If you have read that Portugal “scrapped” its expat tax break, or that it is “bringing NHR back”, the reality sits between those headlines. The famous regime that ran from 2009 was closed to new entrants, a successor was created in its place, and the government has since signalled it wants to widen that successor. This guide explains what actually exists today: the history, the current IFICI rules, the 20% rate, the foreign-income exemption, who qualifies, how to register, and how the tax regime interacts with residency routes such as the D7, the digital nomad visa, and the Golden Visa.
What was the NHR regime?
The Non-Habitual Resident regime was a personal-tax status introduced in 2009 to attract skilled workers, entrepreneurs, investors, and retirees to Portugal. For a fixed 10-year period it offered a 20% flat rate on qualifying Portuguese employment and self-employment income from listed high-value activities, and it exempted most foreign-source income from Portuguese tax, subject to conditions in the relevant double-tax treaty. For much of its life it also taxed foreign pensions lightly: originally at 0%, and from April 2020 at a flat 10%.
That combination made Portugal one of Europe's most talked-about destinations for internationally mobile professionals and retirees. It was always a 10-year, non-renewable benefit tied to becoming a Portuguese tax resident who had not been resident in the previous five years.
NHR is closed: IFICI (NHR 2.0) is the current regime
The 2024 State Budget (Law 82/2023) closed the original NHR regime to new applicants from 1 January 2024. A transitional rule let people who had already committed to relocating in 2024, under conditions fixed during 2023, still register under the old NHR rules for that year. Everyone who was already an NHR holder keeps their benefits until their individual 10-year window ends.
In its place, the same budget created a new regime under Article 58-A of the Tax Benefits Statute (Estatuto dos Benefícios Fiscais). Its formal name is the Tax Incentive for Scientific Research and Innovation, IFICI in Portuguese, and it is widely marketed as “NHR 2.0”. The detailed rules were set out in Ordinance (Portaria) 352/2024/1 of 23 December 2024, applied retroactively to 1 January 2024. For the full progressive-rate context, see our guide to tax in Portugal.
Old NHR vs IFICI (NHR 2.0): what changed
| Feature | Old NHR (closed to new entrants) | IFICI / NHR 2.0 (current) |
|---|---|---|
| Status | Closed to new applicants from 2024; grandfathered for existing holders | Open — the current regime |
| Flat rate on qualifying Portuguese work income | 20% | 20% (income categories A and B from eligible activities) |
| Duration | 10 years | 10 years, non-renewable |
| Most foreign-source income (dividends, interest, rents, royalties, capital gains, foreign salary) | Exempt (with progression) | Exempt (with progression); tax-haven-sourced income excluded |
| Foreign pensions | Taxed at a flat 10% | Not covered — taxed at normal progressive rates |
| Who qualifies | Broadly, most new tax residents | Only those earning income from listed high-value activities |
| Prior-residence bar | Not a Portuguese tax resident in the previous 5 years | Not a tax resident in the previous 5 years, and no prior NHR benefit |
What IFICI actually gives you
IFICI has two distinct benefits, and they help different people:
A 20% flat rate on Portuguese work income. Income in categories A (employment) and B (self-employment) from an eligible activity is taxed at a flat 20% for up to 10 consecutive years, instead of Portugal's progressive rates that climb toward 48%. This suits founders, researchers, and highly qualified professionals who actually work in Portugal.
A broad exemption on most foreign-source income. Foreign employment and business income, foreign dividends, interest, royalties, rental income, and capital gains are generally exempt from Portuguese tax under the regime, using the exemption-with-progression method, meaning the exempt income can still push your other Portuguese income into a higher bracket. Two limits matter: income paid from a blacklisted tax haven is excluded and taxed at 35%, and foreign pensions are treated separately, as set out below. This is the benefit that matters most to an internationally invested resident.
Who qualifies for IFICI?
IFICI is narrower than the old NHR because the benefit is tied to what you do, not simply to moving to Portugal. In broad terms you must:
Become a Portuguese tax resident, typically by spending 183 or more days a year in Portugal, or by having your habitual home there.
Not have been a Portuguese tax resident in the previous five years, and not have previously benefited from the old NHR or the former-residents regime.
Earn income from a qualifying activity. The regime lists categories including higher education and scientific research; jobs in certified startups; highly qualified professions in eligible companies; roles recognised by the competent bodies as relevant to the national economy; research and development personnel; and specific regimes for the Azores and Madeira.
Because eligibility hangs on the activity, two people who both move to Portugal can get very different answers: one who takes a qualifying research or startup role can claim the 20% rate, while one whose income is purely passive may benefit only from the foreign-income exemption, and someone who never becomes tax resident does not fall under IFICI at all.
How to register for IFICI
Registration is time-limited. In general you must apply by 15 January of the year following the year you become a Portuguese tax resident, through the body responsible for your activity category (for example the Fundação para a Ciência e a Tecnologia (FCT)) for research roles, and with the Portuguese Tax Authority. Miss the window and you can lose the benefit for that year, so the registration deadline should be diarised before you move, not after.
NHR, IFICI and your residency route (D7, digital nomad, Golden Visa)
A common point of confusion: the tax regime and your immigration route are two separate things. Your visa gives you the right to live in Portugal; IFICI is a tax status you claim after you become a Portuguese tax resident and if you have a qualifying activity. Getting a visa does not, by itself, put you into IFICI.
That distinction matters most for investors. Someone on the D7 passive-income visa or the digital nomad visa who relocates and takes a qualifying role can combine the 20% rate with the foreign-income exemption. A Golden Visa holder who invests through the fund route but keeps their tax residence outside Portugal falls outside IFICI entirely, since the permit only requires a short stay each year. We cover the tax angle specifically for fund investors in our companion piece on NHR / IFICI for Golden Visa fund investors.
Is Portugal bringing NHR back or widening IFICI?
The government has repeatedly signalled that it wants Portugal to stay competitive for investment and talent. A 2024 growth package set out to widen the list of professions and activities eligible for IFICI, and ministers have since restated an intention to strengthen the tax treatment around foreign investment. The direction of travel is toward a broader regime, aimed at skilled workers rather than a return of the old pension-friendly NHR.
What does not yet exist is a fully re-opened, retiree-friendly NHR. So “there is a 20% flat tax and a 10-year foreign-income exemption you may qualify for through IFICI” is accurate today; “Portugal has brought back NHR for everyone” is not. Treat further widening as a favourable trend to watch, not a benefit to assume before it is law.