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Portugal webinar – are Brits still eligible for the NHR scheme?

British citizens are still able to access Portugal’s favourable Non-Habitual Resident (NHR) tax regime, despite the UK no longer being part of the EU.

That was the biggest take-home from a webinar run and hosted by EDGE International Lawyers, a law firm which has offices in both Portugal and the UK and has many years of experience of helping Brits looking to invest in, live, or buy a holiday home in Portugal.

The webinar – entitled ‘NHR post Brexit: Tax and Residency solutions in Portugal’ – took place on Tuesday via Zoom and Facebook Live, and was hosted by Geoffrey Graham and Gonçalo Figueira, two of the firm’s lawyers. The hour-long session saw the pair cover the NHR scheme in great detail before a quick Q&A session at the end.


Here, PIT provides a summary of what was said.

A similar state of play

The main thing most attendees to the webinar were keen to know was whether Brits would still be eligible for the NHR scheme post-Brexit.

The answer to this was emphatically yes. According to Figueira, there has never been an obligation or rule that the NHR scheme is only for EU citizens, it’s just been the case that most people using the scheme have hailed from the UK and Europe.

“We have clients from all over the world,” he says. “What has changed for Brits? On the tax side, nothing at all. The only thing that has changed is the residency permit. Before, British citizens living in Portugal could go to their local council and get an EU residency permit on the same day. Since January 1 [the end of the transition period], councils can’t issue that document.”

Figueira says there are two large groups of Brits with an interest in the NHR scheme. Those already in Portugal, who already have their registration and who have their rights protected under the Withdrawal Agreement. For these people, not much should change in terms of the NHR, although many are waiting for a new certificate to replace the former EU residency permit to confirm their residence.

The other group is those who are looking to invest in or move to Portugal now and in the future. For this group, there is another process.

Graham explains more. “For British nationals who were resident before the transition period, most of those will already have an EU residency certificate. With this, you can register with SEF [Portugal’s borders authority] to receive a 5-year residency card. In the meantime, you get a document saying you are legally resident in Portugal. At present, because of the current climate, we don’t know of one British client who has received an appointment with SEF, so there is no need for concern. There is an inevitable delay at the moment.”

But for those who aren’t already resident in Portugal, or are seeking residency in the future, getting this and then applying to the NHR scheme might take a bit longer than usual because of the pandemic. However, the lawyers argue it’s still perfectly doable and Portugal is still very much encouraging people from outside to settle in the country and have it as their main place of residence.

What is the NHR scheme?

Portugal’s NHR regime, which was introduced after the country’s major financial crisis in 2011, aims to attract investors and professionals of ‘high cultural and economic worth’ by allowing for substantial tax savings for those who qualify.

In order to apply for the programme, you must have the right to reside in Portugal and must also not have been a Portuguese tax resident in the five years prior to your application. Furthermore, you must have a residence in Portugal – it can be a bought or rented home - that you intend to keep and occupy as your main place of residence.

To apply for the NHR, you need documents to prove residency, as well as a Portuguese tax number, also known as an NIF number.

During the webinar, EDGE said that the first step for those people who want to move, invest or buy a holiday home in Portugal, is to get an NIF number. Even during Covid, it is still possible to obtain this number very quickly. You need a copy of your passport and proof of address outside of Portugal. From this, your nine-digit tax number can be obtained.

Freelancers, pensioners, business owners and other professionals of high ‘cultural or economic worth’ are the most typical candidates applying for the non-habitual tax regime in Portugal, and the NHR applies for 10 years. You can find our more about the scheme here.

An improving situation in Portugal

Those Brits looking to move to Portugal, or buy a holiday home there, are currently blocked by considerable travel restrictions between the countries. It’s virtually impossible to get from the UK to Portugal, or vice versa, at the moment as a result of Covid restrictions.

However, the improving situation in both the UK and Portugal is giving people hope that this could start to change in the coming months.

Following a first wave in which it was widely praised for its reaction to the virus, Portugal has had a much more difficult second wave, with high numbers of deaths, infections and hospitalisations. Things were particularly bad in January and early February.

On Friday January 15, the country was placed into a second national lockdown to drive down the spread of the virus. The country is now at a similar level, in terms of numbers, to other countries starting to think about exiting lockdown, like the UK and Germany. Thanks to the collective effort of the Portuguese population, the R number in Portugal is now the lowest in Europe.

It has gone from having one of the worst rates of infections and deaths by population size in mid-January – which even led to medical staff, 50 ventilators and 150 beds being flown in from Germany - to being in a much better position now.

Despite this progress, lockdown (or confinement) in Portugal is expected to last until the end of March at least, with the economy and the rest of society reopening after the long Easter weekend. This is due to there still being a high number of patients in intensive care units, despite the dramatic decline in transmission, cases and deaths in recent weeks.

Around 700 patients remain in ICU up and down the country, with a number below 200 deemed necessary ‘to deconfine in safety’. The mathematical models suggest this ‘magic number’ will be hit in about a month and a half.

The UK is moving slowly out of lockdown, too, but there has been little said about international travel, so it will be a while yet before planes are in the sky and travel increases again. But from both countries, and the world over, the signs are looking more promising.

“After a difficult month, there are reasons to be optimistic about the pandemic in Portugal,” Figueira said at the start of the webinar, when providing context about the current situation in the country.

“We now have the same numbers, or even below, those looking to exit lockdown. The R number is also the lowest in Europe. The Portuguese government wants this to be the last lockdown, so is now looking at the how and when of exiting.”

He says the easing of restrictions will be gradual, with schools starting first, before the economy and the rest of society follows afterwards.

Aside from the pandemic, Portugal is generally considered to be one of the healthiest and most liveable places to reside in the world. It regularly scores highly on safety and quality of life indexes.

As a result, even despite Brexit and the challenges with Covid, EDGE has still been seeing a high number of enquiries from British nationals about Portugal, and this hasn’t fallen away since the transition period ended.

“The difficulties with Covid didn’t reduce people wanting to move to Portugal, or invest in Portugal in the near future,” Figueira added. “People from the UK could see that Covid was a very specific issue within a specific timeframe, affecting the whole world. People know more normal times will return.”

Brits have long had an interest in Portugal, for tourism, investment and business. This doesn’t just go back decades, to the explosion of the package holiday, cheap travel and budget airlines, but centuries – as is evidenced by many of Portugal’s most famous port houses bearing British names.

The EDGE team argue that Brexit has actually increased this long-established interest. Brits don’t want to lose, without restrictions, the chance to travel to Portugal and the rest of the EU – something which schemes like the NHR offer.

“There has been a substantial increase compared to last year or two years ago,” Figueira said. “That’s very reassuring.”

Graham argues that Brexit crystallisation has helped, too. “There has been more clarity, it has actually finally happened, and people know more about it. Portugal has become a perfect gateway for those wanting to keep access to Schengen.”

He adds that the NHR scheme isn’t the only option for British clients. There’s also the much-talked about Golden Visa scheme – although this is only open to those who don’t already have EU residency as it’s only eligible for non-EU investors.

Available to third-party nationals, it offers the chance of five-year residency and a Portuguese passport at the end of the residency in exchange for a property investment of €500,000 (for a new-build) or €350,000 (for an existing home in need of renovation). There are other options for investment, such as creating employment, but property is far and away the most popular option.

The Golden Visa is more suitable for those who don’t necessarily wish to be resident in Portugal, with a much smaller number of minimum days in the country required to be eligible. With the NHR, people are expected to have Portugal as their main place of habitation, spending at least 183 days in the country, whereas the same restrictions don’t apply for the Golden Visa scheme. It might be most attractive to holiday home owners looking for a more hands-off investment and a summer property to boot.

“There is also the D7 visa,” Graham said. “This requires a clean criminal record and showing you have the means to support yourself. This is typically issued by the Portuguese consulate in the UK, but then completed in Portugal. There is also the reunification visa, if you are married to, or dependent on, an EU citizen, and the D2 startup visa which is similar to the D7 visa.”

Graham says the D7 and D2 visas are also geared to those who want to live in Portugal and be taxed there, too.

One of the advantages of the NHR scheme, at this juncture, is that most, if not all, of the process can be carried out remotely. But the Golden Visa could prove a little more difficult to secure at the moment.

What happens after 10 years?

Figueira says this is a question he hears plenty when it comes to the NHR scheme. Those who signed up right at the beginning are now nearly reaching the end of the 10 years, but what happens afterwards, when this time is up?

“Although 10 years is a very long time, the NHR is only ever intended as a temporary exemption. Once the tenth year expires, you don’t have to do anything, your record just goes back to tax resident without NHR,” he told the webinar. “You don’t have the same exemptions or flat rates anymore.”

However, he argues, you can do as much as possible within the 10-year period on offer. “You can plan ahead for after. Aside from the NHR, you can structure and plan to get the most favourable deal for your situation. Portugal, for example, has no succession and gift tax, so you are fully exempt as long as your beneficiaries are direct family members.”

As Figueria says, the NHR scheme has been so successful because it’s not an offshore scheme offering full exemption. It’s in line with EU rules, it’s fully legitimate, and you are required to fill in a tax return each year like a normal tax resident. You must also declare your worldwide income.

But the rates remain very favourable and those working with an accountant who understands the NHR very well can benefit from the tax incentives accordingly.

NHR or Golden Visa - which is better?

After the webinar, we posed the following question to the EDGE team - is the NHR scheme better for investors/holiday home owners than the Golden Visa scheme? And can both be used interchangeably? 

Graham responded: “It is fundamental to note that the Golden Visa programme is a residency by investment programme and the NHR programme is a tax programme. Therefore, in the same way that the Golden Visa programme allows free travel in Schengen but does not require applicants to become tax resident, the NHR programme provides successful applicants with tax-efficient living but not a residency permit.”

He added: “So, for British holiday home owners, the Golden Visa programme is the most appropriate option to explore as it would allow them to freely enjoy their homes without the restrictions of the 90-day tourist visa and without becoming Portuguese tax resident. Similarly for new investors.”

“On the other hand, the fact that some British nationals already have a holiday home does not make them automatically eligible for the Golden Visa qualifying property investment of, mostly likely, €500,000, so we need to look at the circumstances of each client. At the moment many of our British, and other third country national, clients are combining the programmes to enjoy the benefits of both the free travel in the Schengen area and the tax-efficient living.”

To find out more about the NHR scheme, you can visit www.nonhabitualresidents.com or www.edge-il.com. You can also watch a video of the full webinar below.


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