Miranda advises on crucial Non-Habitual Residents appeal

Miranda & Associados’ tax litigation team advised on the appeal process at the Supreme Administrative Court (STA), resulting in a ruling that may provide a new chance for taxpayers whose Non-Habitual Resident (NHR) status requests were previously denied due to late submission. The issue concerned the right to benefit from the NHR regime whenever the registration request was submitted after the legally prescribed deadline, which is March 31 of the year following the year the individual became a resident in Portugal (provided they had not been a resident in the previous five years).

Although Miranda’s tax litigation team had previously secured favorable decisions from the arbitration courts at the Administrative Arbitration Center (CAAD) (specifically in cases challenging IRS assessments), which recognized that the registration deadline did not constitute the taxpayers’ right to be taxed as NHR, higher judicial courts had not yet taken a stance on the specific right of taxpayers to register as NHR when the deadline had been missed, leaving uncertainty on this matter.

The STA’s decision

In a ruling issued on May 29, the Supreme Administrative Court determined that, although the NHR registration act is “a condition for the application of the respective tax regime, as it allows the Tax Authority to verify and control the legal requirements for granting this status and the corresponding tax benefits,” the legal norms in question do not state “that the application of the non-habitual resident tax regime depends on an act of recognition by the Tax Authority (art. 5 of the EBF), thus the act of registering the taxpayer as a non-habitual resident is merely declarative.”

Benefits for the NHR

This ruling allows taxpayers who previously met the substantial requirements for the NHR regime (i.e., becoming residents in Portugal in a given year without having been residents in the previous five years) but failed to register by March 31 of the following year, to still join the regime (despite its repeal as of January 1, 2024), and benefit from the exemptions and rate reductions provided therein. The litigation team at Miranda & Associados was led by principal associate Pedro Saraiva Nércio (pictured) in this process.