However, the NHR tax regime only lasts for 10 years. Once this period concludes, individuals will find themselves subject to Portugal’s progressive tax system, where rates can soar as high as 48%.

According to the Wealthy Expats in Portugal Survey Report, 73% of the estimated 53,700 NHR tax holders have taken no steps to plan for or mitigate the looming tax challenges after their tax status concludes.

Steve Philp, Director at Portugal Pathways, an online platform that helps affluent expats in Portugal, emphasised the importance of early planning, stating: "The time to act is now. Affluent expats must seek professional advice and meticulously structure their income and assets during the crucial first seven-year window of the NHR tax status to mitigate the impending tax shock."

How one NHR tax holder mitigated future tax burdens

Anthony Woodward was one of these concerned expats who still lives in Portugal with his family under minimal tax stress despite his NHR tax status being expired for over a year now.

When asked how he navigated the tax burden and addressed the situation, he shared, "A close family friend, also under NHR, educated my wife and me about the looming expiration of our tax status in three years, warning us about the potentially steep taxes after that.

He advised us to seek professional assistance early on. Through the structuring of income and assets, we now pay a fraction of the tax and continue to enjoy life in Portugal."

Credits: Supplied Image; Author: Client;

Several steps can be taken to reduce future tax burdens, and one effective strategy involves utilising insurance wrappers or bonds. However, if you’re from the US, other strategies would be required that are more suited to US-connected citizens.

These different instruments must be tailored to the individual to potentially offer the advantage of mitigating unnecessary ongoing tax burdens when enacted early in their NHR tax status life.

Continue thriving in Portugal.

By taking early action and seeking professional advice, many NHR tax holders can potentially reduce future tax burdens and continue to thrive in Portugal post-NHR if they act now.

Portugal Pathways offers personalised guidance to existing NHR tax holders seeking to structure their income, assets, tax, and investments for the long term.

It offers an initial no-obligation discovery call ahead of supporting them with relevant professional advice and structures that allow them peace of mind moving forward.

Contact Portugal Pathways to learn more and arrange an initial call with an advisor.