Portugal’s classical NHR (residente não habitual) tax regime has prompted many foreigners to move to Portugal. It allowed them to benefit from special tax breaks while enjoying the country’s affordable lifestyle, scenic views, delicious food, warm climate, and friendly people. The NHR program ended in 2024 and was substituted by a new NHR 2.0: The Fiscal Incentive for Scientific Research and Innovation (IFICI) Program. The IFICI program is officially open for applications in 2025. To qualify for the IFICI program, you can be employed with a contract, being self employed or working as a company administrator. The IFICI is more advantageous than the previous regime for non- habitual residents, since capital gains earned abroad were not exempt from taxation in Portugal.
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The IFICI porogram in Portugal is a tax regime designed for highly qualified professionals who move to Portugal for both residence and employment purposes. This new regime allows you to pay a special personal income tax rate of 20% (plus social security contributions) on dependent or independent work-related income for a consecutive period of 10 years (non-renewable). This initiative is part of Portugal’s wider strategy to strengthen its knowledge-based economy and to attract global talent in key innovative sectors. The IFICI tax advantages would also be applicable to those who are returning to Portugal, as Portuguese citizens who have lived abroad.
What does IFICI mean to you? This is because it is a big change from the usual tax rules. For many, it’s the difference between a high tax burden and a significantly reduced one, potentially freeing up substantial capital for investment, savings, or simply a higher quality of life. It attracts a lot of talent and money, which shapes Portugal’s modern economic identity.
Portugal’s standard tax rates, especially for higher earners, can be very high without IFICI. This is similar to what you would find in many other developed European countries. But for people who qualify for IFICI, the game changes completely. This regime offers a distinct competitive advantage, making Portugal not just a beautiful country with a rich culture and pleasant climate, but also a financially intelligent choice for relocation. It’s a big part of the puzzle that explains why so many digital nomads, retirees, and professionals with special skills are coming to its shores.
Not everyone can use IFICI, which is also known as the NHR 2.0 regime. It’s a targeted incentive, and it’s very important to know who can get it. In general, it’s meant for people who are moving to Portugal and haven’t lived there as a tax resident for the last five years. This “newness” to the Portuguese tax system is a very important requirement. People who are eligible for this special tax regime are legally known as “Non-Habitual Residents” (NHR). You have to be a tax resident in Portugal before you can be an NHR. This usually means that you spent more than 183 days in Portugal in a 12-month period or that you had a permanent home in Portugal on December 31 of the tax year and planned to make it your permanent home.
There is a direct link between NHR and IFICI: IFICI explains how an NHR’s income is taxed. For instance, certain types of foreign-sourced income, like pensions, dividends, interest, certain capital gains, and some professional income, may not be taxed in Portugal if they can be taxed in the source country under a current double taxation agreement (DTA) or OECD model convention. This stops double taxation and, in many cases, means that there is no tax at all if the source country doesn’t tax it either. For income from “high added value activities” in Portugal, there is a flat 20% tax rate. This is much lower than the progressive rates that can go up to 48% for regular residents.
A big part of the IFICI appeal is made just for “highly qualified professionals.” Portugal’s plan for economic growth focuses on this group. The NHR regime has a list of specific “high added value activities,” which are usually jobs in the arts, sciences, technology, or other professional fields. Doctors, engineers, architects, IT professionals, university professors, designers, artists, and even certain types of managers are often examples.
If you work in Portugal and your job is on this list, you can pay a flat 20% income tax on your Portuguese-sourced employment or self-employment income instead of the usual progressive rates. This is a huge draw for people whose skills are in high demand and who would otherwise have to pay a lot more in taxes. This rule isn’t just about getting talented people to come to your country; it’s also about building a strong, knowledge-based economy. The idea is that by making Portugal a good place for these professionals to live and work, the country can encourage new ideas, start new businesses, and make its economy more competitive overall. It’s smart to build a skilled workforce and promote economic growth from within.
Including scientific employment in units, structures and networks dedicated to the production, dissemination and transmission of knowledge, integrated into the national scientific and technological system. This includes, in particular, the employment of doctoral candidates or those integrated in the scientific research career, university teaching career or higher polytechnic teaching career in R&D activities. Given the requirement of integration into the national scientific and technological system, only Portuguese entities should be included.
Employees or members of the social bodies of organisations recognised as technology and innovation centres. These are organisations dedicated to the production, dissemination and transfer of knowledge. By definition, technology and innovation centres must have effective management and facilities on Portuguese territory and carry out their activities in Portugal.
Employment in companies that have signed tax incentive contracts with the Portuguese government for strategic investments.
Highly Qualified Professions, defined in a decree issued by the members of the Government responsible for financial and economic matters, developed in Companies that benefit (or have benefited in the last 5 years) from our Investment Incentive Scheme (RFAI):
Eligible industrial and service companies that export (or have exported in the last 2 years) at least 50% of their turnover. These are companies that have made tax-relevant investments under the RFAI (mainly in technology) or have significant exports in eligible industrial and service sectors.
Although a new list of highly qualified professionals has not been published, the list used for the previous non-habitual residence regime will most likely apply:
Eligible industrial and service companies should also be understood as those listed above. Once again, these are companies with effective management and facilities in Portuguese territory that carry out their activities in Portugal.
Qualified jobs and members of social bodies in entities engaged in economic activities recognised by AICEP, E.P.E., or IAPMEI, I.P., as relevant to the national economy, particularly in terms of attracting productive investment and reducing regional asymmetries.
It remains to be seen which economic activities will be considered relevant by AICEP and IAPMEI (public bodies responsible for various certifications of innovation and economic activity). However, it is expected that these will be companies with effective management and facilities on Portuguese territory that carry out their activities in Portugal.
Research and development personnel whose expenses are eligible for the Research and Development Tax Incentive Scheme (SIFIDE). These are companies that make significant investments in R&D in Portugal.
Employees and members of social bodies in entities certified as startups. A start-up is considered to be a legal entity that
The IFICI tax regime is an excellent option to maximize your savings if you live and work in Portugal – here’s why:
| Income Type | Tax Benefit |
| Employment Income /Self-employment income (Portuguese-sourced) | 20% On eligible activities + eligible entities (see below) |
| Employment Income /Self-employment income (foreigned-sourced) | Exemption |
| Dividends/Interest/Royalties | Exemption |
| Capital Gains | Exemption |
| Rental Income | Exemption |
| Pension Income | General tax rates |
No. Foreign pensions are taxable at standard rates in Portugal under the new NHR 2.0 / IFICI program. Taxation in Portugal means normal progressive rates (14.5% to 53%).
To prove that you are a legal resident of Portugal as an EU, EEA, or Swiss citizen, simply register at the “Câmara Municipal”, which is the local town hall. You will need to bring one of the following documents:
At this stage, you won’t have to provide any evidence of address.
To obtain Portuguese tax residency, you need to get a Portuguese tax number (NIF) and use it to register at the government finance office in your area.
Next, you must register on the government’s financial portal by clicking on the “Registrar-se” button. About two weeks later, you’ll be sent an access code via mail.
Start by submitting your application for the tax scheme no later than 15 January of the year following that in which you became tax resident in Portugal. The application should be made to the appropriate body depending on your profession and activity, namely
For highly qualified jobs in export-oriented companies, your employer must confirm your role to the tax authorities by 15 March.
The employer will do this through the Portal das Finanças. For other types of activities, the relevant entity must notify the tax authority of your request by 15 February.
By 31 March each year, the tax authority will inform you of the status of your registration. You can access this information and download a certificate confirming your registration status in your reserved area of the Portal das Finanças.
With IFIC status, you may qualify for tax exemptions on income earned abroad and reduced taxes on income earned in Portugal. All this could lead to “double non-taxation”, which means you either don’t pay any or receive heavily reduced income taxes.
To qualify for tax exemptions on income sourced abroad, the country where you earn your income must either have a DTA (a double taxation agreement) with Portugal or be on the country’s whitelist (meaning Portugal does not blacklist them as tax havens). If neither of these conditions is met, you may still enjoy IFICI related tax breaks based on the OECD model tax convention.
While domestic income tax in Portugal is progressive, ranging between 14.5% and 48%, foreigners in high-value professions may be eligible for a 20% flat rate. In addition, social tax is levied for employees at 11% and for employers at 23.75%.
Self-employed individuals pay social security on their own at a rate of 0% for the first 12 months, followed by a 21.4% rate on 70% of their income. Solo entrepreneurs may qualify for a 25% reduction, but this limits their coverage to the mandatory protection scheme. You’ll still need to pay at least €20 per month, even if you don’t have any income.
Individuals who pay social security in a country within the EU or one with which Portugal has a bilateral social agreement may be exempt from social tax by providing the necessary documentation.
Income earned abroad is taxed in Portugal according to a specific treaty. Those who don’t have such a treaty with Portugal will have to pay income taxes in the country where it’s earned.
Although many believe that the IFICI mainly reduces taxes on employment, income tax is paid in the country where the job takes place. For example, if you are based in Portugal but work with foreign clients, your income is considered domestic and taxed at 20% (that is, if you qualify as a high-value professional).
Some foreigners who live in Portugal and own a company that is registered abroad pay themselves tax-exempt dividends plus a freelancer income equal to the minimum wage in Portugal. However, local tax authorities know about this loophole, so we advise against it. While you may think you can use IFICI status to be taxed at 0%, that’s only possible if you pay income taxes in another country.
You don’t have to apply for NHR in your first year of tax residence in Portugal. If you do not meet the requirements until your second year (or later), you can apply then. But remember: The 10-year NHR period always starts from the first year of residence. This means that if you delay your application, you’ll lose the first few years of NHR benefits.
The IFICI system has some very appealing benefits, but it also has some problems and possible downsides. If you don’t pay attention to these, you might be in for some unpleasant surprises later. A confident mentor would always talk about both the problems and the chances. The main problem is that international tax law is very complicated. The basic ideas behind IFICI seem simple, but using them in real life can be very complicated:
Without expert help, it’s like sailing in uncharted waters without a compass to find your way through this legal maze.
Yes, you can track the progress of your application on the ‘Portal das Finanças’.
You only need to show your tax returns. These must include your worldwide income and also state your foreign bank accounts.
No, under the new proposed NHR 2.0 / IFICI module in 2024, passive income is no longer included in the NHR 2.0 / IFICI program. You can still apply, but passive income will be taxed regularly.
It should take around around two weeks, depending on the time of the year.
Digital nomads and remote workers can apply for the NHR, as long as their profession is considered highly qualified, if their income comes from abroad and if they meet residency requirements.
No, the NHR 2.0 / IFICI is simply a tax regime. It must be paired with a residency permit. The D7, D2 and D3 Visas are popular options for NHR 2.0 / IFICI holders, for example.
No, the NHR 2.0 / IFICI is granted to singular individuals. In order to benefit from this tax program, your family members must apply and be approved as well.
The SIFIDE – “Sistema de Incentivos Fiscais em Investigação e Desenvolvimento Empresarial” (Tax Incentive System for Business Research and Development) is a tax support mechanism that aims to increase competitiveness by offering tax incentives for companies.
The NHR 2.0 / IFICI tax regime lasts 10 years.
Yes, you can. Just remember that, unlike the Golden Visa, under the Non-Habitual Resident regime you must live at least 183 days out of year in Portugal.
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