You may not know it and there is no need to be alarmed but if you have decided to move to Lisbon to become an Non Habitual Resident in Portugal, things may change soon. Here is an update on what is happening in Portugal around this NHR status and the changes that may occur in relation to its taxes and taxation in the country.
Non Habitual Resident in Portugal
Fill in the form below to be put in touch with an English-speaking accountant based in Lisbon who will accompany you in your application for Non Habitual Resident status.
I will only make a short summary of this Non Habitual Resident status since there are many articles on the web and you can find here some additional information. This status can be easily applied for at the Portuguese administrations, as long as you can easily speak the language, and gives the possibility under certain conditions to be exempt from taxes for 10 years (non-renewable period).
This status is not reserved for retired people, since certain entrepreneurs who come to work in a high value-added profession (the complete list of which you will find on this article) can benefit from a 20% tax advantage. But this status of Non Habitual Resident is very popular with retirees who come to live in Portugal since it allows you not to pay taxes on a pension paid by European country if you are resident in Portugal.
As a reminder, the main conditions to become a Non Habitual Resident in Portugal are to live in the country for more than 183 days in the year and not to have been a tax resident in the last 5 years.
According to the Luso-French Chamber of Commerce and Industry (CCI), in 2013 there were a few thousand French expatriates in Portugal. In 2018, they are estimated at 50,000, 80% of whom are retired. Many expatriates have come to take advantage of the Portuguese NHR status and its tax benefits.
Portuguese NHR tax exemption under threat
You may have seen on many forums such as the Expat forum dedicated partly to Portugal, Portuguese non habitual residents worried about new measures leading to a new tax exemption which would no longer be null. This request to question the taxation of Portuguese NHR actually comes from a proposal made by the party: “Bloco de Esquerda”. It raises the question of the impact of the tax exemption for NHR on the Portuguese property market. Since they do not pay taxes in Portugal, these NHR can buy real estate at a much higher price than the normal market price, which contributes to its increase and becomes problematic for the Portuguese people and their standard of living. This is the argument of this political party, which is therefore planning to make a proposal to make changes to the tax exemption for real estate purchases in Lisbon or elsewhere in Portugal.
The Bloco de Esquerda also wants to remove this advantage for Portuguese NHRs not to pay IRS tax both in Portugal and in their home country. The problem of the accumulation of short term rentals in big cities like Lisbon is also pointed out by political parties in Portugal. That is why the BE has also announced 4 new draft laws aiming at offering minimum 5-year rental contracts but also tax advantages for landlords offering open-ended rental contracts.
It can therefore be noted through these various announcements and these draft laws that the situation of the Portuguese facing the boom in the real estate market is becoming difficult. The political parties have chosen to put forward their defence and to take measures to help them cope with it.
New Non Habitual Resident status for when?
For the time being there is therefore no reason to worry about Non Habitual Residents in Portugal as these are only proposals that will be made by the Bloco de Esquerda when the state budget for 2019 is negotiated. The main objective is to reduce the speculative capacities on the real estate market of Lisbon, Porto, the Algarve and all these popular destinations of the NHR in Portugal but also probably to remove this 0% taxation (In the country of origin and expatriation) which is in their view unfair and too advantageous.
Once these various proposals have been made, it is still necessary that :
- The government decides to impose a tax
- The government shall determine the amount of such taxation
- The Portuguese Parliament has the majority
- The project be voted on in the 2019 budgets.
These are just a few steps in a long process that is still in progress. The 2019 budgets will be proposed in the fall of 2018, so we will see what happens then. Moreover, it is not said that the measure is retroactive and concerns all expatriates who already have the status of Non Habitual Resident in Portugal. There is therefore nothing to be alarmed about and keep in mind that even in case of taxation, taxation in Portugal will remain no less interesting for a pensioner.
Getting NHR status in Lisbon
It is therefore for the moment still quite possible and interesting to become an Non Habitual Resident in the country. However the administrative procedures and the preparation of the file can be complicated things to set up by yourself. Do not hesitate to contact me in this case. I will put you in contact with a person who speaks English and who will be able to accompany you throughout the process of applying for your NHR status:
- Explanations and details on the procedure, the documents to provide…
- Preparation of the administrative file
- Accompaniment directly in the Portuguese administrations
- Meticulous follow-up until the procedure is finalised and you obtain your status
Application for NHR status in Portugal
By validating the contact form, you authorize me to forward your request to an English-speaking person who will be able to contact you directly. This person is a professional who offers paid services whose price varies according to your requests, needs and projects. Nothing is automated: these are people I know, based in Lisbon and who are qualified to accompany you in your approach & your project.
