Once again, very helpful info. Thank you. I was assuming it wouldn’t affect us as we already have our residency cards. I can also understand the frustration of the Portuguese people.
This underscores the reasoning for moving to Portugal or any other country. If it’s just the tax scheme, then it’s a volatile reason because it can change any time. Big picture. Portugal needs to protect the Portuguese people. Relocating abroad needs to cover all bases, including changing rules.
Hi Nancy. Another well-done post. This information will certainly benefit (or scare!) anyone who is in the planning / thinking / applying stage of making a move to Portugal. I know a couple who are doing their exploratory trip in December. I worry that their plans will be disrupted. Thanks for doing the research to get the facts out.
I believe that most people who consider moving and living in Portugal, have taken the time to see whether or not the NHR would or would not benefit them. I think asking a professional tax expert who does both U.S. and Portuguese taxes would be a good starting point. Having the tax expert run scenarios based on having the NHR, and also not having the NHR. (from a U.S. citizen point of view) If the taxes are so high without the NHR, then folks (like myself) need to weigh the pro's and con's. Is it worth being a tax resident in Portugal? Or does one split there time between other countries? There are many countries around the world that do not tax foreign earned income, including 401K's, pensions, social security, etc.
Hi Nanc. I absolutely love your posts. I did lots of giggling during your building process: you trying (subtly, of course) to train all of the people involved in the American way of building, while in their typical Portuguese fashion, they showed you how things actually work. 😆
Your post today about NHR status is very informative and understandable. As someone who is planning on moving to Portugal "in the future," I am going to have to quickly decide if the time is now, or if I will just deal with the tax situation as it evolves.
The rental problem is a big issue that has to be dealt with. Although it does affect people moving to Portugal, it is even a bigger concern for the Portuguese peoplr.
If only there were a way to benefit the bottomline for the working Portuguese … for example if foreign companies (or some scheme with wealthy immigrating individuals) expanding here were required to pay minimum wages ABOVE the country’s current minimum, it could create a receptive atmosphere for foreigners moving here.
The 11x is pure math. Whether the 3.2 includes or excluded social security was not mentioned. From
To my knowledge NHR “earned” income
Does pay social security tax. There are lower rates for the first 2 years, but then the NHR earned income pays the same SS tax as the Portuguese and will most likely not benefit unless that pay in for many years (10+) and then stay until they are old enough to take payment. I think a minority of current NHR will do both. This is what our tax accountant has told us.
I read a recent article that NHRs account for 0.3% of all tax payers in Portugal and pay 3.2% of the taxes…. Not to mention the amount of money they bring into the local economy via spending. If this is true the average NHR pays almost 11x the average Portuguese tax payer. Both are fairly insignificant but if more Portuguese understood this, it may not be the inflated issue it has become.
In today's newsletter from Jorge Branco it states, "Almost 30,000 people made tax declarations benefiting from the special deal in 2022, costing €1,3 billion compared to if they were paying standard tax rates. (Público) "
I assume “they” were referring only to income tax’s which account for only 18% of the tax resources collected by the state. Not sure how that translates to “eleven times the average Portuguese tax payer”. Retirees in NHR types pay 0% into Social Secuity
Thanks for your continued information... we have or NIF, own property, have a Portuguese bank account, but have not started the D7 process. Our plan is to move September of 2024.... we are looking now for a Portuguese tax advisor to see if we can figure out the impact. Everything seems very mixed up right now, but there is not much we can do...
The current thinking/expectation is that Portugal will discontinue NHR 1/1/24 allowing a grace period for those already "in the system" (i.e. have been issued a visa or possibly have been in contact with VFS) and are just waiting for SEF. However, this is speculation! There are a number of tax advisory services selling their services. I have signed on a number of webinars recently so I can stay informed. If you google this or go onto YouTube you can likely watch replays.
We all know the one constant in life is change. The end of the Golden Visa Program this year was a step to help with the housing crisis but perhaps could have been changed a bit to include that people were to reside here for most of the year or make it their primary residence. As Americans we have options to a few visas to live here but people from other countries are not on the list. My friends from South Africa explained to me that the Golden Visa is the only way to retire here even though they intend to live here year around. SA is still on the "bad country" list from the Apartheid days which makes it impossible for them to choose to move to Portugal with many of the other visa programs. Golden Visa was the only way and while 350k for a rehab or 500k for coastal towns may seem high to Portuguese people it is the only way in for people from a variety of countries.
When people move here and live here full time then they will pay 23 percent VAT on their purchases and that helps the local economy even if they only pay 20 percent income tax for those professions which are listed as necessary workers.
I could be wrong but I think some tweaking to make the plans work better vs elimination could help the economy as this was the plan for Portugal when they instituted the programs to bring foreign money into their economy.
As for the housing shortage I will make a video walking down the streets of my town to show how many vacant properties exist.
Nancy/Denise and other friends are the perfect example of expats who took a ruin in the town and turned it into a beautiful home which adds housing as well as improves the beauty of our towns.
Perhaps a fast track program to streamline the process for people who want to invest in rebuilding a ruin into a place of beauty would be appropriate.
I do think a long term plan of renting in Portugal is not a great idea for expats/immigrants as it does increase the rent and demand for rentals in Portugal so hopefully you're considering moving here and improving the housing situation (like Denise and Nancy) vs taking from it.
As always the devil is in the details. Dramatic changes may make people feel better, but may not solve the problem. A rehabilitation program, like the one you suggest, may be a good solution. The challenge would be agreeing on eligible properties.
Yes, I’m sure this is true as well. It depends on the angle you look at it. Both pieces of data can co-exist simultaneously. However, how many of the NHRs would not be here generating income tax and VAT revenue if the NHR program did not exist? Case in point: 10% of something is more € than 100% of nothing.
Thank you for the insight. The Pollyanna in me just wishes the uber-wealthy would pay their share of taxes wherever they are.
Once again, very helpful info. Thank you. I was assuming it wouldn’t affect us as we already have our residency cards. I can also understand the frustration of the Portuguese people.
This underscores the reasoning for moving to Portugal or any other country. If it’s just the tax scheme, then it’s a volatile reason because it can change any time. Big picture. Portugal needs to protect the Portuguese people. Relocating abroad needs to cover all bases, including changing rules.
Good informative article Nancy. Obrigado.
Hi Nancy. Another well-done post. This information will certainly benefit (or scare!) anyone who is in the planning / thinking / applying stage of making a move to Portugal. I know a couple who are doing their exploratory trip in December. I worry that their plans will be disrupted. Thanks for doing the research to get the facts out.
I came across this article today on the topic of NHR and a suggested ban on selling Portuguese properties to non-habitual residents. https://www.portugalresident.com/left-bloc-turns-up-heat-over-non-habitual-resident-tax-regime/
I believe that most people who consider moving and living in Portugal, have taken the time to see whether or not the NHR would or would not benefit them. I think asking a professional tax expert who does both U.S. and Portuguese taxes would be a good starting point. Having the tax expert run scenarios based on having the NHR, and also not having the NHR. (from a U.S. citizen point of view) If the taxes are so high without the NHR, then folks (like myself) need to weigh the pro's and con's. Is it worth being a tax resident in Portugal? Or does one split there time between other countries? There are many countries around the world that do not tax foreign earned income, including 401K's, pensions, social security, etc.
Hi Nanc. I absolutely love your posts. I did lots of giggling during your building process: you trying (subtly, of course) to train all of the people involved in the American way of building, while in their typical Portuguese fashion, they showed you how things actually work. 😆
Your post today about NHR status is very informative and understandable. As someone who is planning on moving to Portugal "in the future," I am going to have to quickly decide if the time is now, or if I will just deal with the tax situation as it evolves.
The rental problem is a big issue that has to be dealt with. Although it does affect people moving to Portugal, it is even a bigger concern for the Portuguese peoplr.
If only there were a way to benefit the bottomline for the working Portuguese … for example if foreign companies (or some scheme with wealthy immigrating individuals) expanding here were required to pay minimum wages ABOVE the country’s current minimum, it could create a receptive atmosphere for foreigners moving here.
Excellent post as always nance! your research is so appreciated.
Very clear and helpful - thank you!
The 11x is pure math. Whether the 3.2 includes or excluded social security was not mentioned. From
To my knowledge NHR “earned” income
Does pay social security tax. There are lower rates for the first 2 years, but then the NHR earned income pays the same SS tax as the Portuguese and will most likely not benefit unless that pay in for many years (10+) and then stay until they are old enough to take payment. I think a minority of current NHR will do both. This is what our tax accountant has told us.
I read a recent article that NHRs account for 0.3% of all tax payers in Portugal and pay 3.2% of the taxes…. Not to mention the amount of money they bring into the local economy via spending. If this is true the average NHR pays almost 11x the average Portuguese tax payer. Both are fairly insignificant but if more Portuguese understood this, it may not be the inflated issue it has become.
In today's newsletter from Jorge Branco it states, "Almost 30,000 people made tax declarations benefiting from the special deal in 2022, costing €1,3 billion compared to if they were paying standard tax rates. (Público) "
I assume “they” were referring only to income tax’s which account for only 18% of the tax resources collected by the state. Not sure how that translates to “eleven times the average Portuguese tax payer”. Retirees in NHR types pay 0% into Social Secuity
Thanks for your continued information... we have or NIF, own property, have a Portuguese bank account, but have not started the D7 process. Our plan is to move September of 2024.... we are looking now for a Portuguese tax advisor to see if we can figure out the impact. Everything seems very mixed up right now, but there is not much we can do...
The current thinking/expectation is that Portugal will discontinue NHR 1/1/24 allowing a grace period for those already "in the system" (i.e. have been issued a visa or possibly have been in contact with VFS) and are just waiting for SEF. However, this is speculation! There are a number of tax advisory services selling their services. I have signed on a number of webinars recently so I can stay informed. If you google this or go onto YouTube you can likely watch replays.
We all know the one constant in life is change. The end of the Golden Visa Program this year was a step to help with the housing crisis but perhaps could have been changed a bit to include that people were to reside here for most of the year or make it their primary residence. As Americans we have options to a few visas to live here but people from other countries are not on the list. My friends from South Africa explained to me that the Golden Visa is the only way to retire here even though they intend to live here year around. SA is still on the "bad country" list from the Apartheid days which makes it impossible for them to choose to move to Portugal with many of the other visa programs. Golden Visa was the only way and while 350k for a rehab or 500k for coastal towns may seem high to Portuguese people it is the only way in for people from a variety of countries.
When people move here and live here full time then they will pay 23 percent VAT on their purchases and that helps the local economy even if they only pay 20 percent income tax for those professions which are listed as necessary workers.
I could be wrong but I think some tweaking to make the plans work better vs elimination could help the economy as this was the plan for Portugal when they instituted the programs to bring foreign money into their economy.
As for the housing shortage I will make a video walking down the streets of my town to show how many vacant properties exist.
Nancy/Denise and other friends are the perfect example of expats who took a ruin in the town and turned it into a beautiful home which adds housing as well as improves the beauty of our towns.
Perhaps a fast track program to streamline the process for people who want to invest in rebuilding a ruin into a place of beauty would be appropriate.
I do think a long term plan of renting in Portugal is not a great idea for expats/immigrants as it does increase the rent and demand for rentals in Portugal so hopefully you're considering moving here and improving the housing situation (like Denise and Nancy) vs taking from it.
As always the devil is in the details. Dramatic changes may make people feel better, but may not solve the problem. A rehabilitation program, like the one you suggest, may be a good solution. The challenge would be agreeing on eligible properties.
Yes, I’m sure this is true as well. It depends on the angle you look at it. Both pieces of data can co-exist simultaneously. However, how many of the NHRs would not be here generating income tax and VAT revenue if the NHR program did not exist? Case in point: 10% of something is more € than 100% of nothing.
I will admit that NHR made our decision much quicker.