End of NHR regime - 2024 State Budget Law approved

Key aspects

• The State Budget Law for 2024 (“2024 State Budget Law”) was approved by the Portuguese Parliament and confirms the end of the Non-Habitual Resident (“NHR”) regime, starting in 2024.
• The 2024 State Budget Law contains grandfather clauses, allowing taxpayers who already have NHR status to maintain the regime benefits until their 10-year period ends. Also, individuals who become tax residents of Portugal up until December 31, 2023, can still apply for NHR status and enjoy its benefits for the 10-year period.
• The final text of the 2024 State Budget Law amends the initial proposal to include certain exceptions that allow taxpayers who already have existing ties to Portuguese territory, suggesting an ongoing relocation process, to move to Portugal up until December 31, 2024, and still qualify for NHR status.
• A new tax incentive is established for scientific research and innovation, to apply only to taxpayers who relocate to Portugal who earn income from specific job posts and activities.

Although the end of the NHR regime has been confirmed, the 2024 State Budget Law provides a small window of opportunity for individuals already in the process of relocating to Portugal to still benefit from the NHR regime if they are relocating in 2024. However, strict conditions apply, narrowing the possibility of applying this “extension” and necessitating a case-by-case analysis.

On the other hand, the impact of the new tax incentive for scientific research and innovation can only be assessed once the ministerial orders and regional decrees regulating it are published. However, an initial assessment indicates that the applicability of the incentive is considerably restricted.