Portugal will stop foreign tax breaks, limiting access to rebates for digital nomads.Portugal to end foreign tax breaks, limit discounts for digital nomads.

After the financial crisis of the late 2000s, Portugal adopted a safe haven role for foreign workers and investors in hopes of reviving the country's shaky economy. But now the country's prime minister has taken the first steps to limit the number of digital nomads coming to Portugal. Local workers are increasingly unhappy with schemes that have contributed to a serious housing crisis.

In an interview with CNN Portugal's Prime Minister Antonio Costa said he plans to end the country's unusual residence regime (NHR) next year.

According to Deloitte's explanation, under laws aimed at attracting foreign workers, those who become tax residents in Portugal are subject to special tax treatment for 10 years under the NHR scheme. Most people working in "high-impact" professions such as doctors, technology workers and journalists pay income tax in Portugal at a flat rate of 20%.

But Portuguese residents pay income tax ranging from 14.5% to 48% according to a sliding scale, according to PwC. Costa recognized that this unequal policy creates more harm than good for Portugal. "Keeping this measure alive in the future prolongs a measure of tax injustice that is unjustified, in addition to being a biased way to continue to inflate the real estate market," Costa told CNN. He said the regime would remain in place for those coming to the country before the end date in 2024.

It is not yet clear what will come in its place, including new opportunities for tax residency in Portugal and new income tax rates.

A spokesman for the prime minister's office did not immediately respond to Fortune magazine's request for comment on how the new rules will affect digital nomads.

The D8 visa allows foreign nationals from non-EU or EEA countries to work in the country on a 12-month visa with earnings of 2,800 euros (about $2,930) a month or more.

These workers usually pay taxes at home, but new laws on unusual residents may also affect short-term workers.

This makes the prospect of becoming an expat in Portugal less attractive to high-paid emigrant workers. Since the COVID-19 pandemic began, thousands of digital nomads have arrived in the country to take advantage of new remote working opportunities.

According to Nomad List, there were 15,800 digital nomads living in Lisbon last December. Data from Portugal's Immigration and Border Guard Service (SEF) shows that the number of foreigners living in the country increased by around 45% between 2018 and 2021.

Almost half of digital nomads come from the US, according to the latest annual Nomad List report. Lisbon, the capital of Portugal, is the most popular global destination among women and the second most popular among men.

Recent policy changes, however, indicate a change of course that seems aimed at discouraging some groups of would-be visitors who for years were considered to have an advantage over local Portuguese workers.

Earlier this year, the country announced the end of the "golden visa" program, which since 2012 had allowed foreigners to obtain Portuguese citizenship in exchange for investing in the country. This could include buying a home for at least 350,000 euros.

This has triggered an investment boom in Portugal that has generated 7.3 billion euros (about $7.6 billion) from 2012 to 2023 under the program, according to the Portuguese Immigration and Border Guard Service. Almost 90% of these investments came through real estate.

Despite an apparent improvement in the country's financial situation, the uneven nature of the tax regime has led to inevitable social problems for Portugal's residents, who have found themselves increasingly squeezed out of the housing market by wealthy visitors.

Digital nomads have caused a surge in the number of Airbnb properties in cities such as Lisbon, reducing the supply of affordable housing for other residents, The Guardian reports. Margarida Custodio, a Lisbon resident, told the newspaper that she spends 90% of her salary on rent in Lisbon.

Politico reported on the protests of digital nomads who made their way to the gates of the Lisbon Web Summit last November, protesting rising housing prices and gentrification as a result of Portugal's foreign investment-friendly policies.