For 15 years, Portugal’s Non-Habitual Resident (NHR) tax regime has drawn more than 10.000 new residents by providing reduced tax rates and even complete tax exemptions for the first decade of residence. NHRs enjoyed a flat 20% tax rate on their income and were exempt from taxes on global earnings.
However, in late 2023, it was announced that the NHR tax regime would be ending, as parliament deemed it no longer advantageous for the country.
The new NHR tax regime retains most of the previous benefits, but the eligibility criteria have become much stricter. The updated regime now emphasizes employment in scientific research and innovation, excluding retirees and other high-value professions from its benefits.
IFICI: Non-Habitual Resident 2.0
The IFICI, often referred to as the “Non-Habitual Resident 2.0” regime, is a special tax framework introduced in 2024. It offers tax incentives to highly qualified professionals who choose to establish their fiscal and permanent residence in Portugal, as outlined in the Personal Income Tax Code (CIRS).
This regime is available to individuals engaging in eligible, highly skilled professional activities within Portugal, as specified by the relevant legislation and an upcoming Ministerial Order, which the Portuguese government is yet to issue.
The IFICI regime is governed by Article 58-A of the Tax Benefits Statute (EBF).
Tax Residency in Portuguese Territory
An individual is considered a resident in Portugal for a given tax year if any of the following conditions are met:
- Physical Presence: The individual stays in Portugal for more than 183 days, either consecutively or intermittently, within the year.
- Property Ownership: Even if staying less than 183 days, the individual owns a home in Portugal as of December 31, under circumstances indicating an intention to maintain and occupy it as a habitual residence.
- Employment on Ships or Aircraft: On December 31, the individual is a crew member of ships or aircraft operated by entities that are resident, headquartered, or have effective management in Portugal.
- Public Duties Abroad: The individual performs public duties or official commissions abroad on behalf of the Portuguese State.
Additionally, individuals who form part of a family unit are considered residents in Portugal if any member responsible for managing the family unit resides there.
Taxation of the Non-Habitual Resident 2.0
Portuguese-Sourced Income
Employment and service income (Categories A and B) earned from eligible activities under the IFICI regime is taxed at a flat 20% rate, rather than the general progressive rates (14.5% to 53%) plus social security contributions. All other Portuguese-sourced income is taxed at standard rates.
Foreign-Sourced Income
Income from employment, services, capital, rentals, and capital gains earned abroad is exempt from taxation in Portugal but must be reported to determine the effective tax rate on other taxable income.
Pension income is taxed at the progressive rates (14.5% to 53%), while income from entities in tax havens is subject to a 35% rate.
Eligibility Requirements for the IFICI Regime
Eligible Professional Activities: The tax incentive regime applies only to taxpayers engaged in eligible professional activities related to scientific research and innovation.
Fiscal Residency: Taxpayers must establish fiscal residency in Portugal starting in 2024, as per paragraphs 1 and 2 of Article 16 of the IRS Code, and must not have been residents in Portugal in any of the previous five years.
No Previous Benefits: Taxpayers must not have benefited from the Non-Habitual Resident (NHR) regime or opted for taxation under the regime for former residents.
Employment Restrictions: The employing company must not claim salary expenses under the Tax Support Regime for Investment (RFAI).
Continuous Fiscal Residency and Income: Taxpayers must maintain fiscal residency in Portugal during the regime’s duration and continue earning income from eligible activities. If transitioning between activities, the new activity must begin within six months of ending the previous one.
Registration Updates: Taxpayers must submit a new registration request whenever there is a change in the entity responsible for processing the registration or the company verifying the requirements.
Eligibility Professions and Activities NHR 2.0
To qualify for the IFICI (Incentives for Fiscal International Competitiveness Initiative) and benefit from this favorable tax regime, taxpayers must meet the general requirements and be employed in one of the following highly qualified roles:
1) Teaching in Higher Education & Research
This includes roles such as teaching in higher education, conducting scientific research, or engaging in scientific employment within organizations, structures, and networks focused on producing, disseminating, and transmitting knowledge as part of the national science and technology system. It also encompasses employment and corporate governance positions in entities officially recognized as technology and innovation centers under Decree-Law No. 126-B/2021, of December 31.
Competent Authority for Application Review: Fundação para a Ciência e a Tecnologia, I.P. (FCT).
2) Technology & Innovation Centers
This includes qualified employment and corporate governance roles associated with contractual benefits for productive investment, as outlined in Chapter II of the Investment Tax Code. These tax benefits are valid for up to 10 years from the completion of the investment project and apply to initiatives that meet the criteria specified in this chapter, with a minimum required investment of €3,000,000.
3) Highly Qualified Professions
Highly qualified professions eligible for the incentive program are defined by government ordinances from finance and economy officials (yet to be published) and apply to activities developed in the following contexts:
i) Companies Benefiting from Investment Tax Incentives
These are companies with relevant applications during the year of commencement or the previous five years that have benefited from the tax support regime for investment under Chapter III of the Investment Tax Code.
ii) Export-Oriented Industrial and Service Companies
These are companies engaged in industrial or service activities classified under specific CAE codes (to be defined in a government ordinance) and export at least 50% of their turnover in the year of commencement or any of the two previous years.
The company employing the taxpayer is responsible for proving the relevant requirements. By March 15, the company must confirm that the taxpayer meets the conditions outlined in subparagraphs i) or ii) and that the taxpayer performs a highly qualified profession.
Eligible Professions for Scientific Research and Innovation Tax Incentives
Highly qualified professions must fall under the following Portuguese Classification of Professions (CNP) codes:
- 112 — General and executive managers of companies
- 12 — Administrative and commercial services managers
- 13 — Production and specialized services managers (except 1349)
- 21 — Specialists in physical sciences, mathematics, engineering, and related techniques (except 216)
- 2163.1 — Industrial product or equipment designer
- 221 — Doctors/Physicians
- 231 — University and higher education professors
- 25 — Specialists in information and communication technologies (ICT)
Qualifications for Eligible Professions
Professionals must possess at least one of the following:
- Level 8 of the European Qualifications Framework (EQF) or the International Standard Classification of Education (ISCED).
- Level 6 of the EQF or ISCED, with three years of verified professional experience.
For regulated professions, taxpayers must also prove compliance with applicable legal requirements.
Additional Professions under Subparagraph i)
Executive, managerial, and general management positions in companies with relevant applications that have benefited from tax support for investment under Chapter III of the Investment Tax Code (RFAI) are also included as highly qualified professions.
CAE Codes for Activities of Subparagraph ii)
Eligible CAE codes for industrial and service companies include:
- Extractive industries: Divisions 05 to 09
- Manufacturing industries: Divisions 10 to 33
- Information and communication activities: Divisions 58 to 63
- Research and development in physical and natural sciences: Group 721
- Higher education: Subclass 85420
- Human health activities: Subclasses 86100 to 86904
Competent authority for Application Review: Tax and Customs Authority.
4) Other Qualified Jobs and Corporate Roles
This category includes qualified jobs and corporate positions in entities engaged in economic activities recognized by AICEP, E.P.E. or IAPMEI, I.P. as being significant to the national economy. These activities are particularly focused on attracting productive investment and reducing regional disparities. The specific criteria for qualified jobs and recognized activities are yet to be defined.
Competent Authorities for Application Review: IAPMEI, I.P. and AICEP, E.P.E.
5) Research and Development Personnel
This category covers personnel involved in research and development (R&D) activities, whose costs qualify under the tax incentive system for corporate R&D, as stated in paragraph b) of Article 37(1) of the Investment Tax Code. Eligible personnel must possess at least Level 4 of the National Qualifications Framework and be directly engaged in R&D tasks.
Competent Authority for Application Review: Agência Nacional de Inovação, S.A. (ANI)
6) Startups
Directors or employees of accredited Portuguese startups demonstrating significant growth potential or securing venture capital funding. A start-up is defined, under Portuguese law as follows:
- Less than 10 years of activity
- Less than 250 employees
- Less than €50 million turnover
- Not held by a large company
- Based in Portuguese territory or have more than 25 employees
- Be an innovative company, have one round of VC financing, or investment from Banco Portugês de Fomento.
Competent authority for application review: Startup Portugal — Associação Portuguesa para a promoção do Empreendedorismo.
7) Azores & Madeira
Residents of these regions whose roles are outlined by local regulations (pending legislation).
Documentation for Applying for NHR 2.0
- Employment Contract: A copy of the individual employment contract if the activity is performed in a job position.
- Commercial Certificate: An updated permanent commercial certificate if the activity is carried out as a member of a corporate body.
- Scholarship Agreement: A copy of the scholarship agreement if the activity involves scientific research.
- Academic Qualifications: Proof of the relevant academic qualifications.
- Activity Compliance Declaration: A declaration issued by companies or other entities certifying compliance with the requirements for activities listed under subparagraphs 2), 3), 4), and 5).
- Additional Documents: Any other documents that may be specifically requested.
Submission Deadline of NHR 2.0
Taxpayers who register as residents in Portugal must submit their requests for this regime by January 15 of the year following the year they become residents.
If the registration is completed after the deadline, taxation under the regime will only apply starting from the year the registration is finalized and will remain valid for the rest of the legally defined period.
Duration of Non-Habitual Resident 2.0
The tax benefits under the IFICI regime are available for a maximum of 10 consecutive years from the year you register as a tax resident in Portugal, with no option for extension.
If a taxpayer does not utilize the tax benefits in one or more years within the 10-year period, they may resume using the regime in any of the remaining years. This is contingent on them re-establishing tax residency in Portugal and earning income from one of the eligible activities during that period.
Transitory Regime of Non-Habitual Regime 2.0
For income earned in 2024 under the present regime:
- Taxpayers who establish residency in Portugal during 2024 must submit their registration request and report any changes by March 15, 2025.
- Relevant entities are required to submit their communications by April 15, 2025.
- The Tax Authority (AT) will inform taxpayers about the status of their registration by April 30, 2025.
Approval of registration requests under this regime will finalize any ongoing registration processes related to:
- The Non-Habitual Resident (NHR) regime, if submitted under the transitional framework.
- The IFICI regime, if filed before the publication of this ordinance, in compliance with the eligible activities defined up to that point.
How To Apply for the NHR Portugal
Here’s the guide for you on how to become a non habitual resident in Portugal:
Step 1: Get your Proof of Residency
Step 2: Obtain Your NIF
A NIF (Número de Identificação Fiscal) number is your tax identification number in Portugal, essential for conducting business or engaging in official or legal activities. Non-residents can obtain it through their representative or lawyer in Portugal, while residents can apply directly at the local tax offices (finanças). To apply, you need to provide an ID card or passport and proof of residency.
Step 3: Register as a Tax Resident
After you obtain your NIF, you must register as a tax resident in the finanças.
Step 4: Apply for the NHR status
First, you need to register on the relevant government website. Once registered, you will receive a password by post within approximately two weeks. After receiving your password, you can complete the application process online by submitting the required documents.
Comparison between NHR and IFICI Regime
DTA (Double Taxation Agreements)
The international Double Taxation Agreement (DTA), also known as a Double Taxation Treaty (DTT) or Double Taxation Convention (DTC), is an agreement between two countries that aims to prevent double taxation of income or assets that may arise when a taxpayer resides in one country but earns income or holds assets in another country. Here is the list with the countries that have DTA with Portugal:
Residency Options in Portugal
To qualify as a non-habitual resident, you must have lived in Portugal for over 183 days within a 12-month period. Alternatively, you can qualify if you have lived in the country for fewer than 183 days but have purchased property in Portugal during that same period.
If neither of the previous conditions applies to you, you’ll need to obtain residency to qualify for the non-habitual tax regime. Portugal offers several appealing long-stay national visas, also known as residency visas, that enable you to benefit from the 10 years of tax incentives under the NHR status. Here they are:
Portugal D7 Visa
Portugal D7 Visa, also known as the Retirement Visa or Passive Income Visa, was introduces in 2007 by the Portuguese government, allowing non-EU/EEA/Swiss citizens to apply for temporary residency in Portugal.
Retirees and individuals with a minimum regular minimum passive income of €870 per month can apply for the Portugal D7 Visa. This income can include pensions, real estate, royalties, dividends, financial investment, or intellectual property.
Portugal D8 Digital nomad Visa
The D8 Visa also know as, Digital Nomad Visa Portugal, was introduce in October 2022 by the Portuguese government, allowing non-EU/EEA/Swiss citizens with monthly income of €3480 to apply for temporary residency in Portugal while working remotely from Portugal.
Portugal D2 Visa for Entrepreneurs
D2 Visa Portugal also known as the “Entrepreneur Visa” or “Business Visa” was launched in 2018 and is a type of long-stay visa for Portugal that is specifically designed for entrepreneurs who want to start or buy a business in Portugal.
The visa allows non-European Union citizens to stay in Portugal for up to 4 months and after applying for the resident permit. A Portuguese Residence Permit after the D2 Visa is valid for two years and then it can be renewed for three years contingent on the continuity of the applicant’s professional activities.
Portugal Golden Visa for Investors
The Portugal Golden Visa program in Portugal, also known as the Residence Permit by Investment Program, is an investment immigration program that grants residency and citizenship rights to foreign investors who make a significant economic contribution to the country.
- Venture Capital /Private Equity Funds: €500,000
- Scientific research: €500,000
- Cultural Donation: €250,000
- Job Creation: 10 jobs positions or €500,000 + 5 job positions
Frequently Asked Questions About Portugal NHR 2.0
What is the Non-Habitual Resident (NHR) program?
The NHR program is a tax regime designed to attract foreign individuals to Portugal by offering significant tax benefits. It provides reduced tax rates and exemptions on certain types of income for a period of ten years.
Who is eligible for the NHR program?
To be eligible, you must not have been a tax resident in Portugal for the previous five years and must establish tax residency in Portugal. This typically involves living in Portugal for more than 183 days within a 12-month period or owning property there.
What are the main benefits of the NHR program?
Under the NHR program, you can benefit from a flat 20% income tax rate on certain professions and exemptions on foreign income, such as dividends, interest, and royalties, with some exceptions.
What types of income are exempt under the NHR regime?
The NHR regime offers exemptions on various foreign income sources, including employment income, independent work, capital investment income, royalties, and capital gains. However, foreign pensions are not exempt and are taxed at Portugal’s normal progressive rates.
How long does the NHR program last?
The benefits under the NHR program are available for a consecutive period of ten years. The regime is non-renewable, meaning it cannot be extended beyond this period.
Can I apply for the NHR program if I already live in Portugal?
Yes, you can apply for the NHR program if you are already residing in Portugal, provided you meet the eligibility criteria, including not having been a tax resident in Portugal for the previous five years.
How do I apply for the NHR program?
Register as a tax resident in Portugal and submit necessary documents to apply for the NHR program. This often involves providing proof of non-residency in the past five years and other relevant documents.
What documents do I need to apply for the NHR program?
Provide proof of non-residency in Portugal for five years, your tax returns, and a rental agreement or property deed.
Are there any new changes to the NHR program for 2024?
Yes, the NHR program has been updated to the Fiscal Incentive for Scientific Research and Innovation (IFICI) Program, which now focuses on attracting highly qualified professionals in specific sectors and offers a special 20% tax rate. The scope has been narrowed, and the benefits are more targeted.
What if my income is earned in Portugal?
If your income is earned in Portugal, it will generally be subject to the Portuguese tax rates. For certain professions or activities specified under the new Fiscal Incentive for Scientific Research and Innovation (IFICI) Program, you will benefit from a reduced flat tax rate of 20%.
Income earned through other activities or professions not covered by the IFICI Program will be taxed according to standard Portuguese income tax rates, which range from 14.5% to 53%, depending on the income bracket.
What if my income is paid in another country?
If you are paying taxes in a country with a Double Taxation Agreement (DTA) with Portugal, you generally won’t need to pay taxes again in Portugal on that income. However, depending on your income level, you might still need to pay the tax difference in Portugal if your effective tax rate is higher in Portugal.
