The end of the NHR regime in Portugal for 2024 has generated a variety of reactions among international investors. Although the decision aims to review the country's fiscal policies, it raises concerns about the impact it will have on the market and on foreign investment.

The NHR has played an important role in attracting foreign investment and talent to Portugal over the years. The announcement of the end of the scheme may put off those who wanted to benefit from the tax advantages and are now considering other options.

However, some argue that the decision is necessary to ensure more equitable and fair taxation in the country. The NHR was criticised for allowing substantial tax exemptions, which led to a possible tax disparity between residents and non-residents. This decision by the government can be seen as an attempt to correct this inequality.

One thing is certain, the end of the NHR regime will not affect people who already benefit from this status, and those who want to change their residence and thus achieve greater tax efficiency can now look to other countries, such as our neighbour Spain.

In Spain, there is a regime that, although not identical, could be a viable alternative and is known as the "Beckham Law".

This regime was approved in 2004 and was amended in 2015. The Beckham Law, a regime applicable to workers relocating to Spanish territory, named after the famous footballer, was created precisely to attract foreign talent by offering favourable tax conditions to professionals, especially those linked to the sport of football, who moved to the country.

One of the main advantages of this scheme was that it attracted international talent to Spanish clubs, thereby increasing investment in the country.

However, it has been heavily criticised over the years and has generated a lot of debate about its advantages and the possible changes it could be subject to, since this regime has also created some tax disparities and favoured certain professional categories over others. Currently, high-level athletes cannot benefit from this regime.

The Beckham Law has some characteristics that distinguish it from the Portuguese NHR regime. It only lasts for 6 years, and taxation of labour income up to a limit of 600,000.00 euros has a general rate of 24% and, above this limit, the rate rises to 45%.

In Portugal, the NHR regime lasted 10 years and taxed income from high value-added professions at 20 per cent, without any limit.

The Beckham Law states that all labour income is taxed as a whole, regardless of where it is generated, i.e. it also applies to pensions, which in Portugal would be taxed at 10%.

Dividends and other capital income, on the other hand, are exempt from taxation as long as they come from abroad and there is a double taxation agreement (DTA) with the country where the income originates, as is already the case in Portugal. If the income is obtained in Spain, it is taxed at a rate of between 19 per cent and 23 per cent, depending on its value.

Spanish legislation stipulates that foreign workers must fulfil the following requirements:

a. Not have resided in Spain in the 10 years prior to their change of residence and apply this regime within 6 months of starting work;

b. Sign a new labour contract that involves their change of residence;

c. The contracting company must be Spanish; and

d. Do not obtain income through a permanent establishment located in Spanish territory.

Self-employed workers, professional athletes or directors of companies based in Spain that hold more than 25% of their share capital cannot benefit from this regime.

The Beckham Law can bring a considerable tax advantage to those who fall within its scope, however, it is always important to analyse the advantages and disadvantages in tax terms, so you can always count on the experience of the Tax Law Department of Belzuz Abogados, S.L.P - Sucursal em Portugal, which is available to support and advise you on this issue.

 Miguel Paixão

Departamento Derecho Fiscal y Tributario | Lisboa (Portugal)

Belzuz Abogados SLP

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