Non-Habitual Residence

The Portuguese Government has recently revoked the so-called Non-Habitual Residence Tax Regime which allowed, on one hand, for a more favourable personal income taxation by applying a flat rate of 20% tax during 10 years for income obtained in Portugal derived from certain value added activities of a scientific, artistic or technical nature, and, on the other hand, for an exemption in Portugal for pensions, employment or self-employment income obtained from abroad.

However, a transitory legal provision in the Portuguese State Budget Law (“Lei do Orçamento de Estado”) will still allow for the application of the Non-Habitual Residence Tax Regime for individuals who become resident in Portugal during the year of 2024, which means they will have to apply for this status until the end of March 2025 maximum.

Despite the above mentioned change, the fact is that a new legal provision was also added to the Portuguese Tax Benefits Regime (“Estatuto dos Benefícios Fiscais”) foreseeing tax incentives for individuals working in certain activities within the scientific investigation and innovation field who have not been resident in Portugal in the last 5 years and that become resident here in the future and, therefore, in a big part, it will keep in practical terms the previous legal regime by applying to them the same tax special rate of 20% during 10 years for income obtained in Portugal derived from employment or self-employment in those activities.