Portugal’s NHR 2.0: A New Era for International Investors and Expats

The Portuguese government has introduced a revamped version of its Non-Habitual Resident (NHR) tax regime, now known as NHR 2.0 or IFICI (Tax Incentive Regime for Scientific Research and Innovation). This overhaul, part of the 2024 State Budget, signals a shift in Portugal’s strategy for attracting international talent and investment. While the previous NHR regime was a magnet for retirees and remote workers, the new framework prioritizes highly qualified professionals and innovation-driven industries.

So, what does this mean for global investors, high-net-worth individuals (HNWIs), and expatriates considering Portugal as a destination? Here’s 3 Comma Capital in-depth look at the key changes, eligibility requirements, and investment implications.

The End of Traditional NHR: What Has Changed?

The original NHR regime, introduced in 2009, positioned Portugal as a European tax haven for expatriates, offering a 10-year tax holiday on foreign-sourced income, including pensions, dividends, and capital gains. The new regulation shifts the focus away from passive income earners toward scientists, researchers, entrepreneurs, and executives in strategic sectors.

Under NHR 2.0, beneficiaries will still enjoy tax incentives, but with stricter eligibility requirements and a focus on productive investment and innovation. Notably, foreign pension income no longer benefits from tax exemptions, and the blanket exemption on other foreign-sourced income has been narrowed.

Key Tax Benefits Under NHR 2.0

Despite the tightening of eligibility criteria, NHR 2.0 still offers attractive tax advantages:

Portuguese-Sourced Income

Flat 20% Personal Income Tax (PIT) rate on qualifying employment and self-employment income for 10 consecutive years (non-renewable).
Applies to professionals engaged in scientific research, technology, innovation, and certain high-value sectors.

Foreign-Sourced Income

Exemption from PIT on foreign employment income, self-employment income, dividends, interest, capital gains, and rental income.
Foreign pension income remains taxable, meaning retirees will no longer enjoy the same benefits as before.
Income derived from blacklisted jurisdictions remains taxable, ensuring compliance with international tax standards.

Who Qualifies?

To be eligible for NHR 2.0, an individual must:

Be a new Portuguese tax resident (not having been a tax resident in Portugal in the past five years).
Engage in qualifying activities that contribute to Portugal’s economic and scientific landscape.

Eligible Professions and Activities

The NHR 2.0 framework prioritizes individuals working in the following areas:

1. Scientific Research & Higher Education

Professors and researchers at recognized universities, innovation hubs, and R&D centers.
Employees of institutions within the national science and technology system.

2. Strategic Business Sectors

Executives and qualified professionals in industries that benefit from Portugal’s Investment Tax Code.
Key roles in businesses recognized by AICEP (Portugal’s Trade & Investment Agency) as contributing to national economic development.

3. Innovation & Entrepreneurship

Founders and executives of certified startups (applications submitted via Startup Portugal).
Employees involved in scientific research and development (R&D), including companies that qualify for Portugal’s R&D tax incentives (SIFIDE).

4. High-Value Industries with Export Focus

a) Executives and professionals working in export-driven industries, including:

Manufacturing
Technology & Information Services
Healthcare & Biotechnology
Renewable Energy

b) Professionals in industrial and service companies exporting at least 50% of their turnover.

Application Process and Deadlines

Applications for the NHR 2.0 regime must be submitted within 15 January of the year following the tax residency start date. However, for tax residents who relocate in 2024, there is a transitional period allowing submissions until 15 March 2025.

How to Apply?

The application process depends on the applicant’s professional category:

Researchers & Professors → Apply via the Foundation for Science and Technology (FCT).
Executives & Investors → Submit applications to AICEP or IAPMEI (Portugal’s investment and SME development agencies).
Startups & Entrepreneurs → Certification required from Startup Portugal.
R&D Professionals → Application through the National Innovation Agency (ANI).

Investment and Business Implications

For HNWIs, investors, and entrepreneurs, NHR 2.0 presents both challenges and opportunities:

What Has Become Less Attractive?

Retirees will no longer benefit from tax-free foreign pension income.
Individuals living on passive foreign income (e.g., dividends, interest) may need to restructure their tax planning.
The end of broad foreign-source income exemptions may push some investors to reconsider alternative tax jurisdictions.

What Remains Attractive?

Entrepreneurs and business owners can benefit from Portugal’s corporate-friendly tax regime and R&D incentives.
Highly skilled professionals in technology, research, and innovation sectors still enjoy a 20% flat tax rate—far lower than standard progressive rates.
Portugal’s business ecosystem continues to thrive, offering tax-efficient investment opportunities for those in the right industries.

Final Thoughts: Portugal’s New Investment Landscape

Portugal’s NHR 2.0 regulation marks a paradigm shift in the country’s tax strategy, aligning more closely with European standards while maintaining its appeal for entrepreneurs, executives, and investors. The days of a blanket tax exemption for passive income earners are over, but for those engaged in high-value economic activities, Portugal remains a compelling destination.

For investors seeking Golden Visa opportunities, Portugal’s tax incentives, combined with its high quality of life, political stability, and access to the EU market, still make it a standout option.

Golden Visa

​Portugal’s NHR 2.0: A New Era for International Investors and Expats