The non-habitual resident (NHR) regime offered by Portugal is a special tax regime that was introduced to attract foreign investors and talent to the country. The regime provides a reduced level of taxation on certain sources of income, as well as exemptions from tax for non-Portuguese source income. The scheme has been a victim of its own success, and has increased property prices and put strain on public services as taxpayers from throughout Europe have moved to Portugal to enjoy sun, sea and low tax rates. As a result, the Portuguese government has announced the end of the arrangement for anyone moving to Portugal after 31 December 2023.

Alternative destinations

Although Portugal is out of the picture, other jurisdictions with favourable tax regimes for internationally mobile individuals remain, including the following.

• Italy: Italy has higher rates of personal tax than the UK but offers various preferential regimes for individuals moving to the country. In particular, its lump sum tax regime allows expatriates to elect to replace regular taxation on all foreign (non-Italian) source income and some capital gains with a fixed €100,000 lump sum payment once a year. An annual wealth tax applies.
• Switzerland: Personal tax rates can be much lower in Switzerland depending on the canton of residence. The ‘forfait fiscal’ tax regime allows expatriates to pay a flat rate of tax based on personal living expenses, but to benefit from the regime, they cannot work in Switzerland. An annual wealth tax applies.
• Croatia: The Croatian digital nomad visa is an attractive short-term scheme. For up to one year, expatriates can live and work in Croatia and pay no taxes there if qualifying conditions are met. No wealth tax applies.
• Greece: The Greek authorities offer a flat 7% tax rate for foreign retirees who become resident in Greece. This applies to all foreign source income including pensions and investments.
• United Arab Emirates (UAE): Personal tax rates in UAE are zero, corporate tax rates are low and there is no annual wealth tax.

Many other countries try to encourage wealthy immigrants with tax breaks and exemptions, or do not impose income taxes at all. The issue for anyone leaving the UK is often how the rules of the new country interact with UK tax rules. The results are often not what you might expect, and anyone planning to move abroad needs to take advice even if it appears that they are moving to a no-tax jurisdiction.

What else can we expect?

It is clear that authorities globally are using tax as a means of encouraging foreigners to make the decision to move or stay put. This is certainly an area where we expect to see more changes, with public concerns about immigration needing to be balanced with the benefits wealthy incomers can bring to an economy.

Key take aways

Individuals looking to relocate to Portugal should seek immediate tax advice. Individuals currently in the process of moving to Portugal should also seek advice, particularly if the criteria for NHR status will not be met by 31 December 2023.

• There are many alternative, privileged tax regime jurisdictions to consider. We can provide a ‘country overview’ to help decide where might be suitable based not only on tax, but also lifestyle and family considerations.
• The way countries tax wealthy immigrants is a fast-changing area. Those wishing to relocate should be prepared with a ‘plan B’.
• For more information, please get in touch with Andrew Robins, Laura Greenhill or your usual RSM contact.