The Non-Habitual Residency (NHR) program, a coveted scheme granting residency to third-country nationals spending over 183 days in Portugal, is set to conclude in December 2024, a decision reached due to Portugal's government turmoil and budgetary disagreements.

This program extends a 20% income tax reduction to individuals engaged in high-value-added professions such as professors, doctors, and architects. Expatriates relocating to Portugal also enjoy a flat 10% tax on foreign pension income and an exemption on income generated abroad, encompassing foreign rental payments.

Portuguese citizens residing abroad for over five years can also avail themselves of these tax benefits. However, those seeking an expat tax extension must demonstrate a commitment to moving to Portugal in the current year, substantiated through employment or housing contracts.

The Socialist Party in Portugal initially aimed to terminate the scheme for new applicants from January 1, 2024, deeming it a "fiscal injustice." Introduced as a recovery measure post the 2008 global financial crisis, the NHR scheme has supported over 70,000 individuals in the last decade, as reported by Portugal Pathways.

Despite previous uncertainties, expatriates planning their move can now proceed with confidence. Steve Philp, Partnership Director at Portugal Pathways, emphasized the importance of this certainty for those who invested time and money into their relocation plans.

The 2024 state budget outlines income tax reductions and targets a 0.2% budget surplus. Future alterations to the NHR scheme may hinge on political developments after the elections scheduled for March 10.

Recent parliamentary decisions in Portugal include extending NHR benefits to workers in certified start-ups and researchers in qualified positions, aligning with Investment Tax Code criteria. These changes reflect an evolving landscape that impacts the taxation and residency landscape for non-habitual residents in Portugal.