Transitional NHR Regime for 2024

The 2024 State Budget has discontinued the previous regime applicable to Non-Habitual Residents (NHR).

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However, a Transitional Regime has been introduced for those who establish tax residence in Portugal in 2024 and meet the requirements, specifically those who have taken certain steps towards establishing their residence in the country by the end of 2023.

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Requirements:

For the Transitional Regime to apply, taxpayers must change their tax residence to Portugal by 31 December 2024, must not have been tax residents in Portugal in the previous five years, and must meet one of the following requirements:

• Have a job offer or employment contract, a promise or secondment agreement concluded by 31 December 2023, where the duties are to be performed in national territory;
• Have a lease agreement or other contract granting the use or possession of real estate in Portuguese territory, signed by 10 October 2023;
• Have a reservation contract or promissory contract for the acquisition of a real right over real estate in Portuguese territory, signed by 10 October 2023;
• Have enrolment or registration for dependants in an educational establishment domiciled in Portuguese territory, completed by 10 October 2023;
• Have a valid residence visa or residence permit until 31 December 2023;
• Have a procedure initiated by 31 December 2023 for the granting of a residence visa or residence permit with the competent authorities, in accordance with the immigration laws in force, namely through the request for an appointment or actual appointment for filling the application for the granting of a residence visa or residence permit, or by filling the application for the granting of a residence visa or residence permit.

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Tax Benefits:

This regime allows taxpayers to benefit from the same advantages as the previous NHR regime, including the application of the special 20% tax rate on income from dependent and independent work derived from high value-added activities, the possible exemption on foreign income, and the taxation of pensions at a rate of 10%.

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Final Considerations:

The NHR regime presents an opportunity for individuals relocating to Portugal to benefit from one of the most attractive tax regimes in Europe for a period of 10 years.

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At Over the Sea (OTS), we have a team of experts specialised in NHR and international taxation. We are available to help you understand the tax impact of a potential change of residence to Portugal, taking into account your individual circumstances, and to develop a tailored solution to meet your needs.