Portugal’s nonhabitual resident (NHR) tax program, a beacon for wealthy expats since 2009, has been instrumental in the country’s economic revival. The program has lured foreign investors by offering attractive tax benefits for years, stimulated job creation, and propelled Portugal to new economic heights. However, as the current administration contemplates terminating the program as early as 2024, apprehension mounts over the potential economic repercussions.
Luis Horta e Costa, the co-founder of Square View, a prominent real estate developer and asset manager based in Lisbon, is raising the red flag. He cautions that abolishing the NHR program could precipitate a “mass exodus” of foreign capital, imperiling the hard-won gains in pivotal sectors such as real estate, tourism, and technology. Horta e Costa stresses that the NHR program’s benefits transcend mere capital inflows, underscoring the innovation and fresh outlook that foreign investors have injected into Portugal’s economic landscape.
The NHR program has been a game-changer for Portugal’s real estate sector, infusing it with what Horta e Costa describes as “renewed vigor.” He warns that pulling the plug on the program will bring this progress to a screeching halt, potentially triggering a ripple effect across multiple industries. Other entrepreneurs, like Ricardo Marvã, share Horta e Costa’s concerns, attributing Portugal’s unprecedented tech boom to the NHR program’s incentives.
As neighboring countries, including Spain, roll out similar initiatives to court foreign investment, Horta e Costa fears that Portugal may lose its competitive advantage. He contends that the NHR program has been pivotal in cementing Portugal’s image as an open, welcoming, and progressive destination for investors. With these incentives, Portugal may find it easier to maintain its allure and keep pace with its regional competitors.
The looming threat of the NHR program’s demise presents a formidable challenge for Portugal’s government. Given the program’s well-documented economic benefits over the past decade, devising a suitable alternative will be daunting. Luis Horta e Costa asserts that safeguarding foreign investment should be a top priority for government leaders, cautioning that failing could have far-reaching implications beyond economics alone.
Should the NHR program be terminated, Portugal will be at a critical crossroads. The post-mortem of the program may ultimately reveal a policy that breathed new life into Portugal’s economy, only to have its triumph cut short prematurely. As the nation navigates this uncertain terrain, the insights of experts like Luis Horta e Costa serve as a sobering reminder of the high stakes involved in the decision to end the NHR tax program.
