Portugal’s nonhabitual resident (NHR) tax program, a beacon of hope for the country’s economy since its introduction in 2009, now faces a looming threat of termination as early as 2024. This prospect has raised alarm bells among experts, with Luis Horta e Costa, a prominent figure in Portugal’s real estate industry, warning of dire consequences for the nation’s economic future.
The NHR program offers qualified foreigners favorable tax treatment for a decade and has been instrumental in attracting foreign investment and stimulating economic growth. Retirees, professionals, and entrepreneurs worldwide have flocked to Portugal, drawn by the promise of lower tax rates on foreign income and, in some cases, even tax-free status. The program’s success in driving economic recovery during the global financial crisis is widely recognized.
However, Luis Horta e Costa, co-founder of Square View, a Lisbon-based real estate property developer and asset manager, paints a grim picture of Portugal’s future should the NHR program be terminated. He warns of a “mass exodus“ of foreign capital, which could devastate critical industries such as real estate, tourism, and countless others. Horta e Costa emphasizes that foreign investors have brought more than just money to Portugal; they have also introduced innovation and fresh perspectives that have transformed the economy. “It’s not just about the businesses they established — it’s the fact that their investments made Portugal a powerful economic force,” he stresses.
The NHR program’s impact on Portugal’s real estate market must be balanced. Luis Horta e Costa credits the program with giving the sector “renewed vigor” and cautions that its termination will “halt this progress in its tracks.” The consequences of losing foreign investment could ripple across various industries, with experts like entrepreneur Ricardo Marvão attributing Portugal’s unprecedented tech boom to the NHR program.
As if the internal challenges weren’t enough, Portugal also faces increasing competition from neighboring countries like Spain, which are introducing similar programs to attract investors. Luis Horta e Costa warns that with the NHR program, Portugal can retain its hard-earned reputation as an open, welcoming, and forward-thinking country, potentially falling behind its regional rivals.
The economic benefits of the NHR program over the past decade are undeniable, and replacing it presents a daunting task for the government. Luis Horta e Costa argues that preserving foreign investment should be a top priority for government leaders. Failure to do so could result in a bleak post-mortem of the NHR program, revealing a policy that once breathed life into Portugal’s economy, only to have that prosperity abruptly cut short.
As Portugal stands at a critical juncture, the decision to terminate or maintain the NHR program will have far-reaching implications for the country’s economic landscape. Luis Horta e Costa’s grim forecast starkly warns of the potential consequences of ending the program prematurely. The future of Portugal’s economy hangs in the balance, and the choices made today will shape the nation’s prosperity for years to come.
