Portugal’s Non-Habitual Resident tax regime (NHR) was a big incentive for expats and investors to move to the country. Between 2009 and 2024, it provided several benefits to foreigners, including reduced tax rates and exemptions for 10 years.
However, the scheme closed to new applicants in January 2024 and was completely phased out by 2025 when the transitional phase ran its course. This article will cover everything you need to know about the NHR ending in Portugal, its replacement, and how you can apply if you qualify.
Portugal NHR Ending: Key Takeaways
Portugal has closed its original Non-Habitual Resident (NHR) tax regime to new applicants.
There was a transitional period for people who met certain criteria, so some could have applied under the old NHR rules.
A new tax regime, called the Incentivized Tax Regime for Scientific Research and Innovation, now replaces NHR for professionals who qualify.
Existing NHR beneficiaries retain their benefits for the remainder of their original 10-year period.
This change affects anyone planning to move to Portugal who was hoping to benefit from NHR’s lower tax rates and exemptions.
What was the Portugal NHR Tax Regime?
Non-Habitual Residence (NHR) status in Portugal refers to a process whereby foreign residents established their tax residency in the country.
For current holders, it offers substantial advantages such as:
Special tax treatment for ten years
No wealth tax
Free remittance of funds to Portugal
Exemption on all foreign income
20 percent flat rate on some Portuguese income
Tax exemption on gifts for family members
Tax residency in Portugal
In Portugal, your tax residency decides where you need to pay tax on your income. This isn’t about your visa, nationality, or residence permit. What matters is whether Portugal sees you as a tax resident for that year.
You’re considered a tax resident in Portugal if you meet either of these conditions during the calendar year (from January 1 to December 31):
You spend more than 183 days in Portugal in any 12-month stretch that falls within the tax year. The days don’t have to be in a row. If you’re here for more than 183 days, you’re automatically seen as a Portuguese tax resident.
Even if you don’t spend that much time in Portugal, you might still be considered a tax resident if you have a home that is your main place to live during the tax year.
There’s no formal application to become a tax resident in Portugal. Once you meet the criteria, you’re automatically treated as a tax resident for that year, even if you didn’t plan for it.
Is the Portugal NHR Regime 2025 Abolished?
Yes, the NHR effectively ended in 2023, when the Portuguese Parliament approved the changes in the 2024 State Budget. With the ultimate vote on the budget legislation the following year, the government decided to introduce a transitional period before officially halting the regime completely.
During this transitional period, which ran from March 2024 to March 2025, the regime was closed to new applications, unless you met at least one of the criteria:
Having an employment contract signed/to be signed by December 31, 2023
Having a rental agreement or other contract for the use/possession of property signed by October 10, 2023
Having a contract to buy property in Portugal signed by October 10, 2023
Having children enrolled or registered in a school in Portugal by October 10, 2023
Having a residence visa or a residence permit valid from December 31, 2023
Having an application for a residence visa or residence permit initiated by December 31, 2023
Being a member of the household of anyone who meets the above criteria
Anyone who qualified under these conditions would have NHR status from the date they became a tax resident (whether in 2024 or the first quarter of 2025) until December 31, 2033.
What does the Portugal NHR regime changes 2025 mean for you?
The end of Portugal’s NHR regime affects people in different ways. If you already have NHR, not much changes. If you were planning to apply, the rules are now very different. It all comes down to whether you secured NHR status before the program closed.
Foreigners in Portugal with NHR tax status
If you registered as a Non-Habitual Resident before the deadline, your status is safe, as the government’s decision only affects new applicants. As long as your NHR approval was verified by December 31, 2023, you will retain the advantages of reduced tax responsibilities for the entire ten-year period.
Your 10-year NHR clock continues as originally granted.
The 20 percent flat tax rate on qualifying Portuguese employment or self-employment income still applies.
Eligible foreign-sourced income continues to be taxed under the same NHR rules you were approved under.
So, for now, nothing changes for you. But with NHR ended and after your 10 years are up, you’ll move to Portugal’s regular tax system, where income tax rates can go as high as 48 percent, plus extra surcharges.
Foreigners who don’t have NHR tax status
The regime is closed to new applicants. You will no longer be able to benefit from the 20 percent flat tax rate or the foreign income exemptions that were appealing for retirees on the Portugal D7 Visa, remote workers, and people with international income.
Instead, anyone becoming a new tax resident in Portugal will be taxed under the standard system, which means:
Income tax rates are progressive, starting at 14.5 percent and going up to 48 percent, depending on how much you earn.
If you have a higher income, you may also need to pay an extra solidarity tax.
Once you become a Portuguese tax resident, your worldwide income will be taxed in Portugal.
Book a one-on-one consultation with our Portugal Tax Specialist
Portugal’s new tax regime, known as the Fiscal Incentive for Scientific Research and Innovation (IFICI) Program, also unofficially referred to as NHR 2.0, is designed to replace the previous NHR system.
It aims to attract skilled professionals in scientific research, education, and innovation, and if you move to Portugal to work in one of these high-value sectors, you can benefit from a reduced personal income tax rate.
IFICI is designed to offer a straightforward set of tax benefits for people moving to Portugal to work in scientific research, innovation, or other high-skill areas. To qualify, you need to become a tax resident in Portugal, not have lived in Portugal as a tax resident in the past five years, and work in a role recognized by organizations like IAPMEI or AICEP.
The benefits of the new tax regime include:
Reduced IRS rate: A key benefit is a lower tax rate on income you earn in Portugal from work or self-employment in eligible fields. Rather than paying the usual progressive tax rates, which can go up to 48 percent, you’ll pay a flat 20 percent on your net income from these activities.
Foreign-source income is exempt: Most income you earn from outside Portugal is exempt from Portuguese tax, although it still counts when calculating your overall tax rate.
Lasts for 10 years: Once you qualify, 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 ten years.
Applies to employment and self-employment: IFICI isn’t just for salaried employees. Freelancers, researchers, professors, startup founders, and other professionals in high-value fields can also qualify, as long as their work fits the eligible categories set by the government.
Why choose Global Citizen Solutions for your Immigration Visa?
GLOBAL APPROACH BY LOCAL EXPERTS
GCS has offices located across Portugal.
Members of the US-Portugal and UK-Portugal Chambers of Commerce in Portugal, and the Investment Migration Council (IMC).
Our expert team can help you throughout your journey to secure your Visa.
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Our successful track record in applications provides reassurance to applicants.
We have helped clients from more than 35 countries secure residency in Portugal.
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The Portugal NHR tax regime ended on December 31, 2023. The government closed the Non-Habitual Resident (NHR) program to new applicants as part of the 2024 State Budget. Individuals who became tax residents in Portugal by December 31, 2023, could still apply under transitional rules.
What replaced the Portugal NHR tax regime after it ended in 2024?
The Portugal NHR tax regime was replaced in 2024 by the Tax Incentive for Scientific Research and Innovation (IFICI). Portugal introduced IFICI under the 2024 State Budget to attract highly qualified professionals in science, technology, and innovation. The regime offers a 20% flat tax rate on eligible Portuguese employment and self-employment income for up to 10 years.
How does the new IFICI tax regime compare to the former NHR program?
The main difference between the IFICI tax regime and the former NHR program is scope and eligibility. IFICI applies mainly to highly qualified professionals in science, technology, and innovation and offers a 20% flat tax rate on eligible Portuguese employment and self-employment income for up to 10 years. The former NHR program covered a broader range of professions and also provided foreign income exemptions, including pensions and dividends under certain conditions.
What if I already have Portugal NHR status?
Anyone who already has the NHR at the time of entry into force maintains tax-exempt status under the same terms until completing ten years of benefiting from the status.
Is the Portugal NHR ending permanent or could it return in the future?
The Portugal NHR program ended on December 31, 2023, under the 2024 State Budget, and no law currently reinstates it. Portugal replaced NHR with the IFICI regime in 2024. The government can create a new tax incentive in the future, but reinstating NHR would require new legislation approved by Parliament.
How are dividends taxed in Portugal now that NHR has ended?
Portugal taxes dividends at a flat 28% rate for tax residents in 2024 and 2025. Residents can choose progressive rates ranging from 14.5% to 48% by aggregating dividends with other income. Non-residents pay a 28% withholding tax on Portuguese-source dividends. Double tax treaties may reduce the effective rate.
How are foreign-source income and capital gains taxed after the NHR changes?
Portugal taxes foreign-source income and capital gains under standard IRS rules after the NHR changes in 2024. Tax residents pay progressive rates from 14.5% to 48% on most foreign income, unless a double tax treaty applies. Foreign dividends and interest are typically taxed at 28%. Capital gains on securities are generally taxed at 28%, while real estate gains are taxed progressively on 50% of the gain for residents
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