Since the financial crisis of the late 2000s, Portugal has sought to become a haven for foreign workers and investors in the hope of reviving the country’s faltering economy.
But now the country’s prime minister has taken initial steps to control the number of digital nomads arriving in Portugal, as local workers grow increasingly frustrated with plans that have led to a severe housing crisis.
during an interview CNN PortuguesePrime Minister Antonio Costa said he plans to end the country’s non-habitual resident (NHR) system next year.
Deloitte explains Under a law designed to welcome foreign workers, people who become Portuguese tax residents will be subject to a special tax regime for 10 years under the NHR scheme.
Most individuals in “high value-added” jobs – such as doctors, technicians and journalists – are subject to a flat tax rate of 20% on income earned in Portugal.
In comparison, Portuguese residents pay income tax of 14.5% to 48%. sliding scaleAccording to PwC. Costa now admits that this unequal policy has done more harm than good within Portugal.
“Maintaining this measure going forward would not only be a biased way of continuing to drive up the housing market, but it would be prolonging a measure of fiscal injustice, which is unjustified,” Costa told CNN. , the system will remain in effect for those arriving in the country before the 2024 deadline.
It is unclear what will replace it, including a new route to becoming tax resident in Portugal and the new income tax rates once this is done.
A representative from the prime minister’s office did not immediately respond. wealthAsk for an overview of how the new rules will impact digital nomads. It’s unclear how the rule changes will affect the digital nomad visa, which was introduced last year.
Income of foreigners from outside the EU or European Economic Area under the D8 visa 2,800 euros per month (approximately $2,930) per month to obtain a 12-month visa to work in the country. These residents tend to pay taxes back home, but new laws targeting non-residents could change the situation for short-term workers as well.
Portugal cracks down on digital nomads?
The move makes the prospect of becoming an expat in Portugal less attractive to high-income workers who immigrate. Since the onset of the COVID-19 pandemic, thousands of digital nomads have flocked to the country to take advantage of new remote work options.
According to statistics, as of December last year, there were 15,800 digital nomads in Lisbon Nomad List data reported by Politico. Data comes from the Portuguese Immigration and Border Service (SEF) programme The number of foreigners living in the country increased by approximately 45% between 2018 and 2021.
Nearly half of digital nomads are from the U.S., according to new data from Nomad List annual report. Portugal’s capital, Lisbon, is the world’s most popular destination for women and the second most popular destination for men.
But recent policies show dramatic changes that appear aimed at deterring certain groups of future tourists who for years have been considered to have an advantage over native Portuguese workers.
The country announced earlier this year that it would also end its golden visa program, which since 2012 has allowed foreigners to obtain Portuguese citizenship in exchange for investments in the country. This may include purchasing a home worth at least €350,000 (approximately $367,000).
According to statistics, this has promoted Portugal’s investment boom. Between 2012 and 2023, the plan brought 7.3 billion euros (about 7.6 billion U.S. dollars) of investment to Portugal. data From the Portuguese Immigration and Border Service (SEF). Nearly 90% of these investments come from real estate.
While the inequality of the tax system creates inevitable social problems for Portuguese residents, they find themselves increasingly squeezed out of the real estate market by wealthy tourists.
Digital nomads have led to a proliferation of Airbnb properties in cities like Lisbon, reducing the supply of affordable housing for other residents. guardian July report. Lisbon resident Margarida Custódio told the newspaper that she spends 90% of her salary renting an apartment in Lisbon.
political reporting How a handful of nomadic protesters stormed the doors of the Lisbon Internet Summit last November to denounce Portugal’s foreign investment-friendly policies for causing rising house prices and gentrification.
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