The end of the Portuguese NHR Regime?


As per the 2024 Budget Act Proposal (Proposal) released last week, the NHR regime will be revoked from 1 January 2024 onwards, with the following consequences:

  1. The scope of the 20% flat rate applicable to employment/self-employment income arising from high added value activities is substantially reduced as it will only comprise professors and scientific researchers and/or research & development activities (duly certified);
  2. The exemption on foreign source income will only apply to individuals that carry on one of the professional activities referred in 1) above, as opposed to the current regime, which was available to anyone that would benefit from the NHR status;
  3. Foreign source pensions will no longer benefit from the 10% flat rate, being liable to the Portuguese progressive rates.

A new opportunity for Newcomers

At the same time, the Proposal contemplates a new tax regime for those professionals who relocate to Portugal (“Newcomers”), who will benefit from an exclusion of 50% of their annual employment or self-employment income, up to a limit of € 250.000. This regime applies for 5 years to any individual that relocates to Portugal, provided that he/she has not been a tax resident in the previous 5 years and regardless of the activity carried out.

Considering that the employment or self-employment income not exceeding € 250.000 is typically subject to progressive rates up to 50,5%, this means that under this regime, Newcomers’ employment or self-employment income will in practice be liable to effective progressive rates of up to 25,25%, as opposed to 50,50%.


The Proposal will be followed by a Parliamentary discussion (normally, the Budget Act will not be approved before the end of November).

CMS Portugal will keep you updated on further developments. But, for now, three important takeaways:

  1. Those individuals that are already registered as NHR will not be affected by the potential changes;
  2. Those that become tax resident until the end of 2023 will also benefit from the safeguard clause, which means that until the end of the year there is an opportunity to still benefit from the current regime for the next 10 years; 

    At the same time, as from 1 January 2024 onwards:
  3. Those professionals that relocate to Portugal between 2024 and 2026 may benefit from a partial exemption on their professional income, during a period of 5 years. In case of any questions, please feel free to reach out to our colleagues in Portugal.