Portugal NHR 2.0 Program: New Non-Habitual Resident Tax 2024 (IFICI)

Updated: 31 October 2024

Portugal has recently announced an updated Non-Habitual Resident (NHR) program, officially named the Fiscal Incentive for Scientific Research and Innovation (IFICI) Program. This new program, expected to come into effect soon, is specifically designed to attract highly skilled professionals in fields such as research, technology, and strategic industries. With a focus on Portugal-based income, the scheme offers significant tax incentives for those contributing to the nation’s economic and scientific growth.

What is the NHR 2.0 Program?

The new NHR 2.0 program reflects Portugal’s shift in priorities by incentivising professionals in high-value sectors who plan to actively participate in the Portuguese economy. Unlike its predecessor, which provided tax relief on foreign income, including pensions, NHR 2.0 is centred on income generated within Portugal. This revised program offers a flat 20% personal income tax rate for eligible employment, providing a structured tax benefit for qualified professionals while excluding foreign pensions from tax exemptions.

Comparison with the Old NHR Scheme

The new NHR 2.0 scheme represents a significant departure from the previous program. Key differences include:

Exclusion of Foreign Pension Income: Unlike the former NHR scheme, which offered tax relief on foreign pensions, the new scheme taxes foreign pensions at Portugal’s standard progressive rates, ranging from 13.5% to 48%.
Focus on Portugal-Based Income: Unlike the old scheme, which allowed tax benefits on various types of foreign income, NHR 2.0 targets income generated within Portugal, especially in high-value sectors.
Targeted Professional Sectors: The new scheme prioritizes professionals in specific fields, particularly those who collaborate with Portuguese universities or institutions in research, technology, and other strategic areas.
10-Year Non-Renewable Term: Both the old and new schemes offer a 10-year duration; however, NHR 2.0 is non-renewable after this period.

Key Benefits of the New Scheme

The NHR 2.0 scheme offers several benefits aimed at attracting skilled talent:

20% Flat Income Tax Rate: Eligible professionals benefit from a reduced 20% tax rate on Portugal-based employment income for up to 10 years, a favorable option compared to the standard rate, which can reach up to 48%.
Selective Foreign Income Exemptions: Under certain conditions, income from foreign employment, royalties, dividends, and rental income may be exempt, provided it meets Portugal’s Double Taxation Agreements (DTA) or OECD tax standards.
Decade-Long Validity: The scheme’s benefits apply for a maximum of 10 years, offering a stable tax environment for qualified professionals seeking long-term residency in Portugal.

Eligibility Criteria For New Non-Habitual Resident Program

To qualify for NHR 2.0, applicants must not have been tax residents in Portugal for the previous five years. Additionally, they must meet one of the following criteria, including:

Technology & Innovation: Directors or employees in Portuguese-based technology or knowledge-driven organizations.
Portuguese Startups: Professionals working in accredited startups with growth potential or venture backing.
Higher Education & Research: Researchers and academics engaged in R&D projects within Portugal’s scientific network.
Export-Driven Industries: Companies that generate at least 50% of revenue from exports.
Strategic Sectors: Roles in industries supported by public agencies, such as IAPMEI and AICEP, focused on economic and innovation growth.
Azores & Madeira: Individuals in roles defined by local laws in these regions.

This focus on high-value sectors ensures that the NHR 2.0 program is primarily available to professionals whose skills align with Portugal’s strategic development goals.

NHR Application Process

To apply for the NHR 2.0 scheme, eligible individuals should follow these steps:

Obtain Legal Residency: Applicants must secure legal residency in Portugal, either through a visa (such as the Golden Visa or D7 Visa) or by relocating from another EU/EEA country. For more details on residency options, please read our guide on Portugal Visas 2024.
Acquire a Portuguese Tax Identification Number (NIF): This unique ID number is required to conduct business, open bank accounts, and fulfill other legal requirements in Portugal.
Register as a Tax Resident: Individuals must officially declare their tax residency status with Portuguese authorities, demonstrating that they have not been tax residents in Portugal for the previous five years.
Apply for NHR Status: Applicants can apply for NHR status via the Portuguese tax portal, submitting proof of residency, a valid NIF, and other required documentation.

Disclaimer: This guide is intended for informational purposes only and should not be considered legal or financial advice. As this is a new program, potential applicants should consult a qualified legal or financial advisor to ensure they meet all criteria and to understand any regulatory changes as the program evolves further under Portuguese authorities.

Unlocking Opportunities with NHR 2.0 in Portugal

The NHR 2.0 program offers an exciting pathway for skilled professionals to establish roots in Portugal, benefiting from favorable tax rates and a vibrant business environment. Navigating this program can be complex, but we’re here to help. Our network of trusted professionals, including legal and financial advisors, can guide you through every step of the NHR application process. Additionally, we can assist you in finding your ideal home in Portugal and securing financing, making your transition seamless.

Contact us today to connect with our experts and take the first step towards your new life in Portugal.