The Non-Habitual Residents ("NHRs") regime in force since 2009 was implemented with the purpose in order to attract to Portugal highly skilled professionals, high net worth individuals and foreign pensioners ("high net worth individuals").

However and in accordance with the various changes brought by 2020 Portuguese State Budget the Non-Habitual Residents regime will be subject to some changes being on of them the elimination of the exemption applicable to foreign pensions which in accordance with this proposal will be subject to a 10% tax rate.

Currently it is not possible to evaluate the impact of such change which will only be assess with time.

In fact, the Non-Habitual Residents regime presented some advantages to some individuals, for instance, Portuguese sourced employment income and/or self-employment income obtained from high added value activities, with a scientific, artistic or technical nature are subject to a flat 20% IRS tax rate compared to the maximum current taxation of 53%.

Notwithstanding the above, we draw the attention to the fact that the new rules do not apply to those already registered as NHRs, those whose requests for registration as NHRs were duly filed and are still pending on the date of entry into force of the 2020 State Budget Law and those who are already tax residents in Portugal and request their registration as NHRs until March 31st of 2020 or 2021, by meeting the necessary conditions with reference to 2019 or 2020, respectively, which will still be able to benefit for some exemptions on some income for the period of 10 years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.