Week in Insights: A Portugal Tax Policy Shows Pitfalls of Success

Curated by Daniel Xu

Portugal will sunset a tax policy that began in 2009 to draw professionals to the country and ended, arguably, by exacerbating a housing shortage and perpetrating fiscal injustice.

The Portuguese non-habitual resident (NHR) program offered a reduced income tax rate for 10 years for filers that had been taxpayers outside of Portugal the previous five years. It also provided tax advantages to foreign source income, making the program attractive to digital nomads and retirees.

The reduced NHR tax rate of 20% on income for the newly Portuguese taxpayers was higher than the lowest income tax bracket ...