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The national tax authority (Autoridade Tributária) registered 9,166 applications for the Non-Habitual Resident (NHR) tax regime last year, a 22% decrease compared to 2019, which received 11,739 registrations.

While applications dropped in 2020, it is hoped the number will increase, as those applying to the regime have until March 31, 2021 to request registration for the previous year.

For Luís Lima, president of the Portuguese Real Estate Professionals and Brokers Association (APEMIP), the drop in demand and business deals “is related to the health situation and the impediments and difficulties of circulation between countries”.

According to the newspaper Dinheiro Vivo, which analysed data from the Ministry of Finance, French nationals lead the number of NHR registrations, with a total of 9,371 members. They are followed by the British and Irish (6,748 applications), Brazilians (6,623) and Italians (5,054).

What is the NHR?
Since its creation over 10 years ago, the NHR regime has provided generous tax breaks to more than 50,000 pensioners. Under the scheme, most income from a foreign source is exempt from Portuguese taxation for 10 consecutive years, as is income that is taxable in another country.  

While British expatriates could potentially receive most UK rental income, capital gains on real estate, interest, dividends and non-Portuguese employment income tax-free, the effects of Brexit now require that non-EU citizens first receive a residence permit.

This is possible either through the Golden Visa programme (read more) or Passive Income (learn more about the D7 visa).

For advice on investing in real estate in Portugal and benefitting from substantial tax breaks, such as through the NHR regime, get in touch with the team at Algarve Home Sales.