FINANCE
YOUR MONEY
FINANCE
YOUR MONEY
RICARDO CHAVES OF ALL FINANCE MATTERS IS HERE TO HELP PEOPLE UNDERSTAND WHAT IS ALLOWABLE – AND NOT – WHEN IT COMES TO FINANCIAL MATTERS IN PORTUGAL. AFM EXPERTS CAN ADVISE YOU ON HOW TO DEAL WITH BOTH BUSINESS AND PERSONAL TAX MATTERS TO ENSURE YOU ARE IN THE BEST POSSIBLE POSITION.
In the May issue of AlgarvePLUS, he updates readers on Non-Habitual Residency
Q Is the Non Habitual Residency (NHR) scheme still available? I heard that it stopped in 2024 but we only received our residence cards in February 2026. If we don’t qualify for the NHR, what is the tax liability on our income? We are both retired, with State and private pensions in the UK and rental income from a UK property that we may decide to sell going forward in order to fund our future purchase in the Algarve.
A The Non-Habitual Residency tax regime ended in 2024 and some expats who were eligible didn’t apply because they weren’t aware of the programme and its advantages or received incorrect advice or, in some cases, had their visa applications delayed, making it impossible to apply for the NHR before March 31, 2025.
If you were renting a property in Portugal in 2024 and started your visa application in the UK before 31 December 2023, you might still be eligible. Our team has helped many expats in similar situations, and under certain circumstances, you could apply for the NHR regime for the 2024 tax year as a late application, but you would only benefit for eight years instead of the usual ten.
We would need to change your tax address retroactively to 2024, and the NHR application would become effective in 2026. This means that you would be considered a Portuguese tax resident in 2024 and 2025, paying regular taxes during those years.
As a normal resident, your State Pension is taxed in Portugal, not in the UK, and it would be taxed at progressive rates. Rental income earned in the UK is also declared and taxed in Portugal, typically at 25% but with a credit for any tax paid in the UK.
Since the NHR only begins in 2026, as already stated, you would have this status for eight years instead of ten. This means that, from 2026 through 2033, your State Pension would be taxed at a maximum rate of 10% in Portugal, and rental income or capital gains (should you sell the property) would be reported but not taxed during this period.
Be aware that if you sell the property after your NHR status expires, the transaction must be reported in Portugal, and half of the capital gains would be liable for tax here. However, any taxes paid in the UK would be credited in Portugal under the DTA.
