Shhhh…. Europe’s best-kept taxation secret may have to change

Foreign pensioners lured to Portugal under the Non Habitual Residents’ regime (NHR) may have to start paying some kind of tax – albeit small – instead of enjoying the wonder of a 10-year exemption.

The news has come, very quietly, in Dinheiro Vivo today as parliament discusses the State Budget for 2020 (OE2020).

Whatever transpires will not affect anyone already benefiting from NHR. It will only affect future subscribers – and it’s unlikely to put anyone off.

Says DV, “the Socialist Party will advance with a proposal to alter the text of the OE2020 so that pensioners benefiting from NHR in future start paying a minimal tax”.

The proposal is being drafted now by the Ministry of Finance.

DV adds that while NHR has served to attract many retired Europeans to Portugal, it has also elicited quite a bit of criticism. Sweden and Finland, for example, have pulled out of fiscal agreements with Portugal, so that they don’t lose the tax income from their elderly citizens.

Bloco de Esquerda also has been a vehement opponent of the scheme, arguing that it is patently unfair on Portuguese pensioners (who cannot apply and have no tax perks on their pensions).

NHR has been described by accounting giant Pricewaterhouse Coopers as “Europe’s best kept”.

In its opening blurb on the detail, the company describes Portugal as “a very attractive location” for investors, with “very attractive tax regimes” that surpass other regimes “in many ways”.

But time, finally, is being called on NHR, although it is likely to be gentle.