On 8^th October a circular was published by the Portuguese Tax Department changing the approach to and methodology in respect of the High Added Value Activity (“HAVA”) application. The benefits of the HAVA include paying tax on domestic salary at a flat rate of 20% and an exemption on overseas consulting income generated in the exercise of the activity. Conscious of its excessive delays in the granting of approvals, running up to 12 months and more, with the resulting lack of certainty, it was decided that, upon approval, the NHR applicant will automatically acquire the right to be taxed with the special tax rate of 20%. This is on the basis that they already meet the HAVA requirements, without the need for a separate application.

Up to now, the HAVA application was made by way of a subsequent and independent application after NHR approval and, due to the delays, the credibility of the HAVA regime was being undermined. With this in mind, the Tax Authorities have decided to eliminate the need to make an HAVA application, granting this tax benefit automatically.

A new more practical HAVA list comes into force on 1^st January 2020 and NHRs who fulfill the criteria will only need to declare it in their annual tax return. However, supervision will continue to be exercised by the Tax Authorities and they may, after the filing of the tax return, notify the HAVA to file proof that they meet the necessary requirements. The type of evidence will be defined in a legislation which is expected to be published shortly by the Portuguese Authorities.

Although there are still some elements that need to be clarified by the Portuguese Tax Authorities, this is will undoubtedly eliminate the delays in the HAVA applications and restore the credibility of the regime, whilst also reinforcing the commitment to the NHR programme.