The NHR Portugal regime was, for more than a decade, one of Europe’s most attractive tax incentives for foreign residents. It drew retirees, remote workers, and high‑skilled professionals from around the world — particularly from the US and UK — thanks to its generous tax exemptions and flat‑rate structures.
But the landscape has changed. The original NHR (Non‑Habitual Resident) regime has been phased out, replaced by a narrower, more targeted framework often referred to as “NHR 2.0 Portugal” or the Incentive to Scientific Research and Innovation (sometimes abbreviated to IFICI or ITS).
At the same time, Portugal remains one of the most flexible jurisdictions in Europe for remote workers, especially those employed by foreign companies with no Portuguese presence.
This guide explains everything you need to know about NHR Portugal, the new NHR 2.0 replacement regime, the outlook, and the practical realities of relocating to Portugal as a foreign employee — including a real‑world case study demonstrating how tax liabilities can be settled through the annual tax return alone, without requiring the employer to run a Portuguese payroll.
What Is NHR in Portugal?
The original Non‑Habitual Resident (NHR) regime was introduced in 2009 to attract foreign talent and investment. It offered:
- A 10‑year preferential tax status
- A 20% flat tax rate on qualifying Portuguese‑source employment or self‑employment income
- Exemptions on most foreign‑source income, including dividends, interest, rental income, and pensions
- No wealth tax
- No inheritance tax on direct family transfers
For official guidance on Portuguese tax rules and cross‑border issues, the Portuguese Tax Authorities (AT) maintains a dedicated section in English‑language on their portal.
The regime became globally famous because it allowed many expats — especially retirees and remote workers — to legally reduce their tax burden while enjoying Portugal’s lifestyle, safety, and climate.
By 2022–2023, however, political pressure mounted to reform or eliminate the regime.
Critics argued it contributed to rising housing prices and created perceived inequalities between locals and newcomers.
In 2024, the government formally ended the original NHR regime for new applicants.
Is the Original NHR Still Available in Portugal?
Yes — but only under transitional rules, and only for a limited group of people.
The original NHR regime is closed to new applicants, except for individuals who can demonstrate that they had already initiated their relocation to Portugal before the cutoff dates.
These transitional rules are set out in Article 236 of Law 82/2023, which acts as a grandfathering clause.
It does not create a new NHR regime; it simply allows certain taxpayers who had already taken specific steps (such as securing a lease, employment contract, or visa process) to still access the old NHR regime that has now been abolished.
Portugal NHR Replacement — What Actually Changed?
The Portugal NHR replacement regime is officially the Incentive to Scientific Research and Innovation (often abbreviated as IFICI or branded informally as “NHR 2.0”).
The legal basis for this new incentive is set out in Article 58‑A of the Portuguese Tax Benefits Code (Estatuto dos Benefícios Fiscais).
It is significantly narrower than the original NHR and is designed to attract:
- Researchers
- Professors
- PhD‑level professionals
- Tech workers in specific high‑value roles
- Employees of certified startups
- Workers in designated innovation‑driven sectors
Key differences between the original Portugal NHR and NHR 2.0
For both the old NHR and the new NHR 2.0 IFICI / IST regime, the duration is 10 years and the flat rate of taxation is 20%.
However, there are some noticeable differences summarised in the table below.
Feature
Original NHR
NHR 2.0 (IFICI)
Eligibility
Broad (retirees, remote workers, investors, professionals)
Narrow (research, innovation, tech, academia)
Foreign income exemptions
Extensive
More limited and targeted
Flat tax rate
20%
20% (but fewer professions qualify)
Duration
10 years
10 years
Administrative burden
Low
Higher (documentation, proof of activity, employer alignment)
NHR 2.0 Portugal Requirements
To qualify under the replacement regime, applicants must meet several criteria.
1. Tax Residence Requirement
You must become a Portuguese tax resident, typically by:
- Spending 183+ days in Portugal, or
- Having a habitual residence there
2. Professional Activity Requirement
You must perform a qualifying activity in Portugal, such as:
- Scientific research
- Academic teaching
- High‑value technological roles
- Employment with a certified startup
The full legal definition is contained in Article 58‑A EBF (link above).
3. Employer or Activity Certification
Your employer may need to provide documentation confirming:
- Your role
- Your responsibilities
- Your alignment with the qualifying activity categories
4. Documentation
Applicants typically need:
- Proof of Portuguese tax residence
- Employment contract or service agreement
- Evidence of professional qualifications
- Proof of activity in Portugal
NHR Portugal List of Professions (Updated)
The list of qualifying professions under NHR 2.0 is narrower than the original NHR list. It includes:
Scientific and Academic Roles
- University professors
- Researchers
- Scientific project leaders
Technology and Innovation Roles
- Software engineers
- Data scientists
- AI specialists
- Cybersecurity professionals
- Product managers
- Systems architects
Healthcare and Scientific Development
- Medical researchers
- Biotech specialists
- Pharmaceutical R&D professionals
Certified Startup Roles
Employees of startups recognized under Portuguese innovation frameworks may qualify if their role contributes to innovation.
Portugal NHR Replacement Requirements (Step‑by‑Step)
Step 1 — Become a Portuguese Tax Resident
Update your address with the Portuguese Tax Authority and obtain a Portuguese tax number (NIF).
Step 2 — Gather Documentation
This includes:
- Employment contract
- Proof of professional qualifications
- Employer certification
- Residency documentation
Step 3 — Submit the Application
Applications are submitted through the Portuguese Tax Authority portal, referencing the conditions set out in Article 58‑A EBF (link above).
Step 4 — Provide Additional Evidence if Requested
Authorities may request:
- Proof of activity
- Proof of employer eligibility
- Additional documentation
Step 5 — Receive Confirmation
Once approved, the preferential tax status applies for 10 years.
Case Study — American Employee Working Remotely from Portugal
To illustrate how Portugal’s tax and immigration rules work in practice — especially for remote workers employed by foreign companies — consider the case of John, an American employee whose US‑based employer had no entity, no payroll, and no business presence in Portugal.
John wanted to relocate to Portugal while continuing his US‑based role. His employer was concerned about:
- Whether they needed to register a Portuguese entity
- Whether they needed to run Portuguese payroll
- Whether John could legally work from Portugal
- Whether they would face tax or immigration liabilities
After consulting Portuguese tax and immigration experts, the findings were surprisingly favourable.
1. Immigration: The Right to Work Comes From the Residence Permit
Portuguese immigration law distinguishes between:
- Stay visas: e.g., D7 for passive income earners or a D8 digital nomad visa – apply from abroad in your country of residence. Result: Visa stamp in passport usually valid for 120 days
- Residence permits: apply through AIMA after arriving in Portugal, within 120 days of entering Portugal with a D7 / D8 visa. Result: physical residence card valid 2 years initially but renewable
Once a residence permit is issued, the holder gains the right to work in Portugal — regardless of the visa used for entry.
This meant:
- John did not need a Portuguese employer
- His US employer did not need to sponsor him
- No Portuguese work permit tied to the employer was required
2. Tax Residency: The 183‑Day Rule Applies
Once John spent more than 183 days in Portugal, he became a Portuguese tax resident.
This required him to:
- Update his address with the Portuguese tax authorities
- File an annual Portuguese tax return
- Declare his worldwide income in Portugal
The obligation to comply with Portuguese tax rules fell on John personally, not on his US employer.
3. Payroll: Portugal Allows Remote Workers to Settle Tax via the Annual Return
A foreigner Portuguese tax resident of a foreign company with no business presence in Portugal can declare salary from abroad in the annual Portuguese tax return and settle the tax due, without requiring the foreign employer to run a Portuguese payroll.
This meant:
- John could remain on the US payroll (and thus continue to contribute to US FICA, Medicare, 401K)
- His US employer did not need to run Portuguese payroll
- His US employer did not need to register with Portuguese authorities
This is a major advantage compared to jurisdictions where payroll is mandatory as soon as an employee becomes tax resident or, to some other countries, where there are payroll reporting requirements for short-term business visitors.
4. Social Security: Using the US–Portugal Totalization Agreement
Social security was handled under the US–Portugal Totalization Agreement, which coordinates social security coverage between the two countries.
In John’s case:
- He remained under US Social Security (FICA, Medicare, 401K)
- No Portuguese social security contributions were required
- No Portuguese employer registration was needed
5. Employer Risk: Remote Work Is Not Risk‑Free, but It Is Manageable
Remote working was still not 100% risk free for the employer due to potential, albeit relatively small, PE risks when working from a home office in a foreign country.
In addition, John also had to be made aware that:
- Working before the residence permit is issued is not risk‑free
- Enforcement can be inconsistent
- Once the residence permit is issued, the situation becomes fully compliant
John’s employer chose a conservative approach:
- John paused work until his residence permit was issued
- Once issued, he resumed work remotely from Portugal
NHR Portugal in 2026 and Beyond — What to Expect
Looking ahead:
- The original NHR regime is not expected to return
- The Incentive to Scientific Research and Innovation (NHR 2.0) will remain the main framework
- Transitional rules under Article 236 will continue to narrow
- Remote workers will likely remain welcome
Portugal’s tax policy is shifting from broad incentives to targeted, sector‑focused regimes.
Frequently Asked Questions (FAQ) in connection with NHR Portugal
Is NHR still available in Portugal?
Only under the transitional rules in Article 236, which allow certain individuals who had already initiated their relocation to still access the old regime.
To qualify for the previous NHR regime, applicants have to demonstrate that they had already taken concrete steps toward relocation (such as signing an employment contract, lease, or property purchase) within the legally defined transition period.
Eligibility under these transitional provisions is highly fact-specific and requires careful documentation.
Individuals in this situation should seek professional advice before assuming they qualify.
What is the NHR replacement in Portugal?
The new Incentive to Scientific Research and Innovation regime (IFICI), defined in Article 58‑A EBF (and often informally referred to as NHR 2.0), offering a 20% flat tax rate for qualifying professions.
Who is eligible for NHR 2.0 in Portugal?
Eligibility for NHR 2.0 in Portugal depends on whether an individual qualifies under the Incentive for Scientific Research and Innovation (IFICI).
To be eligible, a person must become a Portuguese tax resident and carry out a qualifying professional activity linked to scientific research, innovation, or strategic economic development, as defined in Article 58-A of the Portuguese Tax Benefits Code.
The regime is targeted and does not apply automatically to all new residents.
Eligibility is assessed based on the nature of the activity performed, the individual’s qualifications, and the existence of supporting documentation demonstrating a genuine economic or professional link to Portugal.
What documentation is required to qualify under NHR 2.0 (IFICI)?
Applicants must typically provide formal evidence that they are engaged in qualifying activities.
Depending on the category, this may include:
– Employment contracts or service agreements
– Proof of academic qualifications or professional credentials
– Confirmation from a Portuguese entity, research institution, or certified organization
– Evidence that the activity contributes to innovation, research, or strategic economic development in Portugal
Unlike the former NHR regime, self-declaration is not sufficient. Applications are reviewed based on substance, not intent, and incomplete documentation may result in rejection.
Can Americans stay on US payroll while living in Portugal?
Yes. Remote workers, expats, business travellers and assignees can remain on foreign / home country payroll and settle taxes in Portugal, if due, via the annual return.
The determination of whether taxes are due in Portugal will be made in accordance with Portuguese domestic tax rules and the applicable international tax treaty between Portugal and the home country.
Do I need a Portuguese employer to work remotely from Portugal?
No. The right to work comes from the residence permit, not the employer.
What taxes do I pay under NHR 2.0?
Qualifying income is taxed at 20%, while non‑qualifying income is taxed under standard Portuguese progressive income tax rates ranging from 12.5% to 48%.
How does the new 2.0 NHR Portugal regime compare with other countries special tax regimes for foreigners?
Most other attractive tax regimes for foreigners, such as Spain’s Beckham regime, Netherlands 30% ruling, Italy’s inpatriate regime, France’s inpatriate regime, Ireland’s SARP Relief or the UAE Golden Visa programme are general expat incentives, primarily employment-triggered (tied to a job offer/contract) and often available to a broad range of professionals relocating for work.
By contrast, the new Portugal NHR 2.0 (IFICI / ITS) is now primarily activity-based and sector targeted (high-value R&D, tech, research professions).
Main differences from Portugal NHR 2.0 (IFICI / ITS)
Portugal NHR 2.0 / IFICI: Requires the AT (Autoridade Tributária e Aduaneira, Portugal’s official Tax and Customs Authority (also called “Finanças”)) certification of ~300 specific roles (e.g., engineers, researchers, profs); first-time resident in the past 5 years; 20% flat tax rate on qualifying PT income. Not for general employment—must prove sector/job fits list.
All other regimes listed above are generally less restrictive: Focus on relocation-for-work (any skilled role, often with salary/job proof), exempting/reducing salary tax without profession blacklists.
They prioritise attracting high-earners, executives, key staff and expats via employment, not just targeted sectors, whilst emphasizing ease for both employers and employees.
Portugal is now a narrower “talent magnet” for innovation.
The UAE stands out as 0% income tax + relative ease to obtain residence, but it is not EU-integrated.
Does the new NHR 2.0 / IFICI regime allow exemptions for foreign-sourced income outside of employment income?
Yes. Subject to certain conditions, non-employment, foreign-sourced income (excluding pensions and some tax-heaven income) may be exempted entirely from Portuguese taxation.
Is the new Portuguese NHR still available to digital nomads now?
No. NHR 2.0 / IFICI or ITS is not available anymore for digital nomads unless they fall into very narrow legacy carve-outs (e.g. certain academics or start-up employees).
Does NHR 2.0 replace the need for a Portuguese visa or residence permit?
No. Tax incentives and immigration status are separate matters.
To benefit from NHR 2.0 (IFICI), an individual must first have the legal right to live and work in Portugal, such as through a residence permit / visa (e.g., D7, D8, or other applicable permits).
The tax incentive does not grant residency rights, and holding a visa alone does not guarantee eligibility for the tax regime.
Who is NHR 2.0 not suitable for?
NHR 2.0 is generally not suitable for:
– Retirees seeking passive income tax exemptions
– Digital nomads without qualifying innovation or research activities
– Individuals relocating without a clear professional or economic link to Portugal
For these individuals, alternative tax planning strategies may be more appropriate.
Final Thoughts — Is Portugal Still Attractive Without the Original NHR?
Yes — but for different reasons.
The original NHR regime was broad and generous. The replacement regime is narrower and more targeted. But Portugal remains one of the most attractive destinations in Europe for:
- Remote workers, expats and assignees
- US and other non-EU employees
- Tech professionals
- Researchers
- Startup employees
The ability to:
- Obtain a D8 Digital Nomad Visa or a D7 Passive Income Earners Visa (i.e. pensioners) + resident permits
- Stay on foreign payroll
- Avoid employer local registration in many cases
- Settle tax via the Portuguese annual tax return
- Maintain foreign social security coverage under the Home Country–Portugal Totalization Agreement
…makes Portugal uniquely flexible.
Portugal may no longer offer the original NHR regime — but it remains a top global destination for foreign talent under the new framework.
