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Portugal Expected to Eliminate Non-Habitual Tax Residency Regime by 2024

The current tax regime in Portugal offers special tax rates to people involved in activities like science, art, and technology, such as architects, doctors, engineers, artists, managers, self-employed contractors, and technicians. They pay only a 20% tax rate on their income generated in Portugal. Full exemptions from taxes are given on various types of income from abroad, like income from work, rent, dividends, and more, as long as it's taxable in the source country under a double tax treaty or has been taxed in a non-low-tax jurisdiction. Pensions from foreign sources are taxed at a flat rate of 10%.

People who became tax residents in Portugal and hadn't been residents in the past five years could apply for this special regime. Once accepted, they enjoyed these tax benefits for ten consecutive years.

However, the Prime Minister recently announced that this special regime will be ending soon. He expressed concerns that it was contributing to property speculation and possibly driving up property prices.

The full details of this change have not been announced yet, but they are expected to be included in the 2024 budget, which will be unveiled on October 10, 2023. It's unclear whether the regime will be completely abolished, but it's likely that the 20% 'impatriate tax' regime will be removed.

If the regime is completely abolished, experts believe that those already in the regime and those accepted into it before the end of 2023 will be allowed to continue benefiting from it. This may also include non-EU nationals with pending visa applications as of December 31, 2023, who will still have the chance to apply for non-habitual tax resident status once their visa is approved.


Contacts

If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact info@act.london or your usual A.C.T. contact.

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