Many leave their planning until the eighth, ninth or tenth year of the scheme, by which point their options have narrowed considerably.

This matters because the difference between planning early and planning late is significant. Once NHR status expires, personal income tax rates in Portugal can rise sharply, up to 48%, and as high as 52% once social charges are included.

Many people who relocate to Portugal underestimate just how high these standard rates are, having grown used to the favourable treatment NHR provides.

The key message from tax advisers working in this space is simple: start thinking seriously about your post-NHR position after your first year or two in the regime, not in the final stretch. Waiting until 18 months before NHR ends can be too late, as gains built up over the preceding years can end up being taxed at the higher rate.

One route increasingly recommended is a Portuguese-compliant investment structure. These vehicles offer favourable tax treatment from day one, with the benefits increasing significantly from year eight onwards.

With the right planning, structured between years three and five, and no later than year seven, effective tax rates can be brought down to around 11.2% in certain cases, sometimes lower, rather than facing the jump to nearly half of one's income in tax.

The earlier the planning begins, the lower the eventual rate is likely to be. Leaving it until year eleven risks an unwelcome shock. For anyone approaching the midpoint of their NHR period, now is the time to start exploring alternatives.

Find out how you can prepare ahead of time for this potential tax burden here.

About Portugal Pathways
Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on estate planning, wealth management, Golden Visa and tax optimisation, including post-NHR / IFICI tax regime planning, as well as private healthcare, money transfers and bespoke relocation and luxury real estate solutions to enhance life and investment in Portugal.