Portugal NHR ended: what the IFICI regime means for new residents

For more than a decade, Portugal's non-habitual resident regime (NHR) was a major reason Americans, especially retirees, chose Portugal. That regime is closed to new arrivals. Its replacement, usually called IFICI or "NHR 2.0", is narrower and aimed at specific professional activities. This guide explains what ended, what replaced it, who qualifies, and how to register, using the text of the law as published by the Portuguese tax authority.

What happened to NHR

The NHR rules sat in Article 16, paragraphs 8 to 12, of the Portuguese IRS Code. The Portal das Finanças version of Article 16 shows those paragraphs as revoked by Law 82/2023 of 29 December, the 2024 State Budget.

The same law included a transitional rule that kept NHR available, until the end of the original ten-year period, for:

• people already registered as non-habitual residents when the law came into force, while their period lasts;
• people who met the tax residence conditions by 31 December 2023;
• people who became tax resident by 31 December 2024 and could show qualifying links set before the end of 2023, such as a work contract or promise of one, a lease or property agreement, a child's school enrolment, or a residence visa or permit.

If you arrive now, NHR is not an option. Anyone telling you otherwise is describing the past.

IFICI: the tax incentive for scientific research and innovation

The replacement is Article 58-A of the Tax Benefits Statute (Estatuto dos Benefícios Fiscais), added by the same Law 82/2023. Its official name is the tax incentive for scientific research and innovation (incentivo fiscal à investigação científica e inovação), and the acronym IFICI is used in official guidance.

### The core benefit

Article 58-A(2) lets qualifying taxpayers be taxed at a special IRS rate of 20 percent on net income from categories A and B (employment and self-employment) earned in the qualifying activities, for ten consecutive years from the year they register as Portuguese residents. They can instead choose to aggregate that income with their other income.

### Who can qualify

Article 58-A(1) requires two things. First, you must become a Portuguese tax resident under Article 16(1) and (2) of the IRS Code and not have been resident in Portugal in any of the previous five years. Second, you must carry out one of the listed activities:

• higher education teaching and scientific research, including scientific jobs at entities in the national science and technology system and jobs at recognised technology and innovation centres;
• qualified jobs and board positions under contractual investment benefits in the Investment Tax Code;
• highly qualified professions, defined by ministerial order, carried out at companies that benefited from certain investment tax support, or at industrial and service companies in listed activity codes that export at least 50 percent of turnover;
• other qualified jobs and board positions at entities whose activity is recognised by AICEP or IAPMEI as relevant to the national economy;
• research and development staff whose costs qualify under the business R&D tax incentive system;
• jobs and board positions at certified startups under Law 21/2023;
• jobs and other activities by tax residents of the Azores and Madeira, under regional rules.

### Who is excluded

Article 58-A(10) excludes anyone who has benefited from NHR and anyone who opted for the separate returning-resident regime in Article 12-A of the IRS Code. Article 58-A(12) says the regime can only be used once by the same taxpayer.

Why most retirees do not fit

IFICI applies only to category A and B income from the listed activities. Pensions, Social Security, dividends, interest and rental income are not covered. A retiree on a D7 living on a US pension gets no IFICI benefit and is taxed under the normal Portuguese progressive rules, with the US-Portugal treaty deciding which country taxes which income first.

Remote workers on a D8 also rarely fit. Working remotely for a US company is not, by itself, one of the listed activities. The eligible jobs are tied to Portuguese entities: universities, research centres, certified startups, qualifying exporters and companies recognised by AICEP or IAPMEI.

Keeping the benefit year to year

Article 58-A(3) makes the 20 percent rate conditional, each year, on being a Portuguese tax resident at some point in the year and continuing to earn income from a listed activity. If you change jobs, paragraph 4 treats you as continuing if the new activity starts within six months of the old one ending. Paragraph 5 lets you resume the benefit in a later year of the ten-year period if you lose it for a while.

How to register

Registration is made with the entity responsible for each activity type. Article 58-A(6) names them: FCT for research and teaching, AICEP for contractual investment jobs, the tax authority (AT) for highly qualified professions, IAPMEI or AICEP for recognised entities, ANI for R&D staff, Startup Portugal for startups, and the regional governments for the Azores and Madeira. The detailed procedure is in Portaria 352/2024/1.

The tax authority's information leaflet on the incentive explains that the application is made on the Portal das Finanças (Benefícios Fiscais, then Inscrição no IFICI) and must be submitted by 15 January of the year after the year you became resident. Article 58-A(7) says a late registration takes effect from the year you register, for the remainder of the ten-year period, so lateness costs you years rather than the whole benefit.

How IFICI interacts with your US taxes

The 20 percent Portuguese rate affects only your Portuguese bill. You still file a US return on worldwide income. A lower Portuguese tax means fewer foreign tax credits to offset US tax, so on salary income the foreign earned income exclusion may become more useful than the credit. The IRS explains that you cannot claim the foreign tax credit on income you excluded under the FEIE, and that the exclusion does not reduce self-employment tax. Run the numbers both ways before choosing.

Practical checklist

• Confirm you were not a Portuguese tax resident in any of the previous five years.
• Get written confirmation from your employer or the Portuguese entity of which IFICI category your job falls in.
• Note the date you become tax resident; it fixes the 15 January deadline.
• Register on the Portal das Finanças by that deadline, with any certification needed from FCT, AICEP, IAPMEI, ANI or Startup Portugal.
• Keep records of each job change to protect the six-month continuity rule.

Common questions

Can I still apply for NHR in Portugal? No, unless you fall within the transitional rules of Law 82/2023, which covered people already registered and some who became resident by 31 December 2024 with qualifying links. The NHR paragraphs of Article 16 of the IRS Code were revoked.

What tax rate does IFICI give? A special 20 percent IRS rate on net employment and self-employment income from qualifying activities, for ten consecutive years, under Article 58-A of the Tax Benefits Statute.

Does IFICI cover pensions or Social Security? No. It applies only to category A and B income earned in the listed activities, so pension, Social Security and investment income are taxed under the normal rules.

What is the IFICI registration deadline? The tax authority's leaflet says by 15 January of the year after you become a tax resident. A late registration applies from the year you register for the rest of the ten-year period.