Will Portugal's NHR Program be back?

Portugal's Finance Minister, Joaquim Miranda Sarmento, brought news for immigrants today. This new government is proposing the return of the advantageous tax program for non-habitual residents.

Last year, the previous government eliminated the original version, which granted foreign-qualified professionals and pensioners a flat 20% tax rate on their income.

Now it may be making its return. This time, there are significant changes. Foreign pensioners and passive incomers (with earnings from dividends and capital gains) will no longer be eligible for the updated non-habitual resident program, avoiding complaints from Nordic countries.

The minister told the Financial Times that the new version will only cover “salaries and professional income.” This decision is in line with the opinions of specialists who considered the previous version covering retirees to be inconsistent with its purpose, as Nuno Cunha Barnabé, a tax partner from Abreu Law Firm, described it as an "anomaly."

“It was against demographics. It didn’t make sense,” he stated. “We already have an old population. Attracting pensioners puts more burden on our health system. We need to attract young people.”

NHR tax benefits can exist to "attract highly skilled foreign workers who would help to boost growth," according to Miranda Sarmento.

The measure, which will be fully announced today, is set to find challenges in the parliament, where the current Prime Minister, Luis Montenegro, leads the minority and must gather votes for its approval. Both the far-right party Chega and the leftist Partido Socialista can be against the controversial measure. However, the government is confident that the renewed program could be a success as a tool to improve the country's economy. “We need skilled workers and economic growth," Miranda Sarmento said.

The measure, however, does not indicate the return of the previous format of the Golden Visa, which consisted of the purchase of €500,000 of property, as the government remains focused on tackling the housing crisis. "We will have to balance that with more affordable houses,” he concluded.

FT also says that big companies will gladly receive the possible return of the NHR program, which may now also cover Portuguese nationals living abroad, as they struggle to attract qualified foreign professionals.

The previous program allowed foreign professionals to work as self-employed or for foreign companies while living in Portugal, which brought a wave of expats to the country. Now, the new terms of the proposed program are unknown.

The full terms of the new NHR version will be presented today and must go through a parliamentary vote to be approved.

Source: https://www.ft.com/content/4e7fac79-ea08-4a04-8a37-9d6db239b896