Portugal’s Non-Habitual Residency (NHR) scheme was a hugely popular tax regime that offered favorable tax policies over 10 years for expats who established tax residency in Portugal.
Launched in 2009, the government ended the scheme in late 2024, with a transition phase lasting until March 2025. A new tax regime, called the Tax Incentive for Scientific Research and Innovation (IFICI), has been introduced and is often referred to as the Portugal NHR 2.0.
In this article, you’ll learn more about the new NHR and who can apply. You’ll also find out more about:
What was the NHR?
Portugal’s Non-Habitual Resident (NHR) regime provided reduced tax rates and exemptions on foreign income for new residents for up to ten years.
It was designed to attract entrepreneurs, remote workers, and retirees looking for a stable European base with a competitive tax environment and high quality of life.
The NHR Portugal tax regime is no longer available as the transitional phase after the regime’s official discontinuation has ended. It was still possible to apply for NHR before the 31 March 2025 cut-off, but only if you met specific requirements. It has been replaced with IFICI.
Anyone already registered under the program will continue to benefit from the same tax benefits available to them under the existing terms for the entire 10-year period.
Advantages of the old NHR
- Special personal income tax treatment over ten years
- Exemption on almost all foreign-source income
- 20 percent flat rate for certain Portuguese source incomes
- Become part of a white-listed tax environment
- Tax exemption for gifts or inheritance to direct family members
- No wealth tax
- Tax exemption on passive income from outside Portugal
- Free remittance of funds to Portugal
What is the Tax Incentive for Scientific Research and Innovation Program?
IFICI is Portugal’s new tax regime designed to attract highly qualified professionals working in scientific research and innovation. It offers a favorable IRS (personal income tax) reduction to individuals who relocate to Portugal and work in designated high-value scientific or innovative sectors.
IFICI is intended for people who become tax residents in Portugal, have not been tax residents in the previous five years, and perform activities that are defined and recognized by entities such as IAPMEI and AICEP.
This includes skilled roles in research, technology, and innovation.
Benefits of IFICI
IFICI offers a single, targeted set of tax advantages, but the benefits are meaningful for anyone relocating to Portugal to work in scientific research, innovation, or other designated high-skill fields.
According to government information, the benefits of the new Portugal NHR 2.0 include:
- Reduced IRS rate on eligible Portuguese-source income: Instead of being taxed under Portugal’s progressive income tax brackets (which can reach 48%), beneficiaries are taxed at a flat 20% rate on net employment (Category A) or self-employment (Category B) income earned in qualifying activities. This is the regime’s core fiscal advantage.
- Foreign-source income is exempt: Most income earned abroad is exempt from taxation in Portugal, though it is still considered for rate-determination purposes. For mobile professionals or individuals with international income streams, this can significantly reduce their tax burden. These sources can include foreign employment income, self-employment income, investment income (dividends, interest, royalties), or foreign capital gains from the sale of securities, crypto assets, and other investments.
- Benefit lasts for up to 10 consecutive years: Once granted, IFICI remains valid for ten years. The regime may also be paused and resumed if the taxpayer temporarily leaves Portugal and later returns.
- Applies to employment and self-employment: IFICI is not limited to salaried workers. Freelancers, independent researchers, professors, startup founders, and professionals in recognized high-value sectors can also qualify as long as their activities fall within the eligible categories defined in Article 58-A and the associated Portarias.
Who qualifies for IFICI?
IFICI is intentionally focused on a specific group, targeting individuals who possess advanced skills, research capabilities, or work that is driven by innovation in Portugal.
To qualify, individuals must meet all of the following core conditions, in addition to the activity-based criteria that determine eligibility:
- 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
- Must request formal enrollment (inscrição) in the regime
- Must not be receiving certain other tax incentives
The regime only applies to individuals who exercise activities within one of the categories A to F of Article 58-A, and includes:
- 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, 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 professions defined in the Portaria:
These are explicitly listed and include directors and executives, specialists in physical sciences, mathematics, engineering, ICT specialists, medical doctors and university-level professors.
- Roles in companies benefiting from major R&D or investment incentives:
Includes entities supported under the RFAI or operating within key industrial, technological, or export-oriented sectors.
- Activities recognized by IAPMEI:
Includes companies in sectors such as manufacturing, information and communication, scientific R&D, higher education, and healthcare—with specific CAE classifications.
- Roles in certified startups:
This includes highly qualified positions and board roles in startups certified by Startup Portugal under Law 21/2023.
As part of the requirements, highly qualified professional must also hold:
- EQF level 8 (PhD), or
- EQF level 6 (Bachelor’s) plus 3 years of proven professional experience.
How to Apply for IFICI
Applying for the IFICI regime is similar to the old Portugal NHR and involves several steps:
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 through the Portal das Finanças (Portugal’s tax portal)
Required 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 (e.g,. employment contract, startup registration, academic appointment)
Difference Between NHR and IFICI
As the name suggests, the main difference between the Tax Incentive for Scientific Research and Innovation and the NHR program is that the new scheme requires applicants to earn income in certain professional categories.
NHR offered broad tax breaks to almost anyone who moved to Portugal, with few conditions on profession or activity. It allowed a flat 20% tax on Portuguese income and full or partial exemptions on most foreign income, including pensions.
IFICI, by contrast, is more selective. It’s only for highly qualified professionals working in specific fields like science, innovation, tech, and education. You must actively work in one of the approved activities each year to keep the benefit.
It still offers the 20% flat rate on local income and exemptions on eligible foreign income—but only if you meet stricter eligibility rules.
Another significant change is that, while the NHR program had uniform policies across Portugal’s entire national territory, the Tax Incentive scheme makes special provisions for the islands of Madeira and the Azores to define their own jobs or activities that the regime will apply to under their jurisdiction.
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