The Non-Habitual Resident tax regime, created in 2009, was developed with the aim of attracting foreign residents by offering significant tax benefits.

Qualification as a Non-Habitual Resident depends on the fulfilment of a number of conditions that must be met:
– The taxpayer must be a tax resident in Portugal, i.e. must stay in the country for more than 183 days during a tax year or have a dwelling in conditions that suggest a current intention to maintain and occupy it as a habitual residence;
– Not have been resident in Portuguese territory for the last 5 years.

In these terms, the Non-Habitual Resident has multiple tax advantages, such as:
– Exemption from tax on income obtained abroad;
– Flat rate of 20 per cent for income obtained in Portugal;
– Tax exemption on inheritance and donations to direct family members;
– Application of the special 10 per cent rate for net pension income.

Despite the various advantages offered, the Draft State Budget for 2024 repealed this regime by establishing, in article 195 of Draft Law no. 109/XV/2. ª (revocatory rule), that the articles establishing the tax regime for Non-Habitual Residents are to be revoked, namely Article 16º (numbers 8 to 12), Article 72 (numbers 10 and 12), Article 81º (numbers 7 and 8), Article 99 (number 8) e nº1 d) of article 101º of the CIRS.

However, given the transitional provision within the scope of personal income tax (Article 143 of Bill 109/XV/2), the tax regime for Non-Habitual Residents continues to apply to:

• Taxpayers who, on the date of entry into force of this proposal, are already registered as non-habitual residents in the AT’s register of taxpayers, for as long as the period referred to in paragraphs 9 to 12 of article 16 of the IRS Code has not expired;
• Taxpayers who on 31 December 2023 met the conditions for registration as Non-Habitual Residents, as well as holders of a residence visa valid on that date, until the end of the period provided for in paragraph 10 of article 16 of the IRS Code in the wording prior to that introduced by this proposal.
  Thus, under these terms, taxpayers will be able to continue to benefit from the Non-Habitual Resident tax regime.

However, the 2024 State Budget Proposal also provides for the creation of a similar tax regime, through the inclusion of article 58-A in the Tax Benefits Statute. This is a tax incentive scheme for scientific research and innovation that taxable persons resident in Portugal can benefit from, provided that they have not been resident in Portuguese territory for the previous 5 years and that they earn income that falls under:
– Higher education and scientific research teaching careers, including scientific employment in entities, structures and networks dedicated to the production, dissemination and transmission of knowledge, integrated into the national science and technology system;
– Qualified jobs within the scope of contractual benefits for productive investment, under the terms of Chapter II of the Investment Tax Code;
– Research and development jobs staffed by people with a minimum level 8 qualification on the National Qualifications Framework, whose costs are eligible for the purposes of the tax incentive system for research and business development, under the terms of Article 37(1)(b) of the Investment Tax Code.

Under these terms, the taxpayer will be taxed at the special rate of 20 per cent on net income from categories A and B earned from the above activities for a period of 10 consecutive years from the year of their registration as a resident in Portuguese territory.

However, the regime will not apply to taxpayers who benefit or have benefited from the Non-Habitual Resident regime. It is therefore necessary to weigh up which tax regime is more favourable to the taxpayer who has the possibility of meeting the requirements for both to apply.

We must not forget that these measures contained in the 2024 State Budget Proposal may be subject to subsequent changes, and it is necessary and prudent to constantly monitor them in order to confirm the effective application and/or revocation of the regimes described above.