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Portugal's NHR Regime Under Political Scrutiny in 2023
The Non-Habitual Resident tax regime faces increasing political pressure as debates intensify over housing affordability and tax fairness in Portugal.
Portugal’s Non-Habitual Resident (NHR) tax regime is facing unprecedented scrutiny as political debates over housing and taxation intensify.
The Political Context
As housing prices continue to rise in major Portuguese cities, the NHR program has become a focal point for debate:
- Housing Crisis: Critics link foreign buyer incentives to property price inflation
- Tax Fairness: Questions about whether tax breaks for wealthy foreigners are equitable
- Budget Pressure: Calls to redirect tax revenue to social programs
Arguments Against NHR
Critics argue that the regime:
- Provides tax advantages unavailable to Portuguese citizens
- Contributes to real estate price increases
- Benefits primarily wealthy individuals who would relocate regardless
- Reduces potential tax revenue
Arguments in Favor
Supporters counter that NHR:
- Attracts high-spending residents who boost the economy
- Brings investment and job creation
- Supports Portugal’s international competitiveness
- Generates overall positive fiscal impact through consumption taxes
Potential Changes Under Discussion
Policy options being debated include:
- Complete abolition of the program
- Narrowing eligibility criteria
- Reducing benefit period from 10 years
- Limiting to specific professional categories
Advice for Current and Prospective Applicants
- Current NHR holders: Benefits should continue for 10-year period regardless of changes
- Prospective applicants: Apply promptly if interested, as changes may come quickly
- All taxpayers: Monitor developments and consult professional advisors
The coming months may bring significant changes to Portugal’s tax landscape for expatriates.