On July 23 was published in the Diário da República the Ordinance No. 230/2019, of July 23, which corresponds to the changes made in Ordinance No. 12/2010, of 17 January, which defines the activities of high added value for the purpose of Non-Habitual Residents (NHR) tax regime.
On July 11, Lamares, Capela & Associados wrote an article about the Portuguese government being preparing changes to the NHR regime.
The underlying model on which the Table was based has also changed. Formerly based on CAE codes, now the Portuguese Classification of Professions (CPP) codes are used, moving to a direct correspondence model, thus allowing, in case of doubts of interpretation, a more direct clarification as to define which concrete activities to regist the taxpayers as NHR.
What are the activities of high added value?
The Table of High Value Added Activities now includes professions such as:
- Directors of hotel, restaurant, trade and other services;
- Specialists in the physical sciences, mathematics, engineering and related techniques;
- Specialists in information and communication technologies (ICT);
- Authors, journalists and linguists;
- Creative and performing arts artists;
- Market-oriented farmers and skilled agricultural and livestock workers;
- Skilled market-oriented forest, fishing and hunting workers;
- Skilled workers in industry, construction and craftsmen, including in particular skilled workers in metallurgy, metalworking, food processing, woodworking, clothing, crafts, printing, precision instrument manufacturing, jewelers, craftsmen, electrical workers and in electronics;
- Plant and machine operators and assembly workers, namely stationary and machine operators ”.
The Ordinance further defines: “II – Other Professional Activities: Managers and managers of companies promoting productive investment, provided that they are eligible for eligible projects and with tax benefit concession agreements entered into under the Investment Tax Code, approved by Decree-Law No. 162/2014, of October 31st. ”.
Workers must have at least European Qualifications Framework level 4, or International Type of Education Classification level 35 and or have five years of proven professional experience.
Transitional application of the Non-Habitual Residents regime
The published Ordinance contains a transitional provision, stating that the new Table is not applicable:
- Taxpayers registered as NHR on 1 January 2020 but whose registration has been suspended (upon request from Portugal);
- Taxpayers who have applications for registration as an NHR pending on 1 January 2020, or who apply for registration as an NHR by 31 March 2020, with reference to 2019.
However, the Ordinance also states that it may apply, by choice, to taxpayers previously registered as NHR.
In conclusion, the new Table of High Value Added Activities, although appearing to be smaller than the one for 10 years under the Non-Habitual Residents regime, with the change of base to CPP may imply a broader range of activities whose income may benefit from the reduced and special IRS rate of 20%.