Portugal NHR 2.0: Portugal’s New Tax Regime Explained

For many years, Portugal’s Non-Habitual Resident (NHR) program attracted retirees, entrepreneurs, and remote workers looking for tax advantages and a better quality of life.

In 2024, the government ended the NHR regime and replaced it with a new system called the Tax Incentive for Scientific Research and Innovation (IFICI). Many people now refer to this as Portugal’s NHR 2.0, which fully takes the place of the old program.

Instead of giving tax breaks to all foreign residents, the new system is designed to attract highly skilled professionals working in innovation, technology, and research.

In this guide, we’ll explain how Portugal NHR 2.0 works and how it compares to the old system.

You also find out about:

• Why Portugal replaced the NHR system
• What is Portugal NHR 2.0?
• Who qualifies for IFICI in Portugal?
• Benefits of the IFICI regime
• Difference between NHR and IFICI
• How to apply for IFICI

Why Portugal Replaced the NHR System

Portugal launched the original Non-Habitual Resident regime in 2009 and offered generous tax incentives to individuals who set up their tax residency in Portugal.

With the NHR program, eligible residents paid lower taxes on some Portuguese income and were exempt from tax on many types of foreign income. But over time, some said it gave foreign newcomers an unfair advantage over local residents.

In Portugal, political pressure grew as housing prices climbed in cities like Lisbon and Porto, partly due to the influx of international residents. This pushed the government to reconsider the NHR program.

In 2023, the government announced plans to phase out the traditional NHR regime for new applicants. Much of the Portugal NHR news at the time focused on whether the country would eliminate tax incentives entirely or replace them with a new framework.

However, lawmakers decided to simply introduce the new system, IFICI, with stringent criteria and focused on specific professional sectors.

What is Portugal NHR 2.0?

IFICI stands for Incentivo Fiscal à Investigação Científica e Inovação, or Tax Incentive for Scientific Research and Innovation.

The IFICI regime was designed to attract skilled professionals who work in innovation, research, or advanced industries in Portugal. Unlike the old NHR program, which offered tax breaks to most new residents, this new system focuses on people with specialized skills who can help drive the country’s economic growth.

This means the new NHR rules in Portugal are tied to your job. To qualify, you need to become a Portuguese tax resident and work in certain fields that the government sees as important for the country’s development.

IFICI offers a lower income tax rate for eligible individuals, making it an attractive option for those planning to live and work in the country.

If you’re eligible, here’s what you can expect from the IFICI system:

• A flat 20 percent tax rate applies to income you earn from employment or self-employment in Portugal
• It lasts for ten years

This lower rate is a big advantage, especially since Portugal’s regular income tax rates can go above 40 percent if you’re a high earner.

One key change from the old NHR regime is how foreign income is handled. While the previous system often let you avoid tax on income from abroad, the IFICI regime mostly follows Portugal’s regular tax rules and double taxation agreements.

So, while the new NHR 2.0 (IFICI) still has its perks, the main benefits now apply to professional income earned in Portugal, especially if your work is linked to innovation.

Who qualifies for IFICI in Portugal?

IFICI is designed for people with advanced skills, strong research backgrounds, or those working in innovative fields in Portugal.

To qualify, you need to meet these main requirements, along with specific criteria based on your work or activity:

• Become a tax resident in Portugal
• Not have been a Portuguese tax resident in any of the previous five years
• Perform a qualifying activity listed in Article 58-A of the EBF
• You need to formally enroll in the regime
• You cannot be receiving other tax incentives at the same time
• You need to have an EQF level 8 (PhD), or EQF level 6 (Bachelor’s), plus 3 years of proven professional experience.

Additionally, IFICI is only for people working in one of the categories A to F listed in Article 58-A, which include:

• Higher education teaching and scientific research: Activities assessed and certified by the Fundação para a Ciência e Tecnologia (FCT), such as university professors, scientific researchers, and holders of research grants.
• Qualified positions in productive investment projects: Highly qualified jobs or board positions in companies recognized by AICEP as performing activities relevant to the national economy.
• Highly qualified professionals as defined in the Portaria: These roles include directors, executives, specialists in science, math, engineering, ICT, medical doctors, and university professors.
• Roles in companies benefiting from major R&D or investment incentives: This includes companies supported by the RFAI or operating in key industrial, tech, or export sectors.
• Activities recognized by IAPMEI: This includes companies in areas such as manufacturing, IT, scientific research, higher education, and healthcare, provided they have the appropriate CAE classification.
• Certified startups: This applies to highly qualified jobs and board positions in startups certified by Startup Portugal under Law 21/2023.

Portugal Visas That Align With IFICI

Portugal offers several residency visas designed for highly qualified professionals or researchers, making them a good fit for IFICI.

But since IFICI is a tax regime and not an immigration program, you’ll naturally need to secure legal residency in Portugal before you can apply for these tax benefits.

Portugal HQA Visa: The Portuguese Highly Qualified Activity Visa is a residency visa for highly skilled professionals seeking to work in Portugal, including managers, scientists, doctors, engineers, and programmers.

Portugal Entrepreneur Visa: The Portugal D2 Visa is for anyone who wishes to live in Portugal and operate a business, either by starting a new one or acquiring an existing one. But to qualify for IFICI, the business must be centered around technology, research, or innovation.

Portugal Startup Visa: If you want to fund a start in Portugal that focuses on innovation or technology, the Portugal Startup Visa will also help you qualify for IFICI.

Benefits of the IFICI Regime

IFICI is designed to offer straightforward tax benefits for people moving to Portugal to work in scientific research, innovation, or other high-skill areas. If you’re planning to relocate for one of these fields, the advantages can make a real difference.

Here are the benefits of IFICI:

• A key benefit is a lower tax rate on income you earn in Portugal from work or self-employment. Rather than paying the usual progressive tax rates, which can go up to 48 percent, you’ll pay a flat 20 percent on eligible income if you qualify.
• Most income you earn from outside Portugal is exempt from Portuguese tax, although it still counts when calculating your overall tax rate.
• Once you’re approved, you can enjoy these tax benefits for up to ten years. If you leave Portugal for a while and then come back, you may be able to pause and restart the regime, so you don’t lose out on the full benefit period.
• Freelancers, researchers, professors, startup founders, and other professionals in high-value fields can also qualify, as long as their work fits the eligible categories.

Difference between NHR and IFICI

While NHR was open to retirees, remote workers, consultants, and entrepreneurs, IFICI rules are more selective about who can qualify. But that’s not the only difference between the two tax regimes.

Here’s how the two tax systems compare:

How to Apply for IFICI

Applying for the IFICI regime is similar to the old Portugal NHR, involves several steps, and you’ll need the following documents:

• Provide documentation of eligibility
• Proof that you have not been a tax resident in Portugal for the previous five years.
• Documentation proving academic qualifications or at least 3 years of professional experience
• Proof of employment or self-employment in a qualifying activity, such as an employment contract, startup registration, or academic appointment

After gathering the documents, here is the process you follow to apply for IFICI:

Step 1: Become a Portuguese tax resident by spending more than 183 days in Portugal within a 12-month period, or maintain a habitual residence in Portugal that shows intent to stay long-term.

Step 2: Register with the Portuguese Tax Authorities (AT).

Step 3: Obtain a tax identification number in Portugal (NIF).

Step 4: Update your tax address to your Portuguese residence.

Step 5: Once you’re a resident, registered, and have an NIF, submit a formal request to get IFICI benefits through the Portal das Finanças (Portugal’s tax portal).

Frequently Asked Questions About IFICI

Is the new NHR Portugal regime officially approved for 2026?

Yes. Portugal officially approved the replacement for the NHR regime in the 2024 State Budget. The program is called the Tax Incentive for Scientific Research and Innovation (IFICI) and remains in force for 2026.

Who qualifies for Portugal’s new NHR 2.0 tax regime?

Portugal’s new IFICI qualifies new Portuguese tax residents who work in high-value activities. Eligible workers include scientists, researchers, university professors, startup employees, and professionals in technology, engineering, and innovation sectors.

What are the main tax benefits under NHR 2.0 Portugal?

IFICI provides a 20 percent flat tax rate for 10 years on eligible employment or self-employment income. The regime also provides possible tax exemptions on many foreign-source incomes, such as dividends, interest, and royalties, when tax treaties apply. These benefits apply only to new Portuguese tax residents working in qualified innovation or research sectors.

Can existing NHR holders switch to Portugal NHR 2.0?

Existing Non-Habitual Resident holders cannot switch to IFICI, as it applies only to new tax residents who did not previously benefit from NHR. Current NHR beneficiaries keep their original 10-year NHR tax benefits until their eligibility period ends.

Does Portugal NHR 2.0 apply to remote workers and digital nomads?

IFICI does not broadly apply to remote workers or digital nomads on the Portugal D8 Visa. The regime applies only to professionals working in qualified scientific, research, technology, startup, or innovation sectors in Portugal. Remote workers qualify only if their employment or activity is linked to an eligible Portuguese entity or approved sector.