What is the latest NHR Tax Regime in Portugal?
The most recent NHR Portugal tax regime, also known as NHR 2.0, is a tax incentive program designed to attract foreigners to Portugal by offering significant tax benefits. Under this regime, tax residents in Portugal can benefit from a flat tax rate of 20 percent on income earned in Portugal, along with generous tax exemptions for certain types of income. To qualify for the NHR scheme, individuals must register as a tax resident in Portugal and meet specific criteria. The NHR status allows residents to enjoy reduced tax rates and exemptions, making it an appealing option for those considering moving to Portugal. As of March 2025, the new NHR tax regime will continue to provide opportunities for significant tax savings, especially for eligible professionals and those involved in scientific research. This program is a key component of Portugal’s strategy to enhance its appeal as a destination for expatriates and digital nomads looking to settle in Portugal, especially under the NHR 2.0 tax regime.
General Eligibility Requirements for the Non-Habitual Residence Regime in Portugal 2025
To qualify for the NHR status in Portugal, individuals must meet specific criteria.
· applicants must not have been tax residents in Portugal in the five years preceding their application.
· they must establish tax residency status in Portugal, which typically involves staying in the country for more than 183 days within a 12-month period and having a permanent residence available, owned or rented long-term (12 months contract).
· individuals applying for NHR status must fall under eligible NHR professions
· must request inclusion inthe regime by March 31 of the year following the one they became a tax resident in Portugal
Who can apply for the NHR Portugal tax regime in 2025: main categories
Here are the main categories of people who may qualify for the Portugal non-habitual regime 2025:
1. Scientific Researchers
Individuals conducting scientific research in Portugal, particularly in partnership with:
· Public or private research institutions
· Universities or polytechnic institutes
· Postdoctoral researchers are explicitly eligible for the non-habitual tax benefits.
2. Tech Professionals and Innovators
Employees and entrepreneurs in startups, tech firms, and innovation hubs, especially in sectors like:
· Artificial intelligence
· Software development
· Green tech
· Biotechnology
Startups must be certified by the Portuguese Startup Ecosystem authorities to qualify for the tax incentive for scientific research.
3.Portugal NHR is poular choice for many. Professors and Academic Staff are often attracted to the NHR, also known as the NHR 2.0.
Hired by public or private universities or recognized institutions of higher education, benefiting from the special tax under the residency in Portugal.
4. Highly Qualified Professionals
Working in high value-added sectors within Portugal identified by the government, such as those mentioned in frequently asked questions about the NHR.
· Engineers
· Architects
· IT professionals
· Specialised technicians
The “high value-added” roles is defined by Ordinance No. 12/2024. Such professions as; Engineers, Technical, Engineers, Pharmacists, Physiotherapists, Medical doctors, Dentists, Veterinarians, Public Notaries, Nutritionists, Psychologists, Certified Accountants, Solicitors and bailiffs have a clear and defined basis outlined as to whether they are qualified under their relevant qualification framework.
Other professions may make an application if their professional qualifications are recognised in a similar European qualification framework however the granting of NHR 2.0 tax status is less assured and may result in a lengthy approval process or be rejected.
If you are a business owner or qualified professional it may be possible to set up a ‘relevant company’ in Portugal and qualify for the NHR regime in Portugal. This program is a tax regime that allows eligible professionals to benefit from reduced income tax rates and even be exempt from taxation in Portugal on certain income types.
‘Relevant companies’ are enterprises whose activities the government has considered relevant to the national economy, for example, holding companies, certain fund-management institutions, advanced engineering companies, and hospitality operators, excluding short-term accommodation enterprises. Board members or ‘qualified jobs’ in these relevant companies can qualify for the IFICI (Incentivized Fiscal Status for International Companies in Portugal) if the employee is engaged in tasks that require at least post-secondary level qualifications (Level 5 of the European Qualifications Framework) or an equivalent standard. As a guide, this may be professionally qualified at Level 4 in the UK.
These companies are not mandated to make particular investments or create new jobs in order to qualify under the NHR regime in Portugal. Moreover, understanding the implications of tax residency in Portugal is crucial for those considering residence in Portugal under this scheme.
5. Workers in the Portuguese State or International Organisations
Includes those hired by:
· Portuguese public administration
· European institutions
· United Nations agencies, etc.
6. People Transferred Within Multinational Groups
Intra-group transferees under intra-corporate transfer arrangements, provided the role is in one of the eligible sectors under the incentivised tax status program.
For individuals who have spent 183 days in Portugal within a year, understanding the implications of tax under the non-habitual residence regime is essential. Those eligible for the NHR may also find benefits under the double taxation agreement with Portugal, which can help avoid paying tax on the same income in multiple jurisdictions, thus enhancing the attractiveness of the Portugal program for digital nomads and other expatriates.
What are the Tax Benefits of the New NHR Program in Details?
Individuals who qualify for the most recent NHR program can enjoy several advantages, including the right to reside in Portugal without facing the usual taxation burdens associated with personal income tax. This is particularly appealing for digital nomads looking to live and work in Portugal, as the Portugal digital nomad visa allows for a seamless transition into the resident regime in Portugal.
Tax Considerations in Detail
|
Income Type |
Tax Treatment under IFICI is an important consideration for those applying for the NHR program. |
|
Portuguese-sourced employment income |
20% flat rate (vs. progressive rates up to 48%) |
|
Self-employment in eligible activity |
20% flat rate |
|
Foreign-source pension income may be taxed at benefits under the NHR program. |
May be taxed at benefits under the NHR 10% (subject to DTA*) |
|
Foreign dividends, interest, royalties |
Possibly exempt or taxed under DTA rules |
|
Rental income (foreign or local) |
Taxable under general rules (28%) |
|
Capital gains |
Subject to standard Portuguese CGT rules |
*DTA: Double Taxation Agreement—Portugal has treaties with over 70 countries.
Step-by-Step Application Guide: Non-Habitual Resident Tax Regime in Portugal
1. Move to Portugal and apply for the NHR program to become a tax resident.
Typically by residing more than 183 days per year or establishing a habitual residence.
2. Register with the Portuguese Tax Authority (AT)
Apply for a NIF (Número de Identificação Fiscal).
3. Request to join the IFICI regime
Done via the Tax Portal (Portal das Finanças) by March 31 of the year following your move.
4. Provide supporting documents
Proof of employment or activity in an eligible sector.
Certification by competent authorities (e.g., higher education institution, startup certification).
Duration of NHR Benefits
The NHR regime in Portugal offers significant tax advantages to eligible individuals for a period of 10 consecutive years. The duration of the NHR benefits can greatly influence financial planning, making it crucial for applicants to understand the implications of this regime as they consider their long-term residency in Portugal.
What to do at the end of NHR?
Exiting the NHR regime in Portugal requires careful planning, ideally several or as many as eight years in advance. As the NHR program is known for its incentivised tax status, understanding how to maintain or transition your tax resident status in Portugal is crucial. Engaging a qualified financial adviser with cross-border experience can help you to organise your finances effectively. By doing so, you may be able to pay as little as 11.2 % on eligible income, ensuring you don’t face hefty tax bills or need to leave the country.
Understanding the implications of the OECD Model Tax Convention and the double tax agreements (DTA) with Portugal can provide additional insights into managing your taxation in Portugal.
As the NHR regime is no longer available after a specified period, it’s important to evaluate how to mitigate potentially punitive levels of taxation that may be due upon the expiry of the NHR regime before the end of your eligibility. If your habitual residence in Portugal is coming to an end, planning for your resulting tax postion is vital to avoid any surprises.
Frequently asked questions about NHR:
Is the NHR Status Still Available in 2025 in Portugal?
Yes, the non-habitual residence regime (NHR) in Portugal is still available for the first quarter of 2025, allowing qualifying individuals to benefit from tax advantages.
What Level of Income Tax Is Due Under the NHR Scheme in Portugal 2025?
The tax in Portugal under the NHR 2.0 scheme generally offers a flat rate of 20% on certain income types, while other foreign income may be tax-exempt.
What Happens After 10 Years of NHR Status in Portugal?
After 10 years of holding NHR status, individuals will revert to the standard tax residency rules in Portugal and the holder defaults to being taxed on the same basis as an ordinary resident. A qualified Financial Advisor can help you to arrange your financial affairs and it may then be possible to pay an effective rate of 11.2% tax for life.
Can I Apply for NHR Status if I Already Live in Portugal?
Yes, you can apply for NHR status while already living in Portugal, provided you meet the eligibility criteria.
Can US Citizens Apply for the New NHR Program?
Yes, US citizens can apply for the new NHR program in Portugal, benefiting from its tax advantages if they meet the necessary requirements.
Can a UK Citizen Apply for NHR Status in Portugal?
Yes, UK citizens can apply for NHR status in Portugal, enjoying the same benefits as other foreign residents under this incentivised tax status program.
Do I Need to Declare My Assets When Applying for the NHR Regime in Portugal?
No, generally, you do not need to declare foreign assets when applying for the NHR regime, but you must report income generated in Portugal.
How Long Can I Benefit from the NHR Regime in Portugal?
You can benefit from the NHR regime for a maximum of 10 consecutive years, enjoying the associated tax benefits during this period. Contact an EU qualified and licensed Financial Advisor ideally within 24 months of the granting of NHR to avoid significantly elevated taxation rates typically applicable upon the expiry.
Although it is recommended that professional advice is sought within the initial 24 month period of receiving NHR 2.0 status, it is essentially never too late to speak to a Contact an EU qualified and licensed Financial Advisor.
I have helped Clients achieve good financial outcomes even when they faced the imminent expiry of the NHR status.