2023 was a big year when it came to changes to the tax system for new residents in Portugal. It was announced that the Non-Habitual Resident (NHR) tax regime was coming to an end as parliament argued it was no longer beneficial to the country.

For the last 15 years, the NHR was available to all new tax residents in Portugal who were not Portuguese tax residents for the five years prior, granting them a 20% flat rate on personal income tax for 10 years. 

This was incredibly beneficial to new residents, especially those making over around 80,000 euros a year where the general rate for the population is 48%.

If you were not lucky enough to enjoy the NHR regime before it ended, you might still have a chance of enjoying some tax benefits with the new NHR regime, known as NHR 2.0. 

Grandfathering Rules: Is the initial NHR regime still available to me?

But before we get into the new NHR regime, make sure that you are not still eligible for the initial NHR. Although it has officially ended, you might still qualify if you started your move to Portugal back in 2023. According to Sam Daynes, from Holborn Assets, you are still eligible if you fit into the following Grandfathering rules:

• Promissory employment agreement or promissory secondment agreement (or employment or secondment agreement) signed by 31 December 2023 to perform activities in Portugal or

• Lease agreement or other agreement granting the use or possession of property located in Portugal and concluded before 10 October 2023 or

• Reservation or promissory contract for the acquisition of property located in Portugal concluded before 10 October 2023 or
• Enrolment or registration for dependents at Portuguese educational establishment by 10 October 2023; or
• Residence visa or residence permit valid by 31 December 2023; or
• The procedure, initiated by 31 December 2023, is for granting a residence visa or residence permit with the competent entities in accordance with the current immigration legislation (e.g., visa appointment in 2023).

The New NHR: Non-Habitual Residents in 2024

Now, let’s get into the new NHR for non-habitual residents in 2024. The new regime focuses on employment, primarily scientific research, and innovation, while no longer benefiting retirees and other high-value jobs.

The benefits remain the same – a 20% flat tax rate on personal income and a tax exemption on other passive income. Therefore, you will also not pay any tax on dividends, interest, royalties, capital gains, rental income from real estate outside Portugal, and income from employment in another country.

Keep in mind that this 20% flat rate could be incredibly beneficial when you look at the 2024 general tax rates for personal income in Portugal:

Up to €7,703 13.25%

€11,623 –€16,472 23%

€16,472 –€21,321 26%

€21,321 –€27,146 32.75%

€27,146 –€39,791 37%

€39,791 –€51,997 43.5%

€51,997 –€81,199 45%

Over €81,199 48%

Broadly speaking, employed or self-employed roles such as higher education professors, scientific research technology, and also start-up companies are eligible. But let’s get into more detail on who qualifies for the new NHR regime in Portugal.

Who Qualifies for the new Non-Habitual Resident (NHR) Status in Portugal

• Educational activities in higher learning institutions and scientific investigation, including employment in scientific roles within entities, structures, and networks affiliated with the national science and technology system. This also includes positions and individuals serving on governing bodies within entities acknowledged as technology and innovation centers in Portugal.
• Employment positions and individuals serving on the boards of organizations that receive contractual tax incentives in Portugal through agreements with IAPMEI or AICEP. These incentives are applicable to substantial investments exceeding €3 million.
• Highly qualified professionals working for entities benefiting from the Investment Promotion Tax Regime (RFAI)…
• Or in industrial and service companies that export at least 50% of their turnover in the year of starting work or the prior two years.
• Research and Development personnel whose costs are eligible for the R&D tax incentive system (SIFIDE).
• Job positions and members of entities certified as start-ups under the Portuguese Start-Up Law. 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.

How to Obtain Residency in Portugal

In order to become a non-habitual resident, you must have lived in Portugal for more than 183 days in the space of 12 months. You can also have lived in the country for less than 183 days but have bought property in Portugal during those 12 months or performed public functions in the name of the Portuguese state for the last 12 months.

If the last two options were not the case for you, you will need to obtain residency in order to be eligible for the non-habitual tax regime. Portugal has some attractive long-stay national visas, also known as residency visas, that allow you to make use of the 10 years of tax incentives of the NHR status. Take a look at these guides for Portuguese visas: the Portugal Golden Visa, the Portugal D7 Visa & the Portugal D2 Visa.

Keep in mind that the Portuguese Golden Visa no longer allows for investment through property since October 2023. Instead, the current investment routes include:

• Donation to Arts €250,000
• Venture Capital/Private Equity Fund €500,000
• Donation to Research Activities €500,000
• Company Creation 10 employees or €500,000 + 5 employees

If you are interested in learning more about financial planning and tax efficient tips, we will be providing a walk-through of the fundamentals of good wealth management and financial planning for expats, along with tips and essential advice.

Additionally, we’ll discuss tax implications, investment strategies, and how to maximize your financial potential in your new home. Join us to gain valuable insights and ensure a secure financial future in Portugal here.

For 15 years, the Non-Habitual Resident (NHR) tax regime in Portugal has attracted thousands of residents by offering reduced tax rates and even full tax exemptions for the first ten years of residence. NHRs are taxed at a flat rate of 20% on their income and are exempt from paying taxes on global income. 

However, in late 2023, it was announced that the Non-Habitual Resident (NHR) tax regime was coming to an end as parliament argued it was no longer beneficial to the country.

If you were not lucky enough to enjoy the NHR regime before it ended, you might still have a chance of enjoying some tax benefits with the new NHR regime, known as NHR 2.0. The benefits remain almost the same, but the pool of those who can apply has become a lot smaller. Moreover, the new regime focuses on employment, primarily scientific research, and innovation, while no longer benefiting retirees and other high-value jobs.

Benefits of the Non-Habitual Resident (NHR) Tax Regime in Portugal

Bear in mind that the following benefits only last for 10 years. After that, you will become a regular tax resident like other citizens and will have to abide by the traditional fiscal regime.

Personal Income Tax (IRS): 20% Flat Tax

Those who work in Portugal (freelance or regular employment) under the NHR tax regime only pay a 20% flat rate on personal income tax (IRS). 

Global Income

You will also not pay any tax on dividends, interest, royalties, capital gains, rental income from real estate outside Portugal, and income from employment in another country. These will be paid in the source country if your country has a Double Taxation Agreement (DTA) with the country. The UK, USA, and many more countries have a DTA with Portugal where this is the case. 

Other Taxes

If your pension income happens to be taxed in Portugal as you are not eligible under a DTA, it will only be taxed at a flat rate of 10% which includes retirement savings and insurance. Those with non-habitual residency status pay pension tax like income tax, which can go up to 48%. You will also not pay any inheritance or wealth tax.

Eligibility & Requirements: Who Qualifies for Non-Habitual Resident (NHR) Status in Portugal

Keep in mind that you must have the right to be in Portugal through a long residency visa such as the Portugal Golden Visa, the Portugal D7 Visa, or the Portugal D2 Visa. Here’s a list of who qualifies for the new NHR in Portugal:

• Educational activities in higher learning institutions and scientific investigation, including employment in scientific roles within entities, structures, and networks affiliated with the national science and technology system. This also includes positions and individuals serving on governing bodies within entities acknowledged as technology and innovation centers in Portugal.
• Employment positions and individuals serving on the boards of organizations that receive contractual tax incentives in Portugal through agreements with IAPMEI or AICEP. These incentives are applicable to substantial investments exceeding €3 million.
• Highly qualified professionals working for entities benefiting from the Investment Promotion Tax Regime (RFAI)…
• Or in industrial and service companies that export at least 50% of their turnover in the year of starting work or the prior two years.
• Research and Development personnel whose costs are eligible for the R&D tax incentive system (SIFIDE).
• Job positions and members of entities certified as start-ups under the Portuguese Start-Up Law. 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.

How to Apply for Non-Habitual Residency in Portugal

How to Obtain Residency in Portugal

In order to become a non-habitual resident, you must have lived in Portugal for more than 183 days in the space of 12 months. You can also have lived in the country for less than 183 days but have bought property in Portugal during those 12 months or performed public functions in the name of the Portuguese state for the last 12 months. If the last two options were not the case for you, you will need to obtain residency in order to be eligible for the non-habitual tax regime. Portugal has some attractive long-stay national visas, also known as residency visas, that allow you to make use of the 10 years of tax incentives of the NHR status. Let’s go through our favorites: the Portugal Golden Visa, the Portugal D7 Visa & the Portugal D2 Visa.

Keep in mind that the Portuguese Golden Visa no longer allows for investment through property since October 2023.

Portugal Golden Visa

The Portugal Golden Visa was launched in 2012 to increase foreign investment in Portugal and boost the economy as it requires an investment of at least €350,000. With the Golden Visa, non-EU/EEA/Swiss citizens can live and work in Portugal, as well as travel freely within the Schengen area. The visa leads to permanent residence after 5 years and citizenship after 6 years. However, you do not need to live in Portugal to obtain this visa. You must stay in Portugal for at least 7 days in the first year and 14 days in the subsequent years. The most important thing is that you make an investment with funds from outside of Portugal.

Since 2023, the Golden Visa investment routes have changed and property investment is no longer an option. Instead, the current investment routes include:

• Donation to Arts €250,000
• Venture Capital/Private Equity Fund €500,000
• Donation to Research Activities €500,000
• Company Creation 10 employees or €500,000 + 5 employees

Take a look at our full guide to the Portugal Golden Visa here.

Portugal D7 Visa

The Portugal D7 Visa is suitable for retirees, digital nomads, and remote workers with proof of a stable income. The D7 Visa was introduced in 2007 and allows non-EU/EEA/Swiss citizens to obtain permanent residency in Portugal after 5 years and citizenship after 6 years. This might sound similar to the Golden Visa, but unlike it, it does not require an investment. All you need is to prove that you have a solid passive income that can come from a retirement pension, a financial investment, real estate income, or salary.

The minimum income required is €8,460 per year for the main applicant. For a spouse, you must add 50% to this (€4,230) and for a dependent child, you must add 30% to this (€2,538). Therefore, for a couple with one child, you would need around €15,300 a year to be eligible for the D7 Visa.

You must also spend at least 16 months in Portugal during the first 2 years of the visa, as well as have a clean criminal record and show proof of residence address in Portugal (rental or purchase).

Take a look at our full guide to the Portugal D7 Visa here.

Portugal D2 Visa

The Portugal D2 Visa caters to entrepreneurs, freelancers, and independent service providers who wish to reside in Portugal. Non-EU/EEA/Swiss citizens who want to start a business in Portugal or relocate their existing business to the country can make use of this visa. Another option is choosing to invest in a Portuguese business. Like the Golden Visa and D7 Visa, the D2 visa allows for permanent resident status after 5 years and citizenship after 6 years.

To be eligible, you must prove that you have the financial resources to sustain your business. Although there is no number set in stone, the recommended minimum is at least €5,000. You will also have to show that you can financially sustain yourself

You will also have to present a business plan that demonstrates your business is economically viable and that will be reviewed for its social, economic, and cultural impact.

Keep in mind that the non-habitual resident tax regime applies to your personal income tax, personal capital gains, pension allowance, etc, but your company will still have to pay the normal corporate tax (21% in mainland Portugal) and social security fees (23.75% on top of each employee monthly wage).

Take a look at our full guide to the Portugal D2 Visa here.

Residing in Lisbon comes with advantages, including its closeness to beaches, access to culture, and incredible food scene. What sets it apart from other European capitals is the affordability of living, though the cost has been noticeably increasing, posing a challenge for the residents on a local Portuguese salary. Still, Lisbon is around 30% cheaper than Paris and 50% cheaper than London. 

Keep in mind that the highest cost for anyone moving to Lisbon is the rent. The average price for an apartment in Lisbon is 21€/m2 (December 2023), a 17% increase in comparison to December 2022. Let’s take a look at the average monthly budget in Lisbon for expats without children, families, and digital nomads in 2024. 

Guide to Lisbon

Cost of Living in Lisbon for an Expat

• Housing: For a one-bedroom apartment that’s around 60 m2, expect to pay over €1200. Alternatively, you can also find studios for €700 to €900 a month but expect cramped conditions. Rooms in shared homes tend to go for around €600 at the moment.
• Utilities: You need to budget at least €100 to €150 for bills such as electricity and gas, but this can go up in the winter with a lot of use of your heating. Also, keep in mind that your internet and phone bill should run you around an extra €50.
• Groceries: The price of groceries depends on your lifestyle, diet, choice of products, as well as where you shop. But for a safe bet, budget at least €100 a week for groceries for one person. 
• Eating Out: Full meals for €10 are a thing of the past in Lisbon. While you can still find a few bargains, prices this low are rare and hard to find. A meal out will cost you at least €20 without alcohol at most mid-range restaurants but can be a lot more expensive. If you eat out twice a week, for example, you will need to budget at least €160 a month, but this amount is still pretty conservative. 
• Transportation: Lisbon has new transport passes for €40 called Passe Navegante which allows you to use all public transport companies in the 18 municipalities in greater Lisbon.
• Healthcare: Much like the UK’s NHS, Portugal’s public healthcare system provides essential medical services free of charge to residents, though certain state healthcare services may necessitate standard user fees. These fees range, with examples including €15 for Accident and Emergency Department visits and €5 for basic GP appointments. If you want to go private for easier access to appointments and a wider range of services available (dermatology and dentistry, for example), health insurance will cost you anywhere between €40 to €100 a month.

Cost of Living in Lisbon for a Digital Nomad 

• Housing: If you are looking for a short stay of less than a year, you might still be able to rent a place with a rental contract and pay around €1200 for a one-bedroom. However, it’s more likely that you will have to book a place on Airbnb. This will cost you at least around €1500 for a small apartment during the low season, and anywhere from €2500 to €3000 during the summer. Alternatively, renting a bed at a hostel for around €30 could help you save some money. 
• Groceries: Digital nomads tend to want to explore the food scene since they might be staying in Lisbon for shorter periods of time. However, if you are keen on making most of your food at home, budget €100 a week for groceries for one person. 
• Transportation: Lisbon has new transport passes for €40 called Passe Navegante which allows you to use all public transport companies in the 18 municipalities in greater Lisbon. Uber and Bolt also offer quite affordable fares in Lisbon.
• Eating Out: A meal will cost you around €20 at an average mid-range restaurant without alcohol. But you can easily spend €40+ on a meal for one at certain restaurants in Lisbon.
• Sightseeing & Leisure: Make the most out of Lisbon while you’re here. The city has plenty of museums, theaters, cinemas, and bars to explore. Budget around €30 to €50 a week for these kinds of activities. 
• Coworking: Coworking spaces in Lisbon are becoming more expensive, matching other European cities. Renting a desk for a month can cost around €200 or more.

Cost of Living in Lisbon for a Family of Four

• Housing: A 3-bedroom apartment in Lisbon will cost you around €2,100 but can easily go up to €3,000. You can find more affordable apartments in areas just outside Lisbon like Odivelas (13,2 €/m2), Amadora (13,4 €/m2), and Loures (12,9 €/m2), but then having a car is recommended. 
• Utilities: You need to budget at least €200 for bills such as electricity and gas, but this can go up in the winter with a lot of use of your heating. Internet and phone bills will depend on the amount of phones, but budget at least €100 for a family package.
• Groceries: The price of groceries depends on your family’s lifestyle and food choices. But for a safe bet, budget at least €200 to €250 a week for groceries for a family of four.
• Transportation: Lisbon has new transport passes for €40 called Passe Navegante which allows a person to use all public transport companies in the 18 municipalities in greater Lisbon. But for families, the deal is even better! Each family only needs to pay a maximum of two passes for €80 and the whole family gets transport included. If you have children under 12, they can also get a pass for free.
• Eating Out: A meal out will cost you at least €20 without alcohol at most mid-range restaurants but can be a lot more expensive. If you eat out once a week with your family, for example, you will need to budget at least €300 a month, but this can be a lot more depending on the choice of restaurants.
• Education: Schools can easily be the largest portion of your budget unless you opt for free Portuguese public schools. If you are looking for an international environment and English-speaking schools, private international schools can cost you anywhere between €7,000 and €20,000 a year per child. A private Portuguese school will cost you around €6,000. 
• Healthcare: Portugal’s public healthcare system provides medical care for free to residents, though certain state healthcare services include standard user fees (like €5 for basic GP appointments). At this moment, however, your family is unlikely to be given a family GP as there are none available, making access harder. Therefore, if you want to go private, you should get health insurance for your whole family which can cost at least €200, depending on factors such as age and previous illnesses.