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Non-Habitual Resident Status – Proposed Amendment to the Law

The State Budget Law Proposal for 2024 (“POE 2024”), which is under discussion in Parliament until November 29th, proposes the full termination of the Non-Habitual Resident (“RNH”) regime, as of 2024. However, POE 2024 includes a safeguard clause, which allows taxpayers who already hold RNH status to maintain the benefits of that regime until the end of the respective 10-year period.

Tuesday, 28 November 2023 - Fiscal
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Non-Habitual Resident Status – Proposed Amendment to the Law The State Budget Law Proposal for 2024 (“POE 2024”), which is under discussion in Parliament until November 29th, proposes the full termination of the Non-Habitual Resident (“RNH”) regime, as of 2024. However, POE 2024 includes a safeguard clause, which allows taxpayers who already hold RNH status to maintain the benefits of that regime until the end of the respective 10-year period.

Furthermore, anyone who meets the requirements for RNH and registers as a tax resident in Portugal by December 31, 2023, can still request RNH status and enjoy its benefits during the 10-year period. Additionally, POE 2024 proposes a new tax incentive for those who become tax residents from 2024 onwards, but only for the area of scientific research and innovation.

To be able to benefit from this regime, taxpayers must meet the following cumulative conditions:

 a) Have not been a resident in Portugal, for tax purposes, during the last five years;

 b) Has acquired tax residence in Portugal; and 

c) Earn income that falls into one of the following categories: 

  • i) Higher education and scientific research teachers, including scientific employment in entities, structures and networks dedicated to the production, dissemination and transfer of knowledge, integrated into the national scientific and technological system;
  • ii) Qualified jobs within the scope of contractual benefits to productive investment, in accordance with chapter II of the Investment Tax Code;
  •  iii) Research and development jobs for personnel with minimum educational qualifications at level 8 of the National Qualifications Framework (doctorate), the costs of which are eligible for the purposes of tax incentives for research and business development (SIFIDE).

The OE Proposal for 2024 also foresees extending the already existing Return Program, so that it applies to taxpayers who become tax residents in Portugal up to 2026 and who have not been tax residents in our country in the last 5 years. The Program allows a 50% tax exemption on income from employment and self-employment up to 250,000 Euros per year during the first 5 years of residence.

We will continue to closely monitor parliamentary discussions and possible proposed changes to the current text of the OE Proposal for 2024.

 Martínez-Echevarría & Ferreira has a team of competent lawyers and professionals qualified to provide advice in several areas of law. For questions related to tax matters, do not hesitate to contact our department. We are at your disposal through the usual channels and contact platforms.

 

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