Portugal has introduced a new Non-Habitual Resident tax regime called the Fiscal Incentive for Scientific Research and Innovation (IFICI), commonly referred to as NHR 2.0. This program, which replaces the previous NHR scheme that ended in December 2023, is designed specifically to attract highly qualified professionals relocating to Portugal for residence and employment purposes. We previously released details about the NHR 2.0, but this guide has now been updated with more details.
The new NHR in Portugal offers substantial tax advantages to eligible individuals for a consecutive period of 10 years (non-renewable), but it is not as easy to qualify compared to the first iteration of NHR because there are stricter application deadlines and more documentation required.
Key Benefits of NHR 2.0 in Portugal
The NHR 2.0 in Portugal offers several significant tax benefits to qualifying residents:
- 20% flat tax rate on qualifying Portuguese-sourced employment and self-employment income
- Tax exemption on various foreign-sourced income including:
- Employment income
- Business profits
- Interest
- Dividends
- Rental income
- Royalties
- Capital gains (subject to pending regulations)
It’s important to note that, unlike the previous scheme, the new NHR in Portugal does not provide tax advantages for foreign pensions, which are now subject to standard progressive tax rates ranging from 14.5% to 53%.
Eligibility Requirements for IFICI
To qualify for the new NHR 2.0 in Portugal, applicants must meet the following criteria:
- Became a Portuguese tax resident after January 1, 2024
- Have not been a tax resident in Portugal during the preceding five years
- Meet specific professional and educational qualifications (detailed below)
- Have not previously participated in the old NHR regime or other “ex-residents” programs
Qualifying Professions and Companies
Highly Qualified Professions
The IFICI program targets professionals in the following categories:
- University professors
- Medical doctors
- Specialists in physical sciences, mathematics, and engineering
- Directors of companies (board members, CEOs, executive managers)
- Directors of administrative and commercial services
- Information and Communication Technology (ICT) specialists
- Specialists in physical sciences, mathematics, and engineering
Additionally, applicants must possess:
- At least level 6 of the European Qualifications Framework (equivalent to a bachelor’s degree) with three years of proven professional experience, OR
- Level 8 of the European Qualifications Framework (equivalent to a PhD/Doctorate), which waives the professional experience requirement
Qualifying Companies and Sectors
For a company to make you eligible under the NHR 2.0 in Portugal, it must:
- Export at least 50% of its turnover (in the fiscal year you join or in the two preceding years), AND
- Have its main activity within the following Portuguese CAE codes:
- Extractive industries (divisions 05-09)
- Transformative industries (divisions 10-33)
- Information and communication (divisions 58-63), including:
- Publishing activities
- Film, video, TV production, sound recording
- Software programming and consultancy
- Data processing and hosting
- News agency activities
- Research and development of physical and natural sciences (group 721)
- Higher education (subclass 85420)
- Human health activities (subclasses 86100-86904)
Other qualifying routes include:
- R&D personnel eligible for Portugal’s SIFIDE tax incentive program
- Directors/employees of accredited Portuguese startups
- Researchers with PhDs working on R&D projects within Portugal’s scientific network
- Directors/employees of Portuguese-based organizations producing knowledge
- Positions in organizations approved by IAPMEI or AICEP
- Certain professionals in Azores & Madeira (pending specific regulations)
Application Process and Deadlines
The application process for the new NHR in Portugal has been updated with stricter deadlines and more thorough eligibility checks. Applications must be submitted by January 15 of the year following establishment of residency in Portugal. Please be aware of this when you are in the process of getting residency in Portugal.
The competent authority for application review depends on your NHR 2.0 qualification route:
| NHR 2.0 Route | Competent Authority |
| Board member/employee of a certified startup | Startup Portugal |
| Highly qualified professions in companies exporting at least 50% of turnover | Tax Authority |
| Board member/employee of entities conducting activities relevant to the national economy | AICEP or IAPMEI |
| Eligible investments in Madeira | To be determined |
Required Documents
Applicants must submit the following documentation:
- Proof of required academic qualifications
- Copy of scholarship contract/scientific grant (when applicable)
- Copy of employment contract (when applicable)
- Up-to-date company registration certificate (when applicable)
- Statement from the employer confirming compliance with activity requirements
Additional documentation may be requested during the application process. The Tax Authorities are expected to confirm NHR 2.0 status by March 31 each year.
Tax Treatment of Different Income Types
Under the new NHR in Portugal, different types of income receive specific tax treatment:
Foreign Source Income
- Employment Income – Exempt from Portuguese taxation
- Independent Work – Exempt if from a qualifying profession and sourced from a country with a Double Taxation Agreement (DTA)
- Capital Investment Income (Interest/Dividends) – Exempt if from a country with a DTA or a non-blacklisted jurisdiction
- Royalties – Exempt if from a country with a DTA or a non-blacklisted jurisdiction
- Real Estate Income – Exempt if from a country with a DTA or a non-blacklisted jurisdiction
- Capital Gains – Status currently unclear (awaiting final regulations)
- Pension Income – Subject to standard progressive tax rates (14.5% to 53%)
Portuguese Source Income
- Employment Income – 20% flat rate for eligible professions (or standard progressive rates if lower)
- Self-Employment Income – 20% flat rate for eligible professions (or standard progressive rates if lower)
- Rental Income – 28% (optional rate) or standard progressive rates
- Capital Gains – 50% of net gains taxed at standard progressive rates
- Pension Income – Taxed at standard progressive rates
Comparison – Old NHR vs. New NHR 2.0 in Portugal
| Feature | New NHR 2.0 (IFICI) in 2024 | Old NHR Regime (ended Dec 2023) |
| Residency Requirement | Not a tax resident in Portugal for previous 5 years | Not a tax resident in Portugal for previous 5 years |
| Minimum Stay | No minimum stay requirement | No minimum stay requirement |
| Validity Period | 10 years (non-renewable) | 10 years |
| Employment Income (High-Value Added) | 20% flat rate on eligible activities | 20% flat rate on eligible activities |
| Pension Income | Excluded from benefits (standard rates apply) | 10% flat rate |
| Rental Income & Royalties | Exempt (if taxable abroad under DTA or OECD Tax Model) | Exempt |
| Dividends & Interest | Exempt (if taxable abroad under DTA or OECD Tax Model) | Exempt |
| Capital Gains | Status unclear (awaiting regulations) | Exempt |
Countries with Double Taxation Agreements
Portugal maintains Double Taxation Agreements with numerous countries worldwide, which directly impacts the tax treatment of foreign income under the new NHR in Portugal. These agreements are crucial for determining whether certain income types qualify for exemption.
Key DTA partners include:
- European Union members
- United States, Canada, United Kingdom
- Major Asian economies (China, Japan, South Korea, Singapore)
- Brazil and many other Latin American countries
- Various Middle Eastern and African nations
(The full list includes approximately 80 countries with agreements in force)
Frequently Asked Questions
- Can I apply for NHR 2.0 if I was previously on the old NHR regime?
No, individuals who benefited from the previous NHR regime are not eligible for the new NHR in Portugal.
- How does the new NHR in Portugal treat retirement pensions?
Unlike the previous scheme, foreign pensions are excluded from tax benefits under NHR 2.0 and are subject to standard progressive tax rates (14.5%-53%).
- What happens after the 10-year period of NHR 2.0 expires?
After the non-renewable 10-year period, you will be subject to Portugal’s standard tax regime as a regular tax resident. Please keep this in mind as you prepare to apply for NHR 2.0.
- Is there a minimum stay requirement to maintain NHR 2.0 status?
While there is no specific minimum stay requirement, you must maintain your tax residency status in Portugal to benefit from the program.
- How is the application process different from the old NHR regime?
The new NHR in Portugal features stricter application deadlines, more documentation requirements, and more thorough eligibility verification compared to the previous automatic approval system.
- Can capital gains from selling property abroad be exempt under NHR 2.0?
The treatment of capital gains is still awaiting final regulations, but the initial announcements suggest they may be excluded from exemptions under the new NHR in Portugal.
The new NHR 2.0 (IFICI) program in Portugal offers significant tax advantages for qualified professionals relocating to Portugal, focusing on innovation, research, and high-value activities. While more restrictive than its predecessor, it continues to position Portugal as an attractive destination for international talent and investment.
