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For many years, Portugal’s Non-Habitual Resident (NHR) regime was one of the country’s most attractive tax incentives for foreign residents. The program offered significant tax benefits and helped attract thousands of international professionals, retirees, and investors.
In 2023, the Portuguese government announced that the original NHR regime would be discontinued, with a transition period allowing eligible applicants to apply until early 2025.
To replace the program, Portugal introduced a new tax framework known as the Tax Incentive for Scientific Research and Innovation (IFICI). Often referred to as “NHR 2.0,” this regime focuses on attracting highly qualified professionals working in research, innovation, and technology sectors.
What Is the IFICI Tax Regime?
The IFICI (Incentivo Fiscal à Investigação Científica e Inovação) is Portugal’s new tax incentive regime designed to attract highly qualified professionals to the country.
The program provides tax benefits for up to 10 years for individuals who become tax residents in Portugal and perform eligible professional activities linked to innovation, scientific research, or high-value economic sectors.
The regime is defined in the Portuguese Personal Income Tax Code (CIRS) and applies only to individuals working in specific professional fields.
Main Benefits of the NHR 2.0 / IFICI Regime
Although more limited than the previous NHR program, IFICI still offers attractive tax advantages.
Portuguese-Sourced Employment Income
Eligible professionals benefit from a flat 20% personal income tax rate on employment or self-employment income earned in Portugal.
Under the standard Portuguese tax system, income tax rates can reach 48%, making the IFICI regime significantly more favorable for qualified professionals.
You can learn more about standard income tax rates in our guide on Personal Income Tax (IRS) in Portugal.
Foreign-Sourced Income
In certain cases, foreign-sourced income may be exempt from Portuguese taxation, depending on the nature of the income and applicable tax treaties.
This may include:
- foreign employment income
- foreign self-employment income
- dividends and interest
- royalties and intellectual property income
- capital gains from financial assets
- foreign rental income
The interaction between foreign income and Portuguese taxation is also influenced by double taxation agreements.
See our article on Portugal Double Taxation Agreements for more details.
Who Can Qualify for the IFICI Regime?
Eligibility for the IFICI program is restricted to individuals who meet specific residency and professional criteria.
1. New Tax Residents in Portugal
Applicants must become tax residents in Portugal and must not have been Portuguese tax residents in any of the previous five years.
For more information about residency rules, see our guide on Tax Residency in Portugal.
2. Qualified Academic or Professional Background
Applicants must demonstrate:
- relevant academic qualifications, or
- at least three years of professional experience in an eligible sector.
3. Eligible Professional Activities
The IFICI regime applies only to professionals working in fields related to scientific research, innovation, or high-value economic sectors.
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Eligible Professional Activities Under IFICI
The Portuguese government has defined several categories of eligible activities.
These include:
Teachers and Scientific Researchers
Professionals involved in academic teaching or research at recognized institutions.
Highly Qualified Professionals
Qualified roles such as:
- managers and executives
- engineers and scientists
- ICT specialists
- technology professionals
- medical doctors
- university professors
- Professionals in Productive Investment Projects
Individuals working in sectors benefiting from national investment incentives.
Examples include:
- information technology
- advanced manufacturing
- renewable energy
- telecommunications
- digital services
- tourism innovation
Employees of Certified Startups
Workers employed by startups recognized under Portuguese law may also qualify.
R&D Personnel
Professionals involved in research and development activities within companies benefiting from Portugal’s R&D tax incentives.
Professionals in the Autonomous Regions
Eligible professionals working in Madeira or the Azores may also apply.
How to Apply for the IFICI Regime
The process for applying to IFICI follows steps similar to the former NHR program.
Step 1: Obtain Residency in Portugal
Non-EU citizens must first obtain a valid residence permit through one of Portugal’s immigration pathways. You can learn more in our Portugal Immigration Guide. EU citizens must instead register their stay and obtain a Residency Certificate (CRUE) from the local municipality.
Step 2: Become a Tax Resident
Individuals typically qualify as tax residents by spending more than 183 days in Portugal during a calendar year.
Step 3: Obtain a Portuguese NIF
A NIF (Número de Identificação Fiscal) is required before registering for any tax regime.
See our guide on How to Get Your Tax Identification Number.
Step 4: Update Your Tax Address
Your official tax address must be updated with the Portuguese Tax Authority.
Step 5: Submit the IFICI Application
Applications are submitted through the Portuguese Tax Authority portal (Finanças) within the required timeframe.
Key Differences Between NHR and IFICI
The transition from the original NHR regime to IFICI introduces several important changes.
| Feature | Original NHR | IFICI (NHR 2.0) |
|---|---|---|
| Target audience | Broad expat population | Highly skilled professionals |
| Foreign income exemptions | Very broad | More limited |
| Pension taxation | Often exempt | No longer exempt |
| Employment income tax | 20% flat rate | 20% flat rate |
| Duration | 10 years | 10 years |
Overall, the IFICI regime is designed to attract innovation-driven professionals rather than retirees or passive-income residents.
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Frequently Asked Questions
What replaced the NHR regime in Portugal?
Portugal replaced the original Non-Habitual Resident (NHR) regime with the IFICI tax incentive program, which focuses on attracting highly qualified professionals.
How long does the IFICI tax regime last?
The IFICI regime provides tax incentives for up to 10 years after becoming a tax resident in Portugal.
Who qualifies for NHR 2.0?
Eligibility is limited to professionals working in scientific research, innovation, technology, and high-value economic sectors.
Does the IFICI regime apply to retirees?
No. Unlike the original NHR regime, IFICI is not designed for retirees and generally does not include tax benefits for pension income.
Do you need to become a tax resident to apply for IFICI?
Yes. Applicants must become tax residents in Portugal and must not have been Portuguese tax residents in the previous five years.
How long do the IFICI benefits last?
The tax benefits apply for 10 consecutive years, similar to the former NHR regime.
Portugal’s original NHR regime played a major role in attracting international residents for more than a decade. With the introduction of the IFICI regime (often referred to as NHR 2.0), the country is shifting its focus toward highly skilled professionals working in research, innovation, and high-value sectors. Although the new program is more selective, it still provides significant tax incentives for qualified individuals who establish tax residency in Portugal.
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