Winds of Change – Portugal’s Internal Struggle with NHR Program’s Ultimately Lead to Chilling Immigration Reform?

Winds of Change – Portugal’s Internal Struggle with NHR Program’s Ultimately Lead to Chilling Immigration Reform?

Introduction:  Portugal is HOT in more ways than one 

Heading into 2023, U.S. expat (and other country expat) immigration to Portugal was on an absolute tear.  Over the past several years, Portugal has morphed from a popular choice for British retirees (pensioners) to retire and live in or near the southern coastal region of the Algarve into a country whose resort and urban areas have all been infiltrated by a massive influx of foreign immigrants, both working and retired.  Portugal has indeed become a hotbed for U.S. expats and immigrants from elsewhere in the EU and beyond that wish to enjoy one of the best climates in the world. But how sustainable will this trend prove to be?

Post-Great Recession Reforms Ring in A New Era of Programs to Attract Expats 

A key driver of Portugal’s newfound popularity as an American expat destination were tax and legal reforms over the past decade.  First, the non-habitual residence (NHR) program was enacted to entice immigration of wealthier foreigners and foreigners with specialized, attractive professional skills. The upshot of NHR was that most non-Portuguese-source income became sheltered from Portugal’s personal income tax for the first ten years of residency in Portugal and wage earners in select vocational segments would pay only a twenty percent flat tax on their Portuguese-source earned income.

Other policies encouraging this immigration effort included the abolishment of gift and inheritance taxes (making Portugal a more comfortable place to not just live, but also die) and the legal recognition of fiduciary entities, such as trusts, that were before unknown to the Portuguese civil law legal system. For wealthier foreigners looking for an “easier” path to Portuguese (and their for EU) citizenship, the Golden Visa program also emerged. With a considerable monetary investment in Portugal based pooled investments (mutual funds or private equity funds) OR the direct purchase of real estate in Portugal, such as a new primary residence, the Golden Visa would be offered to clear the immediate path to legal residency in Portugal and, thereafter, the ability to become a citizen as well.

Beyond financial and immigration incentives, Portugal’s popularity for expats could also be widely attributed to the country’s low relative cost of living and access to quality healthcare.  Home prices and rental costs have been considered a bargain in comparison to those in neighboring countries in Western Europe, and routine healthcare services have been considered to be a relative bargain as well. On the downside, at least for expats looking to join the local workforce, wages and salaries in Portugal were also considered to be relatively low compared to other Western European countries. However, for digital nomads and other consultants and employees of foreign companies that tolerated or encouraged remote work, it remained possible to enjoy Portugal’s lower cost of living without having to endure the corresponding lower incomes that came with the territory. This mobility trend naturally accelerated during and in the aftermath of the global COVID-19 pandemic.

Signs of an Overheated Market:  Too Much Of A Good Thing?

But favorable legal and financial policies and favorable climate and demographic conditions can neither evade nor shelter Portugal and its residents from the inevitable market forces of supply and demand, nor from a global bout of post-pandemic inflation. The population explosion of immigrants to Portugal has driven up housing prices and rents for expats and Portuguese locals alike. Just as the explosion of tech-company-driven wealth and massive influxes of employees to Silicon Valley displaced many San Francisco locals from their traditional neighborhoods, Portugal’s locals in Lisbon, it’s coastal neighboring community of Cascais, Porto, the Algarve and other areas are finding it difficult to maintain their homes in their communities as more and more expats compete to own and rent properties in their neighborhoods. These problems have only intensified over the past year with record numbers of Americans immigrating to Portugal, rising prices for goods and services (no doubt including the costs to rehabilitate older properties and construct new ones), and rising interest rates.

Given these challenges created by the success of these decade-long policies, it should come as very little surprise that the political and governmental climate has begun to shift to finding new ways to curb the influx of expats and slow the inflationary pressures that are a direct byproduct of the surge of expats to Portugal. For one, the Portuguese border and immigration service, known as SEF, has from time to time made it more difficult to obtain the in-person appointments necessary to obtain or renew residence permits. This has been a source of frustration for existing and would-be residents of Portugal alike.

Changes to the Golden Visa program have resulted in more direct efforts to ebb the flow of American dollars in Portugal’s overheated real estate markets.  First, changes were made recently so that direct purchases of residential real estate would no longer satisfy the investment requirements for the program in key property markets, including Cascais, Lisbon, Porto and the Algarve.  However, investment requirements could still be made through direct real estate purchase in other areas and through indirect real estate investment via Portuguese investment funds. However, the ultimate reform to curb immigration through the Golden Visa program will soon take center stage in the Portuguese Assembly (legislature):  the outright termination of the Golden Visa program!

In February of this year, the current coalition government in Portugal made this proposal to abolish the issuance of Golden Visas. This represents an unfortunate, but understandable, policy and attitudinal shift away from policies that sought as much immigration from affluent foreigners as the country could absorb. By “understandable,” it seems logical that, in the face of a very bubbly real estate environment where the costs of living are spiraling higher, Portugal may logically decide that they are at, or close, to the point of maximum expat absorption. 

Moving Forward: Is Portugal Still a Great Option for Expats?

As of the time of this writing in early June, 2023, the Golden Visa program continues, though perhaps on its last legs. The government has signaled that any and all Golden Visa applications that are submitted before the program is terminated by legislation will be honored and processed. Accordingly, if your application is in, don’t panic.  If you are thinking about making an application, perhaps professional assistance from a consulting firm that assists would-be expats through the process may be needed as time is likely running out very quickly. However, if my experience living abroad, including in Portugal, has taught me anything, it is that European bureaucracy moves at its own, deathly slow pace.  Therefore, it may already be time to start looking for avenues other than the Golden Visa program if you wish to move abroad to Portugal, just in case the Golden Visa program is abolished in the near future.

Keep in mind that the Golden Visa option, under Article 90A of Portugal’s immigration laws, is only one of several legal avenues to obtain residency, and eventually citizenship (if desired), in Portugal. The general residence program is governed by Article 77 and is most often the process that expat retirees or employed expats have used to immigrate to Portugal. As we are not immigration experts, nor consultants that assist in the immigration process, this is far from an comprehensive discussion of Portuguese immigration, but generally the important steps include showing that you have an income stream to sustain your costs of living, have arranged for a place to live in Portugal (owner’s deed or rental agreement), health insurance or eligibility determination for national health insurance, etc. For those looking to start up a business in Portugal, there is the alternative option of Article 89 for Entrepreneurs. Expats who have been living in another EU country may be able to avail themselves of the residence programs for long-term EU residents (Article 116) or EU residents holding the EU blue card with “highly qualified” professional activities (Article 121-B, 121-K).

Conclusion – Portugal Filling Up But Still Attractive While Others Ready to Compete

The main point here is that the Portugal government is responding to growing concerns of its citizens to spiraling inflation in key housing markets in the country by proposing the removal of the Golden Visa program. This is a step that should directly reduce some future demand in those markets, but this does not close the door to Portuguese immigration by expats looking to enjoy the benefits of the NHR program. Only time will tell if there are more restrictions to come from immigration, or tax, policies. If you are in the latter stages of planning, it makes sense to proceed according to plan.

However, if you are still “shopping” for a European expat destination, there are other attractive options that may provide significant bang for the buck so to speak. Italy and Greece have entered the competition for affluent expats with programs quite similar to Portugal’s NHR. You can learn more about those programs and how they compare to NHR HERE (hyperlink). And it is always important to remember that, as a U.S. citizen or long-term resident, your U.S. federal income, estate and gift tax obligations follow you wherever you choose to go.  Accordingly, U.S. income tax rates are the “floor”, meaning that your total income tax obligations, even with foreign tax credits, will not fall below your U.S. federal income tax obligations. In the majority of the EU countries, U.S. expat residents will find a new “ceiling” for income taxes, meaning that the net resident country and U.S. income tax bill will exceed what your U.S. federal income tax alone would total. However, if you move further East within the EU, you may find certain EU member nations with extremely attractive tax rates that keep your net tax obligations at that floor. You can learn more about those tax-attractive options HERE (hyperlink).

France is also an attractive option for American expats because of the exceptionally favorable terms of our tax treaty with our revolutionary allies. You can learn more about these attractive features HERE (hyperlink).  While Portugal struggles with how to deal with its own expat success, there are many attractive routes to Europe. You might even say that

The future’s in the air, I can feel it everywhere

I’m blowing with the wind of change

  • “Winds of Change” by The Scorpions

And remember, unlike retiring in Florida, there are no European equivalent  storms to “rock you like a hurricane.”  (LOL)

Stan Farmer, CFP®

Napoleon vs Your Wealth: What Expats in Europe Need to Know About EU Directive 650/2012

Napoleon vs Your Wealth: What Expats in Europe Need to Know About EU Directive 650/2012

In Europe, succession planning can be a very different concept than what Americans are used to at home. In the U.S., we are almost entirely free to dispose of our estates as we please. This includes the ability to transfer everything to a friend, a trust, or to a charity upon death. In European countries apply a range of forced heirship rules, aimed at protecting specific heirs (usually children and blood relatives). 

These restrictions create difficult estate planning situations for Americans in Europe. For example, a married U.S. couple living in France may want the surviving spouse to inherit the entire estate of a deceased husband or wife. They will find that convoluted heirship rules, derived from early 19th century Napoleonic reforms, require that their children receive a portion of the wealth.

These laws are not limited to France, and most countries in Europe will apply some form of forced heirship requirement. A relatively recent piece of EU regulation, directive 650/2012 (1), gives foreign nationals greater flexibility in disposing of their estate. 

In a nutshell, EU Directive 650/2012 allows foreign citizens (say, an American living in Europe) to select the law of their country of citizenship in matters of succession, as opposed to local succession laws which would otherwise apply by default. For example, the previously mentioned American couple in France may have been able to transfer their wealth between spouses if they had made an election of U.S. law under 650/2012, and thereby opted for more flexible U.S. succession rules as opposed to more rigid French law. 

As all things having to do with cross border estate planning, the application of this directive is a complex matter. In most cases it will require seeking advice from local experts.

The following bullet points will highlights a few key details to be aware of:

    • The election is not a choice of probate location: many EU countries do not have a concept of probate comparable to the U.S. It is important to note that even if U.S. law is selected, whatever administrative proceeding might be applicable has to be followed locally.

    • The election is tax neutral: regardless of your choice of succession law, local inheritance/estate or gift tax will still apply.

    • Some countries opted out: The UK (pre-brexit), Ireland and Denmark have opted out of the directive (2).

    • There may be alternatives: there may be solutions available under local law to circumvent forced heirship without resorting to 650/2012, these will usually involve either a specific election of matrimonial regime, or a marriage contract.

    • Some practitioners may advise against it: Some estate planning practitioners still consider the directive to be relatively new and untested, and feel that it may add unnecessary complexity. Be sure to consult a local expert to understand all required formalities, procedures and consider alternatives.

By: Syl Michelin

You should always consult a financial, tax, or legal professional familiar about your unique circumstances before making any financial decisions. This material is intended for educational purposes only. Nothing in this material constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost.

Three Tax-Friendly Off-The-Radar European Countries for Expats

Three Tax-Friendly Off-The-Radar European Countries for Expats

For expats looking to relocate to Europe, the typical destinations are usually Western European countries such as France, Portugal, and Spain. However, there are many hidden gems in Central and Eastern Europe that offer a unique blend:


Old-world charm, rich cultural heritage, affordable cost of living!

 One of the more attractive features of Europe for U.S. expats is the ability to visit, work or even live in more than one country. The mobility of EU passport has enhanced the appeal of all EU nations.  Let’s explore three off-the-radar EU nations in Central and Eastern European countries that U.S. expats should consider.

 There are many non-financial factors to consider when deciding on moving to a foreign country. Including an array of subjective qualities that make one place seem more like “home” to an expat than other locations. While these more subjective qualities are superficially touched on below, this is after all a blog from an international financial advisory perspective.

Accordingly, lower cost of living and lower relative tax burdens played the key role in pinpointing three of the EU’s most fiscally appealing destinations. These three nations are tax-friendly standouts. They have something to offer many expats looking to live on the cheap. To even live relatively lavishly without breaking the bank, or to protect that family wealth. Actually, the order above was chosen simply to accommodate a semi-cheesy axiom that can help you remember our top three choices:

 For EU capitals where tax rates are the best, consider Budapest, Sofia, and Bucharest!

Hey, it was catchier  than anything we could come up with using the country names instead of their capitals.



 Romania, located in Southeastern Europe, is a country that is often overlooked by travelers but has much to offer. The country is home to stunning natural landscapes, including the Carpathian Mountains and the Danube Delta. It also has a rich history and cultural heritage. Bucharest is the capital and is a bustling metropolis with a vibrant nightlife and a thriving arts and culture scene. The country offers a low cost of living and a high quality of life, making it an attractive destination for expats.

Romania, with that scenic beauty and rich history, is also a good place to live in the EU if you are on a budget and need a low-cost, low-tax place to call home. Or if you are rich and wish to stay that way, and leave your legacy of largesse to your heirs. Romania employs a flat tax on personal income at the rate of ten percent. This ten percent rate applies to virtually all sources of income, including wages, self-employment income, interest, dividends and capital gains. Significantly, there are also no wealth, inheritance or gift taxes levied in Romania. The standard value-added tax (VAT) rate is nineteen percent (which compares favorably with most EU countries), with some goods and services exempt from the VAT regime.


 Located on the eastern coast of the Balkan Peninsula, Bulgaria is a country with a rich history and a unique blend of Slavic, Greek, and Ottoman cultures. Sofia is a vibrant and cosmopolitan city with a thriving arts and culture scene, and a low cost of living. The country also boasts stunning natural landscapes, from the Black Sea coast to the snow-capped peaks of the Balkan Mountains.

The healthcare system in Bulgaria is also affordable and of good quality, making it an attractive destination for retirees. Bulgaria also employs a flat tax rate of ten percent on personal income from most sources. This includes earnings (employment or self-employment) and capital gains. Dividends are taxed at an even lower rate of five percent. Also like Romania, Bulgaria does not impose a wealth tax, nor taxes on inheritances and gifts.  There is a low rate of property tax, ranging from 0.01% up to 0.45% on the value of real property. VAT is a comparably favorable standard rate of 20 percent, with lower rates on certain goods and services.



 Hungary, though not quite as tax friendly as Romania and Bulgaria, offers a terrific mixture of liveability, workability and affordability that is sure to check a lot of boxes for many adventurous expats. It has a rich culture and history, with a long-standing tradition of music, literature, and the arts.

 Historic Landmarks:

-Buda Castle

-Fisherman’s Bastion in Budapest

-The second-largest synagogue in the world in Szeged

 -Historic thermal baths of Hévíz

 Expats can immerse themselves in Hungarian culture by attending festivals, visiting museums, and exploring the country’s many historic sites. Hungary has a thriving job market, particularly in the technology, finance, and healthcare industries. Many multinational companies have set up operations in Hungary. This offers expats the opportunity to work in a dynamic and growing business environment. Additionally, the country has a low unemployment rate, making it easier for expats to find employment.

 A country of natural beauty…

 Hungary is a country of stunning natural beauty, with rolling hills, forests, and lakes. The country is also home to the Danube River, which flows through Budapest and offers stunning views of the city. Expats can enjoy the great outdoors by hiking, cycling, or simply exploring the countryside.

 Hungarians are known for their warm hospitality and welcoming nature. Expats can expect to be greeted with open arms and will find it easy to make friends with locals.


Also comparing favorably against the tax regimes of most EU countries, Hungary employs a modest tax rate of fifteen percent. This includes all forms of personal income (earnings, dividends, interest, capital gains, and even cryptocurrency trading gains). VAT is a bit higher in Hungary than in Bulgaria or Romania. With a standard rate of twenty-seven percent, with reduced rates of eighteen percent or five percent for certain goods and services. There are no wealth taxes, but there is a gift and inheritance tax regime in Hungary. The standard tax rate on gifts and inheritances is eighteen percent. A lower nine percent tax rate applies for gifts and inheritances of residential property. These gift and inheritance taxes do not apply to wealth transfers to spouses and lineal relatives (children, parents, grandchildren, etc.). Such lineal wealth transfers are exempt for these tax regimes.

Europe is already home to millions of Americans who have ventured back across the Atlantic to work or enjoy their retirement. The majority of these expats, however, accept a steep tax bill and sometimes a cost of living hike (depending on where you’re coming from and where you are going to) for the privilege of a European lifestyle.

At Walkner Condon Financial Advisors, our Expat Team is proud to offer financial guidance and ongoing planning and investment management to American expat families. We’ve also dedicated a great deal of research to inform those considering a move to Europe about the various tax incentive programs that certain Western European countries have to offer. However, most of those incentives are for a definite period of time and standard resident tax rates apply thereafter – rates which can be considerably higher than the U.S. federal tax rates that all U.S. citizens must pay, even while living abroad.

 Accordingly, we believe that, given the growing mobility of the global workforce and the abundance of potential low-cost, low-tax alternatives within Europe, we think looking a little further east may provide Americans looking to venture abroad a whole set of new alternatives. Romania, Bulgaria and Hungary are by no means the only attractive destinations to consider outside of Western Europe that offer the benefits of living within the EU. Whether you are planning a move to Europe or any other continent in the world, we’re here to lend our financial planning and investment insights to help you navigate the complexities of a cross-border (U.S. and foreign) financial and regulatory environment.  If you’d like to learn more, please reach out to our team to discuss your specific circumstances: Book Now! 

By: Stan Farmer