How to apply for Portugal NHR tax program as government sets deadline for its end

 

 

According to Prime Minister António Costa, the NHR program is “no longer justified” because it contributes to the inflation of the housing market, which he said has reached “unsustainable prices.”

 

 

In recent months, Portuguese people have taken to the streets across the country to protest rising housing prices. In the second quarter of 2023, house prices in Portugal recorded the fourth highest increase in the European Union, the latest figures from Eurostat show.

 

 

The decision to end the NHR tax scheme was included in the 2024 state budget proposal. The original version is still subject to debate and voting, but given the majority that the ruling party has in parliament, it is very likely that it will be enacted. The final vote on the budget bill will take place on November 29, 2023. 

What are the NHR tax benefits?

 

Here's what you need to know about the key requirements if you want to apply for NHR status in Portugal. 

 

The main requirement is that you need to become a tax resident in Portugal, which means you must be eligible to live in the country. 

 

In the year to which the income relates, the applicant must meet at least one of the following criteria:

 

• Staying in the country for more than 183 consecutive or interpolated days in any 12-month period beginning or ending in that year 
• Staying in the country for a shorter period of time, on any day during the period referred to in the previous paragraph, and having access to a housing under conditions that indicate a current intention to maintain and use it as a habitual residence
• On December 31, individuals serving as crew members on a ship or aircraft qualify if they are in the service of entities that have their residence, headquarters, or effective management in the territory in question
• Performing public functions or assignments abroad, in the service of the Portuguese State

Moreover, this residence must be provable. It’s important that you not only meet the above requirements, but also that you are not a tax resident of another country. You should not stay in another country for more than 183 days, as tax residence can then be presumed there. 

 

The additional cumulative condition is that the applicant has not been a tax resident in Portugal for the last five years. 

 

 

 

To start the process for the non-habitual resident regime in Portugal, the first thing you need to do is become a resident in the country. 

 

If you're an EU/EEA/Swiss citizen, you can register for residency without a visa. Just go to your local town hall, bring your passport, and proof of your current address (though proof of residency isn't required). Find the counter for "Cidadão Europeu" (European Citizen), and the staff will help you fill out the form. The registration usually costs around €15.

 

Those who are not EU citizens and wish to apply for the NHR scheme must first apply for a residence permit to live legally in Portugal. There are several ways to obtain this permit, but one widely used method is the Portugal D7 visa program, especially given the recent restrictions on golden visas related to real estate investment. The application process can be completed through the “Serviço de Estrangeiros e Fronteiras” (SEF) or at the nearest Portuguese embassy or consulate. 

It is recommended that NHR applicants seek professional financial and legal advice, but if you wish to apply on your own, you must follow the steps below.

There are several ways to obtain a NIF. If you are currently in Portugal, you can visit your local finance office (finanças). To get a NIF at a finanças, you'll need to present proof of residency (such as an electricity bill or rental agreement), your certificate of residency or visa, and your passport.

 

Once you have received your NIF, you must register as a tax resident in Portugal. This registration can also be done at the finanças, provided that you can prove your permission to reside in Portugal (by indicating previous registration as a European citizen or residency permit holder).

Here we explain how to apply for NHR status.

 

• The easiest method is through the government's financial portal.
• Initial registration on the website is required.
• Information required for registration: NIF, Fiscal address, Email address, Phone number (matching the NIF registration details), Answer to a security question

• After registration, a password will be sent to you by post.
• You are expected to receive the password within two weeks.

• Once you receive the password, log into the finanças portal.
• Navigate to Aceda aos Serviços Tributários, click Entregar Pedido and then Inscrição Residente Não Habitual to register your NHR application.

• Declaration confirming that you have not been a tax resident in Portugal for the last five years.
• Tax returns for the last five years.
• Proof of purchase of a property in Portugal or a rental contract.
• Be prepared that additional proof may be required.

 

 

 

 

Below is additional information for U.S. and UK citizens. 

Any Americans moving to Portugal who meets the eligibility requirements may apply.

To be eligible for the NHR scheme, applicants must have a residence in Portugal on December 31 of the year in question and the intention to establish a habitual residence.

Significant benefits, especially for U.S. citizens retiring in Portugal, with tax exemptions related to pension income.

 

Due to the UK's exit from the EU, obtaining NHR status has become more complicated for UK citizens.

UK citizens are advised to apply for a D7 visa.

Once you have obtained the appropriate visa, the steps to obtain NHR status are the same as the general application process described previously for all applicants.

 

Explore more: Porto guide for Digital Nomads

 

Here are some additional notes on non-habitual residency in Portugal:

 

If registered online at the Portal das Finanças, you can monitor the status of your non-habitual residency application.

 

You will usually receive a response within a couple of weeks.

In some cases, especially if your NIF was issued recently, the process may take as little as 2 days.

 

You can be resident in Portugal, but the crucial aspect is not having been a tax resident for the five years preceding your application.

You must be a tax resident to qualify for non-habitual residency.