Americans rush to Portugal. Everything you should know

As the tax exemption for non-habitual residents (NHR) in Portugal is ending, citizens from North America are rushing to apply for residency tax in the country. To avoid the possible termination of the tax breaks, Americans are scrambling to complete paperwork to make sure they qualify for the program. This can help them save hundreds of thousands of dollars over 10 years.

NHR tax regime

According to Bloomberg, the end of the NHR tax regime is part of the measures in the State Budget 2024, which was approved at the end of November in Parliament. However, a proposal to amend the document that creates a transitional regime for NHRs next year was moved. It was done to take care of the case of workers, retirees, or investors who prove that they have prepared their move to Portugal during 2023.

Transitional regime

The Socialist Government of Portugal wants to "strengthen the transitional regime, allowing the legitimate expectations of citizens who have already undertaken a set of material steps to change of tax residence to Portugal, based on the regime whose validity ends with the law proposal."

It has also been reported that North Americans who want to move to Portugal, give the example of Matt Booth, a resident of Boise, Idaho. According to Bloomberg, initially planning to move to the Algarve in January, where he and his wife bought a house for EUR380,000 in 2021, Booth postponed his move date by a few weeks to guarantee qualification.

US citizens living abroad pay taxes to their country

The US citizens living abroad still pay taxes to their country. However, the non-habitual resident tax system allows expats relocating to Portugal to pay a flat 20% tax on income and a 10% levy on pensions for 10 years. This is less than the progressive tax regime for locals, which requires residents with annual incomes surpassing about EUR79,000 to pay a 48% tax.

FAQs:

Why are US citizens rushing to complete paperwork to move to Portugal?
As the tax exemption for non-habitual residents (NHR) in Portugal is ending, citizens from North America are rushing to apply for residency tax in the country.

Why do Americans want to move to Portugal?
The US citizens living abroad still pay taxes to their country. However, the non-habitual resident tax system allows expats relocating to Portugal to pay a flat 20% tax on income and a 10% levy on pensions for 10 years. This is less than the progressive tax regime for locals, which requires residents with annual incomes surpassing about EUR79,000 to pay a 48% tax.