The decision to phase out the special tax incentives for new NHR in Portugal has stirred some discontent. It's anticipated to conclude by the end of 2023 but there's a glimmer of hope for 2024.
The anticipated end of the NHR has prompted discussions about potential alternatives. Although the regime is likely to terminate in 2023, there's a glimmer of hope for its revival in 2024, especially with an upcoming change in government.
In place of the NHR, the Portuguese Government has introduced the Tax Incentive for Scientific Research and Innovation. This scheme caters to new residents with a focus on innovation and research. However, it excludes current or past NHR beneficiaries, maintaining the application window until December 2023. Successful applicants from this year will retain their status for a decade.
The future model for attracting high-value professionals remains in flux until the approval of the 2024 State Budget. But experts anticipate a more restricted and possibly less competitive system than the current one.
However, the political landscape in Portugal is in upheaval. Prime Minister António Costa's abrupt resignation after nearly eight years in office, closely following the initiation of the contentious Mais Habitação package, has sent shockwaves through the political landscape. Costa's departure, triggered by a judicial inquiry, has precipitated a wave of speculation and unease.
In response to this, President Marcelo Rebelo de Sousa has announced the dissolution of the Assembly of the Republic and has called for early elections set for March 10, 2024. However, this decree hinges on the final approval of the State Budget for 2024, underscoring the uncertainty looming over the nation's political future.
This unexpected turn of events has created a complex scenario, raising questions about the continuity of policies, particularly concerning the revocation of the NHR regime. The upcoming State Budget, poised for final approval in November, may face revision or challenges under the new government, potentially altering the course of critical economic and housing strategies.
The potential demise of the NHR has triggered concern within the investment community. Gonçalo Roxo, co-founder of YPA, expresses concern, stating,
“The announcement has already undermined our credibility and stability, leading to a noticeable decline in foreign investment in Portugal. We acknowledge the importance of foreign investment for our country and remain hopeful that the situation will improve in 2024.”
Despite government efforts to address housing issues, the crisis remains unresolved. Measures like ending golden visas and revoking NHR status have led to investor distrust. Housing prices have surged by 4.8%, rental costs by 26.3%, and property transactions have dwindled due to supply-demand disparities.
As Portugal navigates this period of transition and political uncertainty, it's critical to monitor how the future government shapes its policies and the impact it will have on the housing market and investment landscape.
Your perspectives matter. Stay tuned for updates on how these changes will unfold and what they mean for Portugal's economic and housing future.