According to a report by ECO, the tax authorities are automatically refusing all requests from foreign workers and pensioners who want to come to Portugal, this year, to benefit from the more favourable regime for non-habitual residents, which only applies an IRS rate of 20% on income from work, including green receipts, instead of the progressive rates of this tax that go up to 48%.

Only then, “in the notification to candidates, does the Tax Authority (AT) ask them to present proof, documents showing how, until the end of 2023, they were eligible to benefit from the regime, such as employment contracts, enrolment of children in Portuguese schools or contracts promising to purchase a house”, Luis Leon, tax expert and co-founder of the consultancy Ilya, revealed to ECO.

It has been revealed that the AT does not have the means to automatically apply the change that the PS introduced in the State Budget (OE) for 2024, which provided for the end of the regime for non-habitual residents and the creation of a new program aimed at some activities linked to innovation and science.

The current model does not require the exercise of an activity nor limits it to a range of sectors and assigns the tax benefit indiscriminately, in terms of IRS, for 10 years to all foreigners who, in the last five, have not had an address in Portugal. Faced with the outcry that the end of this regime provoked, the socialists decided to approve a transitional regime, allowing foreigners who moved to the country during this year to still benefit from the old regime, as long as they presented proof of what they already had, by the end of 2023, plans to live in Portugal.

Not having the means to apply this transitional regime, the AT decided to reject all applications in advance, then asked the foreigners in question to prove, through documents that they already had, by the end of 2023.

This “bureaucratic” process, as Leon classifies it, could lead to considerable delays in approving applications. “A few months ago, AT was still evaluating requests for 2022”, warns the inspector.

Luís Leon also warns that there are two deadlines to take into account when presenting evidence: “In the case of work contracts and visas, the documents must be signed by December 31st at the latest. Registration of children in schools or property purchase contracts must have been signed by October.”