The Non-Habitual Resident Regime and the Duty to Register: Finding the Middle Ground
13 March 2026
The Portuguese Supreme Administrative Court recently clarified conflicting case law by ruling that submitting a request to register as a Non-Habitual Resident (NHR) — even when filed after the legal deadline — is still a necessary requirement to access the tax benefit.
Background
On 28 January 2026, the Supreme Administrative Court issued a decision in case No. 084/25.9BALSB, addressing conflicting interpretations between arbitration rulings 1276/2024-T and 391/2023-T. The court aimed to establish a consistent position regarding the consequences of failing to register in the tax records as a Non-Habitual Resident.
In the arbitration case under appeal, the taxpayer challenged the legality of an IRS (personal income tax) assessment, arguing that the tax authority had ignored their NHR status. The arbitral tribunal ultimately concluded that, although the legal criteria for the regime were satisfied, the taxpayer could not benefit from it because they had never formally applied for registration as an NHR. According to that tribunal, the act of registration is a prerequisite for the application of the tax regime, since it allows the tax authority to verify whether the statutory requirements for granting the status and the associated tax advantages are met.
A different conclusion had been reached in the other arbitration decision used as the basis for comparison. In that case, involving a similar request, the tribunal ruled that registration as an NHR is merely declaratory. Therefore, if the substantive legal conditions for the regime are fulfilled, the absence of registration should not prevent the taxpayer from obtaining the benefit.
The Non-Habitual Resident Regime
The NHR regime was originally introduced to attract skilled professionals working in high-value sectors, as well as high-net-worth individuals and pensioners.
For a period of ten years, eligible individuals could benefit from a more favorable personal income tax (IRS) treatment on certain types of income.
To qualify, taxpayers needed to meet two main conditions:
- They had to become tax residents in Portugal.
- In the year they registered as tax residents, they must not have been tax residents in Portugal during the preceding five years.
In addition, individuals were required to request registration in the tax system as Non-Habitual Residents by 31 March of the year following the one in which they became tax residents in Portugal.
From the outset, however, there has been disagreement regarding the legal consequences of failing to complete this registration, particularly if the deadline is missed.
The tax authority has consistently argued that failing to register on time prevents taxpayers from benefiting from the NHR regime. Conversely, a strong body of arbitral decisions — particularly from the Administrative Arbitration Centre (CAAD) maintained that the registration requirement is not constitutive of the right itself. According to that interpretation (reinforced by amendments introduced by Law No. 20/2021 of 14 May), taxpayers who satisfy the two substantive conditions — becoming a Portuguese tax resident and not having been resident in the previous five years — should still qualify for the regime.
Harmonization of Case Law and Its Consequences
The Supreme Administrative Court ultimately adopted a position that attempts to reconcile the opposing views.
In its judgment, the court acknowledged that registration as a Non-Habitual Resident has a declaratory nature but nevertheless held that it remains a necessary condition for accessing the regime.
In other words, the registration does not create the right itself, but it is required for the right to be applied.
The court reasoned that, as a matter of practicality and administrative oversight, the tax authority must be able to verify whether the requirements of the regime are fulfilled in each specific case. Although the relevant conditions relate to the date on which the taxpayer became resident in Portugal, that verification process would be undermined if the regime could apply automatically without a formal registration request.
As a result, the court considered the registration request to be a legal obligation placed on the taxpayer. Failure to comply with that obligation may justify denying the benefit or at least limiting its application to the moment when the registration request is submitted.
The ruling therefore establishes a uniform interpretation: submitting a request for registration as a Non-Habitual Resident under Article 16(10) of the Portuguese Personal Income Tax Code (in the version applicable in 2023) is a condition for obtaining the associated tax benefit.
Consequently, if the request is filed after the legal deadline, the NHR regime will only apply from that moment onward, rather than retroactively.
In practice, this means that taxpayers who meet the substantive conditions for the regime — even if those conditions were satisfied earlier — may still benefit from the NHR status provided they subsequently request registration with the tax authority.
Critical Observations
Although the court attempted to strike a balanced solution, the reasoning raises certain conceptual concerns. The judgment simultaneously describes the registration as purely declaratory while also treating it as a mandatory condition for access to the regime.
Logically, these positions appear difficult to reconcile. If registration is not a condition for acquiring the right, then failing to register should not prevent recognition of a pre-existing entitlement. Conversely, if the regime only produces effects once the registration request is submitted, the requirement effectively operates as a constitutive condition regardless of how it is labeled.
For this reason, it could be argued that the court should have viewed registration merely as the formal recognition of the taxpayer’s status before the tax authority, effective from the date of registration, while still allowing the taxpayer — given the declaratory nature of the act — to benefit from the regime from the moment the legal requirements were first met, including retroactive effect. Otherwise, the consistent application of the tax benefit may be compromised.