Reports of the anticipated end of the Non-Habitual Tax Residents (“NHR”) program appear to have been overwhelmingly exaggerated.

We have seen widespread news that the NHR program, which has been in force for over a decade, was cancelled in December 2023, but there are still viable options for latecomers. In a nutshell, the NHR allowed for an exemption on income from foreign sources and for the application of a 20% flat rate on employment and self-employment income deemed of high value-added, but also a 10% flat rate on pension income. Even though the NHR was not a one-size-fits-all exemption, it allowed thousands of individuals to live in Portugal under extremely favorable tax conditions.

Amongst several other requirements, the regime required individuals to change their tax residency to Portugal and file an application until March of the year following their relocation. However, moving to a different country entails several life-changing decisions requiring adequate planning, such as buying or renting a new house, meeting all immigration requirements, enrolling children in new schools, managing estates, changing jobs, etc. As such, the promise of an abrupt end of the program by the 2024 State Budget Bill was heavily criticized by many who started (or were about to start) their relocation process, as it was perceived as a major breach of their expectations.

Within such context, the 2024 State Budget Law approved a transitional regime, allowing individuals who had already started their relocation process to Portugal in 2023 to benefit from the NHR.

The transitional regime provides a last chance for certain individuals to finalise their relocation to Portugal under very advantageous circumstances. It is also noteworthy that such a regime will be easily applicable to many of those who were considering moving at some point in life but have not took the plunge by the end of 2023.

In fact, individuals who entered into a lease agreement or bought a house in Portugal before October 10, 2023, will be eligible for the transitional NHR. In this respect, a substantial number of individuals had already a place available in Portugal before the referred date and, as such, will be eligible for the NHR. This is an opportunity that cannot be missed but will only be available for a short period of time, as it requires a change of tax residency until the end of the year.

In addition, those who initiated their residence visa or permit process before December 31, 2023, will also be eligible to benefit from this regime. Here, the law merely requires that an appointment has been requested to apply for a residence visa or residence permit, or that an application for a residence visa or residence permit has been submitted before the end of 2023.

Other situations deemed eligible for the transitional regime include promissory or employment agreements to be executed until the end of 2023, or the enrollment or registering of children in a Portuguese school until October 10, 2023.

Also within the NHR sphere, a great new opportunity also arose after a recent decision from the Portuguese Supreme Administrative Court. In fact, many individuals who were eligible for the NHR missed their window to apply for the regime, and saw their requests denied by the Portuguese Tax Authority. However, on a groundbreaking ruling, the Court stated that even if the request is (or was) submitted after the due date (i.e., after March of the year following the relocation to Portugal), such request should still be approved. This represents a tremendous chance for many expats already living in Portugal.

Finally, even in circumstances where neither the above transitional regime nor the Supreme Administrative Court precedent are applicable, a new and improved regime (the so-called NHR 2.0.) might still be an option.

The revamp of the NHR 2.0. by the current Portuguese Government, aiming to attract highly qualified individuals to the country, will also create an opportunity for many individuals to benefit from a favorable tax regime, accompanied by a glass of fine wine and enjoy the famous Portuguese sunny weather.

We do not know what surprises may lie ahead. But for now, it seems like there are still a few possibilities for those intending to relocate to Portugal.