The Portuguese parliament has extended tax breaks for foreign residents until the end of 2024; despite criticism, the initiative has driven up housing prices to unaffordable levels for many Portuguese citizens.

Within the extension announced on Wednesday, applicants need to prove they are prepared to relocate to Portugal in 2023 via an employment or housing contract signed by the end of December, Reuters reports.

The scheme, which was implemented back in 2009, allows those who become residents by spending over 183 days in Portugal to benefit from a 20% tax rate on Portuguese-sourced income from “high value-added activities” over 10 years.

Additional benefits of the so-called Non-Habitual Resident initiative include tax exemptions on nearly all foreign income, as long as it is taxed in the country of origin, and a flat tax rate of 10% on foreign pensions.

The scheme was originally introduced to attract professionals and investors as Portugal struggled through the financial crisis.

In addition, Portuguese citizens who have lived overseas for five years or more are also eligible to apply.

Last month, Prime Minister Antonio Costa vowed to cease the scheme by the end of the year, referring to it as a “fiscal injustice that is no longer justified,” being one of the measures included in the country’s draft 2024 budget.

Yet after his resignation earlier in November, the Socialist Party shifted its view and proposed it should remain open until the end of next year. The decision gained approval on Wednesday within the budget bill’s final vote.

In a statement, the Socialists said it was important to “safeguard the legitimate expectations of people who have already made the decision to immigrate or return to Portugal.”

By the end of last year, more than 74,000 people had benefitted from the scheme, according to official data. In 2022, the tax exemptions cost the state budget over €1.5 billion, an annual rise of 18.5%.