New NHR status for retirees : 10% tax and 7,500 euros minimum per year
Selling Portugal as a "fiscal Eldorado" or "Florida of Europe" will be more difficult. Foreign retirees who join the non-habitual resident regime (NHR) in the future should lose the tax exemption and double non-taxation and will have to pay a tax rate of 10% with a minimum tax of 7,500 € per year, according to sources close to the government. For several weeks, NHR status specialists have been agitating to find out whether the famous tax system will be abolished or modified for foreign retirees. The subject is advancing because today it is a clear proposal from the PS which will be debated as part of the 2020 State Budget. A tax rate of 10% with a minimum amount of € 7,500 in taxes to be paid per year : this is the PS's proposal for the 2020 State Budget. Lisbob, the expatriate assistant in Portugal, tells you all about the new NHR status.
Article translated from Idealista.pt
New NHR status for retirees : 10% tax and 7,500 euros minimum per year
Launched in 2009, the regime for non-habitual residents has more than 27,000 beneficiaries and has been a powerful driver of real estate investment in Portugal, especially in recent years. But there are changes in sight in this program which grants tax advantages to foreign retirees who settle in the country. The idea is to keep the exemption for those who already have it, but to reduce it for those who request it in the future.
The PS is preparing to go ahead with a proposal to modify the 2020 state budget in order to modify the regime for non-habitual residents, the Negocios newspaper quotes government sources, adding that the objective is to introduce imposing a minimum tax tax on retirees who arrive and end up losing the full exemption - which was applicable until now.
Foreign retirees who join the non-habitual resident regime (NHR) in the future should lose the exemption and double non-taxation and will be required to pay a tax rate of 10% with a minimum of € 7,500 per year according to the Expresso newspaper. Foreign retirees currently enjoy full exemption, because thanks to double taxation agreements, no IRS is required in Portugal or in their country of origin.
The change in NHR status, according to the Negocios newspaper, was prepared by the Ministry of Finance and is in line with the demands of the Portuguese left, which is very critical of this regime, in particular the Left Bloc (Bloco de Esquerda)
All the good things have an end, even NHR status
The proposal will be tabled by members of the Socialist Party (PS) during the debate on the 2020 state budget (OE-2020). And, according to Expresso, it strives to achieve a sort of squaring in the circle: "to calm the growing internal and external criticism that has been heard about these tax advantages and, at the same time, not to keep wealthy foreigners away a regime that has invested millions in real estate and tax consulting. "
New rules equivalent to benefits for "brains"
This is not the first time that the Portuguese Ministry of Finance has considered such a change in the NHR status, as Negocios also points out. Already in 2017, as part of the preparation of the 2018 state budget, Mário Centeno confirmed that a change was being evaluated and, in the meantime, the country had already been forced to renegotiate agreements double taxation with countries such as Sweden or Finland. So with this measure, installing a minimum rate is also a way for Portugal to calm certain countries that wanted to do the same and challenge the tax agreements.
The new model, if confirmed, will comply with the rules applied - under the same regime - for non-residents with high added value activities, the so-called "brains", who settle in the country and who for a period of ten years benefit from a rate of 20% income tax.