Portugal NHR Program: Complete Tax Guide for Expats

Portugal's Non-Habitual Resident (NHR) program, launched in 2009, was one of Europe's most successful tax incentive schemes. It offered a flat 20% tax on Portuguese-source employment and self-employment income from 'high value-added' activities, plus exemptions on most foreign-source income for 10 years. The program attracted an estimated 74,000 people by 2023, but was criticized for driving up property prices and creating inequality. Portugal ended the original NHR for new applicants from January 1, 2024.

The replacement regime, officially called the 'Tax Incentive for Scientific Research and Innovation,' is significantly more restrictive. Key features:

• 20% flat tax on eligible employment and self-employment income
• Duration: 10 consecutive years
• Qualifying activities: Scientific research, teaching in higher education, qualified jobs within certified startups, R&D roles in companies with significant R&D expenditure
• Exemptions: Certain foreign-source income may still be exempt under tax treaties
• Application: Must register as tax resident and apply within deadline

Eligibility is narrower than the original NHR:

1. Must not have been a Portuguese tax resident in the previous 5 years 2. Must work in one of these qualifying categories: - Scientific research and innovation roles - Teaching and research at higher education institutions - Qualified positions in certified startup companies - R&D positions in companies that meet R&D spending thresholds - Positions in entities benefiting from contractual tax benefits 3. Must become a Portuguese tax resident 4. Must apply within the prescribed period after becoming resident

If you were already registered as NHR before 2024, your existing benefits continue for the remainder of your 10-year period. If you became a Portuguese tax resident in 2023 and were in the process of applying, transitional rules may still allow you to access the old program. Key dates: registration as tax resident by December 31, 2023, or having signed an employment contract/rental agreement by October 2023. Consult a Portuguese tax advisor for your specific situation.

With Portugal's NHR restricted, consider these alternatives:

• Spain's Beckham Law: 24% flat tax for 6 years on Spanish income (up to 600k EUR)
• Italy's Flat Tax: 100,000 EUR lump sum on worldwide income for new residents
• Greece's Non-Dom: 100,000 EUR flat tax on foreign income + 7% for digital nomads
• Cyprus Non-Dom: Exempt from SDC on dividends, interest, rental income for 17 years
• Malta's Global Residence Programme: 15% flat tax on foreign income remitted (min 15,000 EUR)

Each has different strengths depending on your income type, level, and source.