Has the NHR Tax Regime come to an end?

Has the NHR Tax Regime come to an end?

by | May 6, 2024

Portugal’s Non-Habitual Resident (NHR) tax regime is undergoing significant changes, prompting questions and concerns among expats and potential residents.

As of January 1, 2024, new tax residents will no longer have access to the NHR regime in its current form, except for those eligible under the grandfathering provision outlined in the 2024 State Budget Law. This means that individuals seeking NHR status must become tax residents in Portugal by the end of December 2024 and meet specific criteria upon application. These criteria include:

(i) Having signed a (promissory or) employment contract or secondment agreement by December 31, 2023, with duties to be carried out in Portugal;

(ii) Having signed, by October 10, 2023, a lease or other contract allowing for the use or possession of a property in Portugal;

(iii) Having signed a reservation or promissory contract for property acquisition by October 10, 2023;

(iv) Having enrolled or registered dependents at an educational institution in Portugal by October 10, 2023;

(v) Holding a residence visa or residence permit valid until December 31, 2023;

(vi) Having initiated the procedure for obtaining a residence visa or permit with a Portuguese Consulate or AIMA (formerly SEF) by December 31, 2023.

For expats and individuals considering relocating to Portugal, the changes to the NHR regime introduce new considerations and timelines to navigate. Prospective residents must carefully review the updated requirements and deadlines to determine their eligibility for NHR status, either under the grandfathering provision or under the “new NHR” regime with a narrower scope, which is applicable only to some professionals and situations.

For more information or assistance with navigating Portugal’s NHR regime changes, please contact us at geral@sbpslegal.com. 

Know Your Rights: Understanding Security Deposits in Rental Agreements

Know Your Rights: Understanding Security Deposits in Rental Agreements

by | May 6, 2024

In the process of renting out a property, it is not uncommon for landlords to discover issues during property inspections that fall under the tenant’s responsibility. Tenants are obligated to return the property in its original condition, and if damages or anomalies are found, landlords have the right to retain the security deposit to cover repair costs upon handing over the property.

Additionally, landlords can withhold the security deposit for various reasons, such as late rent payments, negligent property use, or non-compliance with contractual terms detrimental to the landlord’s interests. However, if there is no breach of contract, tenants have the right to request the return of their security deposit.

Is the security deposit mandatory?

Although the security deposit is legally provided for in the Portuguese Civil Code and serves as a landlord guarantee, it is not mandatory for the rental contract to be valid. Both parties can mutually agree to waive the deposit requirement.

Is there a legal maximum for the security deposit?

As per current law, landlords cannot demand a security deposit exceeding the equivalent of two rents. This limitation ensures fairness and prevents tenants from facing undue financial burden. Additionally, stating that the signing of the contract is dependent on the full and immediate payment of more than the equivalent of two rents is not allowed as it would be considered abusive and disadvantageous to tenants.

And if the landlord demands a higher amount for the lease to be signed?

If a landlord insists on a deposit exceeding the legal limit, seeking legal assistance during the negotiation and agreement process is advisable. Professional guidance can help tenants navigate the terms of the tenancy agreement and ensure fairness for all parties involved.

For more information or assistance, please contact us at geral@sbpslegal.com.

How to legalize documents for international use

How to legalize documents for international use

by | May 6, 2024

For public documents (as opposed to private) to be valid abroad, these need to be legalised, thus its authenticity being certified. Issuing entities of public documents will typically include Ministries, Registry Offices, Courts, Schools, Notaries, Commerce and Industry Chambers, among others. Documents issued by diplomatic or consular officers do not need apostille seals for authentication purposes.

When a public document originates from a country that is a member of the Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents (the member list can be browsed here), it requires an apostille stamp for authentication when used in another member country. The apostille stamp confirms that the competent authorities of the issuing country have recognized and certified the signature and authority of the person signing the document. In some cases, the receiving country may also require a translated version of the document, which must also be apostilled if prepared abroad.

For documents originating from non-member countries of this Hague Convention, the authentication process involves obtaining certification from the local competent authority followed by validation from the consulate of the receiving country with jurisdiction over the specific territory.

Here are a few examples for clarity:

1 – A civil document, such as a birth or marriage certificate, issued in the US, will need an apostille seal by the Governor of that specific state, who is the competent authority to legalise documents at state level. However, a document issued at federal level (e.g. an FBI background report) will need an apostille seal from the Department of State.

2 – A document issued in a non-member country like Sri Lanka must be authenticated by the Portuguese Consulate in India, which has jurisdiction over Sri Lanka. However, since it originates from Sri Lanka, it must first be authenticated by the Sri Lanka High Commissioner in New Delhi before submission to the Portuguese Consulate.

For more information or assistance, please contact us at geral@sbpslegal.com.

Do I need a will in Portugal?

Do I need a will in Portugal?

by | May 6, 2024

Planning for the distribution of assets after passing is a crucial step in ensuring loved ones are taken care of and in avoiding situations potentially leading to disputes and complications for heirs. Therefore, understanding succession rules is essential for anyone considering residency in another country.

In Portugal, inheritance laws dictate that certain family members, known as “compulsory heirs”, are entitled to a minimum percentage of the deceased’s estate that may vary according to the number of heirs. Compulsory heirs include spouses, children, grandchildren, parents, and grandparents. In the absence of compulsory heirs, the estate goes to the deceased’s other legitime heirs (successors) following a predetermined order.

Under EU regulation, the law of the deceased’s last place of habitual residence will govern succession, unless a will has been drafted declaring that the testator wishes the country of origin’s law to apply. This means that without a Portuguese will stating these wishes, Portuguese law will apply to the deceased’s estate, regardless of nationality or former country of residence, leading to, for example, a surviving spouse not receiving the entirety of the estate if there are children involved.

Therefore, to ensure the division of the assets according to the testator’s wishes a Portuguese will must be drafted. This not only streamlines the estate administration process but also provides clarity and peace of mind to beneficiaries.

Furthermore, estate planning involves considerations beyond asset distribution. Portugal does not have a conventional ‘inheritance tax’, but it does impose a 10% stamp duty on assets located in Portugal and transferred upon death. While this tax does not apply to spouses, children and grandchildren, and parents, careful planning is necessary to minimize tax implications.

Individuals relocating to Portugal should additionally review their existing estate planning arrangements in their country of origin. For example, trusts and fiduciary structures are uncommon in Portugal and need thorough examination and consideration from a Portuguese tax and legal perspective to ensure compliance and effectiveness.

For further information or assistance, feel free to reach out to us at  geral@sbpslegal.com.

 

Understanding Recent Changes to Portuguese Citizenship Law

Understanding Recent Changes to Portuguese Citizenship Law

by | May 4, 2024

The much-awaited amendments to Portuguese Citizenship Law were published in March (Organic Law 1/2024, of March 5th), and the changes are worth noting.

To apply for Portuguese citizenship based on residency, one needs to have lived in Portugal for at least 5 years within the last 15 years. Initially, this 5-year period was calculated from the date the first temporary residence card was issued. However, over time, periods spent in Portugal under residence and temporary stay visas started counting towards the total 5-year requirement.

The new wording of Article 15 now establishes that time spent waiting for the residence permit application to be approved can also count towards the residency period, as long as the application is approved in the end. This is particularly good news for those who applied for Golden Visas or submitted Expressions of Interest, procedures typically without a visa stage, and who are currently waiting 2-3 years for their applications to be processed.

To illustrate the impact of these changes, let us consider an example: someone who applied for a Golden Visa in January 2021 may now become eligible for citizenship in January 2026, even if their residence permit is issued in 2024.

However, there is still some uncertainty about how this change will be implemented in practice, since the Regulatory Decree, which provides detailed guidelines on how the law will be applied, has not been approved yet.

From a legal perspective, the Portuguese Immigration Authority (AIMA) considers the Golden Visa application effective from the appointment date, which currently can be at least 1.5 years after submission. Therefore, questions remain about whether decisions will be based on the date of application submission or the date of biometric data collection appointments.

While the interpretation of the law is still to be clarified, this amendment is nonetheless positive news for many applicants, as it will most certainly reduce the waiting time for eligibility to apply for Portuguese citizenship.

For further information or assistance, feel free to reach out to us at geral@sbpslegal.com.