At the origin of this decision by the Administrative Arbitration Center (CAAD), is the case of a Swedish couple who changed their residence to Portugal in 2011, with both being registered in the Non-Habitual Resident (NHR) tax regime for a period of 10 years (from January 2011 to December 2020) who in 2021 found that they were no longer able to benefit from the regime and could not renew it.

Following the impossibility of renewal - in 2012 a change to the law determined that the regime is granted for a period of 10 years - the IRS declaration relating to their 2021 income could no longer be submitted under the NHR regime, which resulted in a payment of taxes payable of €186,116.84.

After seeing the Tax and Customs Authority (AT) rejected their complaint contesting the assessment -- with the tax authorities basing their response on the fact that, in light of the law in force, there is no longer room for renewal of the NHR period - , the couple went to CAAD, claiming that due to the NHR status acquired in 2011, they had the right to benefit from a period of validity of 10 consecutive renewable years, which extended beyond the year 2020.

In their presentation to the CAAD, the couple requested a refund of the tax paid and compensatory interest, having indicated as the value of the case the amount of €130,004.85 - which corresponds to the value of the settlement they intended to avoid.

However, CAAD's decision, which dates from November 2023, was that the AT "made a correct interpretation of the law and did not commit any illegality in carrying out the contested settlement and in rejecting the complaint filed against it".

Under the NHR, workers in a list of professions considered to have high added value pay an IRS rate of 20%. Retirees were initially exempt from IRS in Portugal, but the law was changed and they are now subject to a 10% tax.