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.
The original Non‑Habitual Resident (NHR) regime was introduced in 2009 to attract foreign talent and investment. It offered:
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.
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.
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:
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.
Broad (retirees, remote workers, investors, professionals)
Narrow (research, innovation, tech, academia)
Extensive
More limited and targeted
20%
20% (but fewer professions qualify)
10 years
10 years
Low
Higher (documentation, proof of activity, employer alignment)
To qualify under the replacement regime, applicants must meet several criteria.
You must become a Portuguese tax resident, typically by:
You must perform a qualifying activity in Portugal, such as:
The full legal definition is contained in Article 58‑A EBF (link above).
Your employer may need to provide documentation confirming:
Applicants typically need:
The list of qualifying professions under NHR 2.0 is narrower than the original NHR list. It includes:
Employees of startups recognized under Portuguese innovation frameworks may qualify if their role contributes to innovation.
Update your address with the Portuguese Tax Authority and obtain a Portuguese tax number (NIF).
This includes:
Applications are submitted through the Portuguese Tax Authority portal, referencing the conditions set out in Article 58‑A EBF (link above).
Authorities may request:
Once approved, the preferential tax status applies for 10 years.
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:
After consulting Portuguese tax and immigration experts, the findings were surprisingly favourable.
Portuguese immigration law distinguishes between:
Once a residence permit is issued, the holder gains the right to work in Portugal — regardless of the visa used for entry.
This meant:
Once John spent more than 183 days in Portugal, he became a Portuguese tax resident.
This required him to:
The obligation to comply with Portuguese tax rules fell on John personally, not on his US employer.
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:
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.
Social security was handled under the US–Portugal Totalization Agreement, which coordinates social security coverage between the two countries.
In John’s case:
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:
John’s employer chose a conservative approach:
Looking ahead:
Portugal’s tax policy is shifting from broad incentives to targeted, sector‑focused regimes.
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.
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.
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.
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.
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.
No. The right to work comes from the residence permit, not the employer.
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%.
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).
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.
Yes. Subject to certain conditions, non-employment, foreign-sourced income (excluding pensions and some tax-heaven income) may be exempted entirely from Portuguese taxation.
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).
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.
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.
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:
The ability to:
…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.
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