On Monday, lawmakers approved a provision that modifies the non-habitual resident (NHR) tax regime, stipulating that NHR is accessible to workers in companies certified as ‘startups.’
The State Budget proposal for 2024 (OE2024) anticipates the discontinuation of the NHR regime, limiting its accessibility to individuals whose income stems from careers in higher education teaching, scientific research, or qualified positions under the contractual benefits for productive investment outlined in the Fiscal Investment Code.
The solution proposed in the OE2024, which faced strong opposition, particularly from tax experts who deemed it ineffective, underwent an alteration proposed by the Socialist Party (PS). This alteration was approved in committee on Monday, expanding the scope of positions that can benefit from a 20% income tax rate for ten years. The proposal was passed with the majority the Socialist Party holds on the Parlament.
Thus, this tax incentive for scientific research and innovation will be available to individuals who, not having been residents in Portugal in the previous five years, become tax residents in the country and hold positions in entities certified as ‘startups’ under the law.
This includes companies employing fewer than 250 workers, with an annual turnover not exceeding 50 million euros, in operation for less than ten years, having headquarters or representation in Portugal, or at least 25 employees in the country. They must also meet other requirements, such as not resulting from the split of a large company.
The tax regime will also cover “qualified positions recognized by the Agency for Investment and Foreign Trade of Portuga, or by IAPMEI – Agency for Competitiveness and Innovation as relevant to the national economy, particularly in the context of attracting productive investment.”
The Socialist Party’s proposal also extends the regime to “positions or other activities carried out by tax residents in the autonomous regions of the Azores and Madeira,” according to the terms to be defined by regional legislative decree.
Author: Chris Morris