The Portuguese government announced in 2023 that the hugely popular Non-Habitual Residency (NHR) tax regime would end in January 2024. During a transition phase, it was still possible to apply for NHR status, but that also ended in March 2025. The NHR has been replaced by a new tax regime called the Tax Incentive for Scientific Research and Innovation (IFICI) and is open to new applicants.
In this article, you’ll learn more about the new NHR and who can apply. You’ll also find out more about:
The End of the NHR Transitional Phase
The original NHR program closed for new applicants in 2024, while a transition phase allowed residents who met certain criteria to apply up to the end of March 2025. Since the transition phase is over, the tax regime is no longer available to anyone.
Many expats who established tax residency in Portugal over the past decade or so have been able to take advantage of the NHR, which offers favorable tax policies over a 10-year period, such as a flat 20 percent rate on income tax and a 0 to 10 percent rate on pensions.
Anyone already registered under the program will continue to benefit from the same tax benefits available to them under the existing terms for the entire 10-year period.
What is IFICI?
Portugal’s new Tax Incentive for Scientific Research and Innovation (Incentivo Fiscal à Investigação Científica e Inovação – IFICI) is the official replacement for the NHR scheme.
Sometimes referred to as NHR 2.0, it is a 10-year tax incentive regime aimed at attracting qualified professionals and entrepreneurs working in key economic sectors like science, technology, education, and innovation.
It offers reduced tax rates on Portuguese income and exemptions on certain foreign-sourced income.
Benefits of the Tax Incentive for Scientific Research and Innovation Program
Those who qualify for IFICI will benefit from a flat tax rate of 20 percent on eligible professional income arising from Portugal and possibly an exemption on professional foreign-sourced income. Here’s a quick glance at some of the benefits that will last for a 10-year period:
- Portuguese sourced income: 20% flat rate on Portuguese source employment and self-employment income, compared to standard progressive rates that can reach up to 48% for high earners. The flat rate applies regardless of income level, providing predictability and simplicity in tax planning, and applies to income derived from eligible activities performed for qualifying Portuguese entities.
- Foreign-sourced income: 0% taxation (full exemption) on all foreign-sourced income, including:
– Foreign employment income
– Foreign self-employment income
– Foreign investment income (dividends, interest, royalties)
– Foreign capital gains from the sale of securities, crypto assets, and other investments
– Income from intellectual property
– Foreign rental income - Enables tax-efficient asset allocation between Portuguese and foreign investments.
- Provides opportunities for entrepreneurs with international business interests.
- Benefits digital nomads and remote workers with foreign employers.
- Creates advantages for international consultants and professionals operating across borders.
- Allows for tax-free growth of foreign investments during the 10-year period.
Who qualifies for IFICI?
To qualify for the IFICI regime, an individual must meet all of the following conditions:
- Must hold relevant academic qualifications or have at least three years of professional experience in a qualifying field
- Must become a tax resident in Portugal and cannot have been a tax resident in Portugal in any of the five previous years
- Cannot already be under the former Non-Habitual Resident (NHR) regime and cannot be under the special tax regime for former residents
Additionally, applicants must work in an eligible activity to be eligible for the Tax Incentive for Scientific Research and Innovation program. These are:
- Teachers and scientists
- People with qualified jobs according to the tax code and members of corporate bodies within the scope of contractual benefits for productive investment, such as:
• Activities carried out within the scope of the extractive industry and manufacturing industries
• Tourism, including activities of interest to tourism
• IT and related activities and services
• Agricultural, aquaculture, fish farming, farming and forestry activities
• Research and development and high technological intensity activities
• Information technologies and audiovisual and multimedia production
• Defense, environment, energy and telecommunication
• Activities of shared service centers
- Highly qualified professionals, which will be anyone performing one or more of the above activities and carrying them out in a qualifying entity
- People working for companies recognized by relevant government agencies — AICEP, EPE, IAPMEI, IP — or relevant to the national economy, working with investment etc.
- Research and development personnel who meet the definitions of the tax code
- People working for startups, certified by law as such
- People working in Madeira and Azores who meet the terms set by these regions
Book a one-on-one consultation with our Portugal Tax Specialist
How to Apply for IFICI
Applying for the IFICI regime is similar to the old NHR and involves several steps.
Step 1: Become a Portuguese tax resident by spending more than 183 days in Portugal within a 12-month period, or maintain a habitual residence in Portugal that shows intent to stay long-term
Step 2: Register with the Portuguese Tax Authorities (AT)
Step 3: Obtain a tax identification number in Portugal (NIF)
Step 4: Update your tax address to your Portuguese residence
Step 5: Once you’re a resident, registered, and have an NIF, submit a formal request through the Portal das Finanças (Portugal’s tax portal)
Required documents
- Provide documentation of eligibility
- Proof you have not been a tax resident in Portugal for the previous five years.
- Documentation proving academic qualifications or at least 3 years of professional experience
- Proof of employment or self-employment in a qualifying activity (e.g,. employment contract, startup registration, academic appointment)
Difference Between NHR and IFICI
As the name suggests, the main difference between the Tax Incentive for Scientific Research and Innovation and the NHR program is that the new scheme requires applicants to earn income in certain professional categories.
NHR offered broad tax breaks to almost anyone who moved to Portugal, with few conditions on profession or activity. It allowed a flat 20% tax on Portuguese income and full or partial exemptions on most foreign income, including pensions.
IFICI, by contrast, is more selective. It’s only for highly qualified professionals working in specific fields like science, innovation, tech, and education. You must actively work in one of the approved activities each year to keep the benefit. It still offers the 20% flat rate on local income and exemptions on eligible foreign income—but only if you meet stricter eligibility rules.
Another significant change is that, while the NHR program had uniform policies across Portugal’s entire national territory, the Tax Incentive scheme makes special provisions for the islands of Madeira and the Azores to define their own jobs or activities that the regime will apply to under their jurisdiction.
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Frequently Asked Questions about NHR 2.0
What is the new NHR for Portugal 2025?
The “new NHR” is the Tax Incentive for Scientific Research and Innovation Program, which requires individuals to earn income in certain professional categories, including teachers, scientists, and research and development, in order to be eligible.
Is Portugal getting rid of NHR?
Yes, the NHR officially ended in March 2025 when the transitional phase closed for certain qualifying applicants.
What is replacing NHR?
The Non-Habitual Residency (NHR) program is being replaced by a new tax regime known as the Tax Incentive for Scientific Research and Innovation Program, which will provide a flat tax rate of 20 percent on professional income as well as exemption on the majority of foreign-sourced income, such as dividends, interest, capital gains, and rents.
