Portugal’s tax incentive: What you need to know about NHR 2.0

Portugal has introduced a new tax incentive scheme to attract highly skilled professionals in research and innovation. Introduced in the 2024 State Budget, the scheme is effective retroactively from 1 January 2024, following its official promulgation.

What is the IFICI tax regime?

The Tax Incentive for Scientific Research and Innovation (TISRI), commonly referred to as IFICI or "NHR 2.0", replaces the previous Non-Habitual Residents (NHR) regime

The aim is to make Portugal an attractive destination for international talent and high-net-worth individuals, while also encouraging companies to invest in high-value sectors.

The tax incentive targets highly skilled professionals, particularly in science, technology, engineering, health and academia.

By offering competitive tax rates on professional income and relief on most passive global earnings (excluding foreign pension income), the regime aims to stimulate research, development and innovation.

Read more: A guide to Portugal’s tax system

Key features

Focus: The IFICI aims to attract skilled workers and incentivise research, development, and job creation in Portugal’s key industries.
Benefits:

Flat 20% tax rate: Applicable to employment income (Category A) and professional income (Category B) earned within Portugal.
Tax exemption: Certain foreign income is exempt if derived from jurisdictions on Portugal’s whitelist. This includes dependent employment income (Category A), professional income (Category B), dividend and interest income (Category E), rental income (Category F) and Capital Gains (Category G).
Exclusion: Foreign pension income is no longer exempt under the IFICI.

Duration: Qualified individuals can benefit from the IFICI regime for 10 consecutive years, starting from the date of attaining tax residency in Portugal.
Registration:

The registration request must be submitted by 15 January of the year following the fiscal year in which they establish residency in Portugal, through an official form (yet to be approved by the Portuguese Government).
These entities must electronically communicate to the Portuguese Tax Authority (AT), by 15 February of each year, the registration requests and respective changes that have been submitted to them.
Subsequently, the AT provides taxpayers, by 31 March of each year, with information about their registration in the IFICI which.

Application submission: By 15 March 2025.
Certification by relevant entities: This communication can be fulfilled until 15 April 2025.
Tax Authority registration confirmation: By 30 April 2025.

Ongoing obligations: Applicants are required to maintain detailed documentation to verify their eligibility, which must be presented to the Tax Authority upon request.
Eligibility:

New residency: Applicants must not have resided in Portugal in the previous five years.
Professional focus: Residency in Portugal must be established specifically for research and innovation activities.

Type of activity	Nature	Registration entity
Teaching in Higher education and scientific research	This includes roles in entities, structures and networks dedicated to advancing knowledge within Portugal’s national science and technology system. It also includes roles and memberships in social bodies within entities recognised as technology and innovation centres under Decree-Law no. 126-B/2021, dated December 31, 2021.	The Foundation for Science and Technology (FCT)
For qualified positions under investment incentive agreements	For activities considered essential to the national economy. Qualified work positions and members of social bodies in entities carrying out economic activities recognised by AICEP, E.P.E or IAPMEI, I.P.	The Portuguese Trade & Investment Agency (AICEP) and The Agency for Competitiveness and Innovation Portugal (IAPMEI)
For highly skilled professionals in companies with significant investments or export-driven revenue	Highly qualified professionals developed in: Companies with relevant applications, in the financial year in which they took up their duties or in the previous five financial years, which benefit or have benefited from the investment tax regime (so called RFAI): 112: Directors-general and executive managers of companies 12: Directors of administrative and commercial services 13: Production and specialised services managers (except 1349) 21: Specialists in physical sciences, mathematics, engineering and related techniques (except 216) 2163.1: Industrial or equipment product designer 221: Physicians 231: University and higher education professors 25: Information and communication technology (ICT) specialists Administrators, managers and general managers Industrial and service companies The IFICI prioritises industries that are critical to Portugal’s economic growth – whose main activity corresponds to the CAE mentioned below and which export as least 50% of their turnover in the financial year in which they take up their duties or in any of the two previous financial years: Extractive industries: Divisions 05 to 09 of the CPP (e.g., mining, oil and gas extraction) Manufacturing industries: Divisions 10 to 33 of the CPP (e.g., manufacturing, construction) Information and communication activities: Divisions 58 to 63 of the CPP (e.g., publishing, cinema, telecommunications) Research and development in physical and natural sciences: Group 721 of the CPP Higher education: Subclass 85420 of the CPP Health Services: Subclasses 86100 to 86904 of the CPP In both the above cases, employees must have at least: Level 8 of the European Qualifications Framework, or level 8 of the International Standard Classification of Education (ISCED) or Level 6 of the European Qualifications Framework, or level 6 of the International Standard Classification of Education (ISCED) and have three years’ duly proven professional experience.	The Portuguese Tax Authority (AT)
Research and development staff	Research and development staff whose costs are eligible for SIFIDE II (Tax Incentive System for Business Research & Development)	The National Innovation Agency (ANI)
For roles within certified startups	Work positions and members of social bodies in entities certified as start ups	Startup Portugal
Roles developed by tax residents in Azores and Madeira	Work positions or other activities developed by tax residents in the Autonomous Regions of the Azores and Madeira	Autonomous Regions of the Azores and Madeira

Read more: Moving to Portugal from the UK – A financial guide
Type of activity Nature Registration entity
Teaching in Higher education and scientific research This includes roles in entities, structures and networks dedicated to advancing knowledge within Portugal’s national science and technology system. It also includes roles and memberships in social bodies within entities recognised as technology and innovation centres under Decree-Law no. 126-B/2021, dated December 31, 2021. The Foundation for Science and Technology (FCT)
For qualified positions under investment incentive agreements For activities considered essential to the national economy. Qualified work positions and members of social bodies in entities carrying out economic activities recognised by AICEP, E.P.E or IAPMEI, I.P. The Portuguese Trade & Investment Agency (AICEP) and The Agency for Competitiveness and Innovation Portugal (IAPMEI)
For highly skilled professionals in companies with significant investments or export-driven revenue Highly qualified professionals developed in:
Companies with relevant applications, in the financial year in which they took up their duties or in the previous five financial years, which benefit or have benefited from the investment tax regime (so called RFAI):
112: Directors-general and executive managers of companies
12: Directors of administrative and commercial services
13: Production and specialised services managers (except 1349)
21: Specialists in physical sciences, mathematics, engineering and related techniques (except 216)
2163.1: Industrial or equipment product designer
221: Physicians
231: University and higher education professors
25: Information and communication technology (ICT) specialists
Administrators, managers and general managers

Industrial and service companies

The IFICI prioritises industries that are critical to Portugal’s economic growth – whose main activity corresponds to the CAE mentioned below and which export as least 50% of their turnover in the financial year in which they take up their duties or in any of the two previous financial years:
Extractive industries: Divisions 05 to 09 of the CPP (e.g., mining, oil and gas extraction)
Manufacturing industries: Divisions 10 to 33 of the CPP (e.g., manufacturing, construction)
Information and communication activities: Divisions 58 to 63 of the CPP (e.g., publishing, cinema, telecommunications)
Research and development in physical and natural sciences: Group 721 of the CPP
Higher education: Subclass 85420 of the CPP
Health Services: Subclasses 86100 to 86904 of the CPP
In both the above cases, employees must have at least:
Level 8 of the European Qualifications Framework, or level 8 of the International Standard Classification of Education (ISCED) or
Level 6 of the European Qualifications Framework, or level 6 of the International Standard Classification of Education (ISCED) and have three years’ duly proven professional experience.
The Portuguese Tax Authority (AT)
Research and development staff Research and development staff whose costs are eligible for SIFIDE II (Tax Incentive System for Business Research & Development) The National Innovation Agency (ANI)
For roles within certified startups Work positions and members of social bodies in entities certified as start ups Startup Portugal
Roles developed by tax residents in Azores and Madeira Work positions or other activities developed by tax residents in the Autonomous Regions of the Azores and Madeira Autonomous Regions of the Azores and Madeira

The Portuguese Classification of Professions (CPP) is a coding system used to classify occupations and is essential for the application of this tax incentive.
The CAE i.e. Código de Atividade Económica is a code used to classify and identify business activities in Portugal.

Consulting with a financial planner familiar with Portuguese tax laws remains essential for understanding the full implications of these changes and making informed decisions about relocating to Portugal.

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