NHRs save record €1.7 billion in taxes
The NHR regime offers a flat 20% IRS rate for qualified professionals and 10% for pensioners, significantly lower than Portugal’s standard progressive tax system.
In the final year that workers and pensioners could join Portugal’s Non-Habitual Resident (NHR) tax regime, beneficiaries saved a record €1.74 billion in personal income tax (IRS), marking the highest amount since the program’s creation in 2009.
According to the 2024 State General Account, the fiscal cost of the NHR scheme to the Portuguese government rose by 34% compared to the previous year.
This means the state forfeited €444.5 million more in tax revenue than in 2023, when the total savings for beneficiaries amounted to €1.3 billion.
The NHR regime offers a flat 20% IRS rate for qualified professionals and 10% for pensioners, significantly lower than Portugal’s standard progressive tax system.
This benefit is available to foreign or Portuguese citizens who had lived outside Portugal for at least five years before becoming tax residents in the country.
The aim has been to attract skilled workers and retirees to relocate to Portugal.
The spike in tax savings coincides with the program’s transition phase.
As reported by Jornal de Negócios, 2024 marks the end of new registrations under the NHR.
Only individuals who had demonstrated a formal connection to Portugal by the end of 2023, such as applying for a residence visa, signing an employment or housing contract, or enrolling children in school, were allowed to join under transitional rules.
Another factor likely contributing to the increased tax expenditure is the rising salaries of NHR beneficiaries who had already enrolled in previous years and continued to benefit in 2024.
However, data also shows that this increase is not entirely linear.
From 2022 to 2023, despite salary growth in Portugal, total NHR tax savings actually fell by 5%, from €1.36 billion to €1.3 billion.
The report does not specify how many individuals were enrolled in the program at the end of each year, making it unclear whether the rise in savings stems from higher incomes, more beneficiaries, or both.
Though the original NHR program has ended, the government has introduced a new, more targeted tax regime.
It offers similar benefits, a 20% flat IRS rate, but only to highly qualified professionals in science and strategic sectors.
Pensioners are excluded from this new scheme.