this measure, specifically to gauge its real impact on the country and the consequences of its end,” Hugo Santos Ferreira, president of APPII, says in the press release.
This is an pitch by APPII for a government u-turn. The organisation says it “hopes that the government can re-evaluate its position and start a process of consultation with the main players in this market, in order to conclude, based on real data, which is the right step to take”.
In interview with TVI/ CNN on Monday, António Costa described the government’s decision not to prolong this 14-year tax break for ‘non-habitual residents’ as being one prompted by the fact that it is, in fact, a form of fiscal injustice.
This has been the criticism of NHR all along: wealthy foreigners/ emigrés are encouraged to invest in Portugal and receive 10 years of ‘tax breaks’. At the outset of the regime, the deal was a full 10-year tax amnesty. This has since changed so that working people pay a flat 20% rate of tax on their income, retirees 10%. This is still much more favourable than the tax paid by national citizens – and, as the government has explained, the regime’s is seen as one of the measures that have caused an unsustainable inflation of prices in the housing market, to the point where ‘ordinary working people’ are now regularly taking to the streets in protest.
According to Mr Costa in his interview earlier this week, in the days when the country was struggling to attract foreign investment NHR “made sense”. Fourteen years on – a period during which house prices have almost doubled – “it does not make sense”.