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Arquivo de tag taxes

janeiro 19, 2024

NHR: Tax Authority Automatically Rejecting Foreigners’ Requests for Fiscal Benefits

Por José Vicente Cândido Em , ,

NHR: Tax Authority Automatically Rejecting Foreigners’ Requests for Fiscal Benefits

Only later, in notifications to applicants, does the Tax Authority (AT) request evidence from individuals to prove their eligibility to NHR regime. This evidence includes documents such as employment contracts, enrollment of children in Portuguese schools, or promises of property purchase, demonstrating eligibility until the end of 2023. Luis Leon, a tax expert and co-founder of the consulting firm Ilya, shared this information with ECO.

From an IT perspective, the AT lacks the means to automatically implement the amendment introduced by the PS (Socialist Party) in the 2024 State Budget, which proposed ending the non-habitual resident regime and establishing a new program focused on certain activities related to innovation and science.

The current NHR model does not require engaging in any professional activity nor restricts it to specific sectors. It uniformly grants tax benefits in terms of income tax (IRS) for 10 years to all foreigners who have not had a residence in Portugal in the last five years. Due to the backlash against ending this regime, the Socialists decided to approve a transitional regime, allowing foreigners moving to the country this year to still benefit from the old regime, provided they can prove plans to live in Portugal by the end of 2023.

Unable to implement this transitional regime, the AT has decided to automatically reject all NHR applications upfront. Subsequently, the individuals concerned are asked to provide documentation proving their plans to live in Portugal by the end of 2023.

This “bureaucratic” process, as described by Leon, may lead to significant delays in the approval of applications. Leon warns, “A few months ago, the AT was still evaluating requests from 2022.”

Leon also highlights two deadlines for submitting evidence: “In the case of employment contracts and visas, documents must be signed, at the latest, by December 31. Enrollment of children in schools or promises to purchase real estate must have been made by October.”

To qualify for the transitional regime for non-habitual residents, foreign workers and retirees, or Portuguese nationals who have been emigrated for more than five years, must meet one of the following conditions:

  • – Promise or employment contract until the end of 2023.
  • – Lease or possession contract for property in national territory until October 2023.
  • – Reservation contract or promise of acquisition of real rights over property in Portuguese territory concluded by October 10, 2023.
  • – Enrollment of dependents in an educational institution located in Portuguese territory until October.
  • – Residence visa or residence permit valid until December 31, 2023, or a procedure initiated by December 31, 2023, for the granting of a residence visa or permit, with the competent authorities.
  • – Member of the family unit of the taxpayers mentioned in the previous points.

In this special regime, foreign workers choosing to reside in Portugal or Portuguese citizens who have been emigrated for more than five years benefit from a reduction in IRS for 10 years, subject to a 20% tax rate on income from categories A and B. Pensioners pay a 10% IRS, having been exempt until 2020.

To access this regime, non-habitual residents must have tax residence in Portugal and stay in the country for more than 183 days, consecutively or interpolated, in a one-year period. They must also have their own residence or rented property with the intention of using it as their habitual residence.

 

Author: Chris Morris

novembro 28, 2023

NHR: Portuguese Parliament Approves Changes to Non-Habitual Resident Tax Regime

Por TejoMag Em , ,

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

novembro 15, 2023

NHR. Portuguese Government Introduces Transitional Regime 2024

Por José Vicente Cândido Em , ,

Initially, the government had announced the end of new enrollments, signaling that individuals moving to Portugal in 2024 would no longer be eligible for a decade of reduced taxes compared to the general population.

However, during the transition from the proposal of the State Budget to the presentation of amendments, the Socialist parliamentary group decided to overhaul the government’s original plan. They are now proposing the creation of a transitional regime, effectively maintaining the current rules for an additional year until the end of 2024. Importantly, this extension will apply exclusively to those individuals who had already begun the process of relocating to Portugal.

Socialist Party justifies this move as a measure to “safeguard the legitimate expectations of people who have already made the decision to immigrate or return to Portugal.” Failing to address these expectations, they argue, could erode the confidence of those who have committed to such a significant life change.

In addition to preserving the existing rules (lower IRS for ten years) for those becoming tax residents by the end of 2023, Socialist Party proposes that the regime will also apply to individuals who “become tax residents by December 31, 2024” and “declare, for the purpose of their registration as non-habitual residents, to possess a certain element binding them to this commitment.”

This unexpected shift in policy aims to provide a smoother transition for individuals making life-altering decisions and underscores the government’s recognition of the substantial impact such a move can have on people’s lives.