The NHR regime is closed for new applicants. Learn if you qualify for the strict new IFICI tax incentives or if you face standard rates.
Introduction
Portugal has changed the rules. For over a decade, the Non-Habitual Resident (NHR) regime was the gold standard for expats, offering a flat 20 percent tax rate and pension exemptions. That door is now shut for most new arrivals.
The replacement is IFICI (Tax Incentive for Scientific Research and Innovation). While some brokers call it “NHR 2.0,” this is dangerous marketing. IFICI is not a broad demographic magnet; it is a narrow economic tool designed for scientists, certified tech talent, and startup founders.
If you move to Lisbon today assuming you will get the old tax breaks, you risk walking into a 48 percent tax bracket. This guide explains exactly who is in, who is out, and how to avoid the irreversible mistake of registering your residency (residência fiscal) before you know where you stand.
The end of NHR and the rise of IFICI
The NHR regime was a volume game. It attracted over 74,000 people by offering tax breaks to almost anyone with “high value” skills, plus retirees and passive investors.
The government closed this path on January 1, 2024. They replaced it with IFICI to stop subsidizing real estate buyers and start subsidizing pure economic innovation.
The transition timeline
- NHR (Old Regime): Closed to new applicants on January 1, 2024.
- Grandfathering: If you secured NHR status before the cutoff, you keep your benefits for the full 10-year term.
- Transitional Period: You can still apply for NHR until March 31, 2025, but only if you became a tax resident by December 31, 2024, and can prove you started your move (lease, visa, or contract) in 2023.
If you do not fit those specific dates, NHR is gone. You are now looking at IFICI or standard taxation.
IFICI explained: A strict filter for talent
The Tax Incentive for Scientific Research and Innovation is codified in Article 58-A of the Tax Benefits Statute. It offers a 20 percent flat tax on Portuguese income and exemptions on foreign income, but the entry gate is much smaller.
Who actually qualifies?
You must meet three hard criteria:
- Become a new tax resident (not resident in the previous 5 years).
- Have never used NHR or the Programa Regressar before.
- Earn income from a certified activity.
This “certified activity” is where most people fail. You cannot just be a “consultant” or “developer.” You must hold a specific role, such as:
- Teacher or researcher in the national higher education system.
- Qualified role in a certified technology or innovation center (CITE).
- Highly qualified professional in a company with recognized export intensity or R&D certification.
- Founder or employee in a certified startup (recognized by IAPMEI).
The benefits if you get in
If you pass the certification test, the perks are powerful for 10 years:
- 20% flat tax on salaries and self-employment income (Categoria A and B) from the qualifying activity.
- Exemption on foreign dividends, interest, and capital gains.
- Exemption on foreign professional income (if taxed at source).
Actionable takeaway: Do not assume your job title qualifies you. You need your employer or company to have specific certifications from Portuguese agencies like IAPMEI or FCT.
The major exclusions: Who is locked out?
The shift to IFICI creates immediate losers. If you fall into these categories, you likely face standard Portuguese tax rates.
1. Retirees
Under NHR, retirees paid a flat 10 percent tax on foreign pensions. Under IFICI, foreign pensions are excluded.
- Result: Pensions are taxed at progressive rates (14.5 percent to 48 percent).
- Impact: A retiree with a €60,000 pension goes from paying €6,000 tax (NHR) to approx €22,800 tax (Standard).
2. General freelancers and digital nomads
Previously, a graphic designer or marketing consultant could easily fit the “high value” NHR list. Now, unless your freelance activity is directly tied to a certified R&D project or innovation center, you do not qualify.
- Result: You pay standard tax on your global income.
- Impact: You lose the 20 percent flat rate and the foreign income exemptions.
3. Passive investors
If you move to Portugal solely to live off foreign dividends or interest, you no longer get special treatment unless you also have a qualifying job or activity that triggers IFICI status.
Comparison: NHR vs IFICI
| Feature | NHR (2009–2023) | IFICI (2024–Present) |
|---|---|---|
| Target Audience | Broad (Retirees, Pros, Nomads) | Narrow (Researchers, Tech, Founders) |
| Qualifying Roles | Self-declared “High Value” list | Certified R&D/Innovation entities |
| Pension Tax | 10% flat rate | Standard progressive rates (up to 48%) |
| Foreign Capital Gains | Generally taxable (28%) | Exempt (if eligible for regime) |
| Application Deadline | March 31 of following year | January 15 of following year |
| Status Duration | 10 years (fixed) | 10 years (pausable) |
Real-world scenarios
See how the change impacts different profiles.
The remote developer (Anna)
Anna invoices €80,000 to German clients.
- NHR: She paid 20 percent tax and social security.
- IFICI: She does not work for a certified Portuguese tech center. She is rejected.
- Outcome: She pays standard progressive tax. Her bill jumps by over €18,000 per year compared to NHR.
The crypto founder (Rui)
Rui moves his biotech startup to a certified incubator in Porto and sells €1M in foreign crypto.
- NHR: His salary was 20 percent, but crypto gains were often taxed at 28 percent.
- IFICI: He qualifies. His salary is 20 percent, and his foreign capital gains are exempt.
- Outcome: Rui saves roughly €210,000 in taxes on his exit compared to the old rules.
The retiree (Linda)
Linda retires to the Algarve with a UK pension.
- NHR: She paid 10 percent.
- IFICI: She is excluded.
- Outcome: She pays full Portuguese tax rates. Portugal is no longer a tax haven for her.
Critical risks and how to fix them
The transition rules are complex. These are the specific traps that catch new residents.
Risk Analysis Box
| Risk | The Fix |
|---|---|
| Premature residency registration Registering as a resident before confirming IFICI eligibility locks you into standard tax rates if you fail the check. | Do not sign a 12-month lease or stay 183 days until a specialist confirms your job qualifies for IFICI. |
| Missing the new deadline IFICI applications are due by January 15, much earlier than the old March 31 NHR deadline. | Set a calendar alert for December. If you miss Jan 15, you lose the benefit for that year and potentially forever. |
| Wrong activity code (CAE) Opening activity with a generic code (e.g., “Consultancy”) instead of a specific R&D code triggers rejection. | Validate your CAE code with a certified accountant before opening activity on the Finanças portal. |
| Pension assumption Moving to Portugal expecting a 10% tax on your pension. | Run a simulation using standard tax rates (up to 48%) to see if the move is still financially viable. |
| Fake “Innovation” contracts Using a shell company to “certify” your work without real R&D activity. | Avoid schemes. The Tax Authority (Autoridade Tributária) audits these certifications strictly. |
Common traps (and how to avoid them)
- Applying for NHR 2.0
→ There is no such legal term. You are applying for IFICI. Ensure your lawyer uses the correct statute (Article 58-A EBF). - Assuming all “Tech” is “Innovation”
→ Coding for a foreign bank is tech, but it is not “innovation” under Portuguese law. You need a connection to a certified center or recognized startup. - Ignoring the “Blacklist”
→ Even under IFICI, income from blacklisted jurisdictions (like the BVI or Cayman Islands) is taxed at a punitive 35 percent rate.
Bottom Line
Portugal is no longer a low-tax destination for everyone. It is a low-tax destination for people who build the economy—scientists, founders, and certified experts. If you fit that box, IFICI is powerful, especially for capital gains. If you don’t, you are entering a high-tax European system. Know your status before you book the flight.
FAQ
Is the NHR regime completely gone?
Yes, for new applicants who did not establish residence by December 31, 2023 (or meet specific transitional criteria by the end of 2024). Existing NHR holders keep their benefits until their 10-year term ends.
Can retirees apply for IFICI?
No. The IFICI regime explicitly excludes pensions. Retirees moving to Portugal now face standard progressive tax rates on their pension income.
What is the tax rate for IFICI?
Qualifying income from certified activities is taxed at a flat 20 percent. Most foreign-sourced income (dividends, interest, capital gains) is exempt from Portuguese tax.
Does a remote software developer qualify for IFICI?
Generally, no. Working remotely for a foreign client does not qualify. You must be employed by or contracted with a certified innovation entity, research center, or recognized startup in Portugal.
What is the deadline to apply for IFICI?
You must apply by January 15 of the year following your arrival as a tax resident. This is tighter than the old NHR deadline.
Can I switch from NHR to IFICI?
No. If you have already used the NHR regime, you are barred from accessing IFICI. You cannot “double dip” tax incentives.
What happens if I miss the IFICI application deadline?
You lose the right to the regime for that year. Unlike NHR, where late applications were sometimes managed, the IFICI deadline is strict.
