Portugal’s non habitual resident (NHR) tax program, which has been a significant catalyst for its economic resurgence since its introduction in 2009, now faces an uncertain future. The current administration is considering terminating the program as early as 2024. This has raised concerns among experts like Luis Horta e Costa, who fear that losing NHR could severely affect Portugal’s economy.
The NHR program has been instrumental in attracting wealthy expats, retirees, and investors to Portugal by offering them favorable tax treatment for ten years. This influx of foreign capital has boosted the real estate market and brought innovation and a fresh perspective that has transformed the Portuguese economy. Luis Horta e Costa, co-founder of Square View, a real estate property developer and asset manager in Lisbon, believes that the termination of NHR could trigger a “mass exodus” of foreign investment, hurting critical industries and growth prospects.
According to Horta e Costa, the NHR program has been particularly crucial for Portugal’s real estate market, which has experienced “renewed vigor” thanks to the tax incentives. He warns that the program’s termination will “halt this progress in its tracks,” potentially leading to a significant slowdown in the sector. Fellow entrepreneur Ricardo Marvão echoes these concerns, crediting NHR with enabling an unprecedented tech boom in Portugal.
The potential fallout from the end of NHR extends beyond just economics. Luis Horta e Costa argues that the program has been essential for cementing Portugal’s reputation as an open, welcoming, and forward-thinking destination. Without these incentives to attract foreign capital and talent, he worries that Portugal may fall behind its regional competitors, particularly as neighboring countries like Spain introduce similar programs to attract investors.
As the future of NHR hangs in the balance, Portugal finds itself at a critical juncture. The program’s economic benefits have been clearly demonstrated over the past decade, and replacing it presents a substantial challenge for the government. Luis Horta e Costa believes that preserving foreign investment should be a top priority for policymakers, as failing could jeopardize the hard-won prosperity that Portugal has enjoyed in recent years.
The potential post-mortem of NHR, as Horta e Costa suggests, may tell the story of a policy that breathed new life into Portugal’s economy, only to have that progress cut short prematurely. As the debate over the program’s future continues, it remains to be seen whether Portugal will find a way to maintain its appeal to foreign investors and sustain its economic momentum in the face of this new challenge.
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