Not all lost in NHR incentives
The Government’s decision to end the Non-Habitual Residents tax regime next year may pave the way for a new tax incentive aimed at scientific researchers and innovators.
The new tax incentive will “allow a series of professions to continue to benefit from reduced tax income” according to news reports last week.
Like the NHR. It will apply to working people “who may not have been resident in Portuguese territory in any of the five previous years”, but this time the tax breaks are directed specifically at “careers in higher education teaching and scientific research”.
The explanation given in the draft Sate Budget for 2024 refers to the regime applying to people involved in “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 research and development jobs, for staff with minimum qualifications of level 8 of the National Qualifications Framework, whose costs are eligible for the purposes of the system of tax incentives for research and business development.”
Like the NHR, the tax incentive will be a 20% flat rate on earnings for 10 years.
The Finance minister Fernando Medina said last week that although there would no longer be a “universal, transversal tax regime to entice foreign pensioners and high earners, the conditions for attracting relevant investment to the Portuguese economy are intact” and this new mechanism, coming in 2024, would ensure he attraction of “structural investment”.
“In the meantime NHR does not end until 2024 and all applications for the regime whose processing takes place until the end of the year, are covered by the current law”, he reiterated.
The State Budget is clear; NHR will continue to apply “to taxpayers who, on this date of entry into force of this law, are already registered as non-habitual residents in the AT taxpayer register, as long as the period referred to in the paragraphs 9-12 of article 16 of the IRS Code (10 years) has no been exhausted” and also to “taxpayers who in December 31, 2023 met the conditions for registration as Non-Habitual residents, as well as holders of a residence visa valid on that date.”
Complete article in the Algarve Resident.