Portugal to Scrap Controversial Tax Breaks for Foreign Residents: Government Announcement

Background

• Portugal’s government plans to abolish tax breaks under the Non-Habitual Resident (NHR) regime
• Scheme introduced during the financial crisis, but has drawn criticism for disadvantaging local residents
• Fueled by significant discounts on Portuguese taxation for foreigners

Criticisms and Concerns

• Thousands of mainly overseas applicants taking advantage of tax incentives
• Contributed to rising housing prices and inflation
• Negative impact on local communities and housing market

Public Protests and Government Response

• Months of protests pushing for the elimination of NHR tax regime
• Government confirms intention to scrap tax perks
• Commitment to addressing affordability and fair competition

Impact on Housing Markets and Foreigners

• Rapid price growth in Portuguese cities (Lisbon, Porto)
• Making it challenging for local residents to purchase homes or afford rent
• Uncertainty around implementation and consequences for current beneficiaries

Updates and Further Details

• Discussions ongoing between ministries and international partners
• Prime Minister António Costa working on even distribution of tax benefits
• More information regarding tax reforms and impact on individuals and businesses to be released

Last updated: October 3, 2023