Portugal NHR Regime

The Non-Habitual Resident (NHR) regime was a Portuguese tax incentive created in 2009 that provided individuals who established their tax residence in Portugal for the first time (or after a 5-year absence) with a 10-year period of preferential taxation. It was one of Europe’s most widely used personal tax relocation regimes among Spanish nationals, retirees, digital professionals and investors — until its abolition on 1 January 2024.

What NHR offered (2009–2023)

Foreign pension income: taxed at 0% in Portugal (changed to 10% from 2020 following EU and OECD pressure).

Income from ‘high value-added activities’: a flat 20% rate on Portuguese-source employment or self-employment income from a broad list of qualifying professions — including architects, engineers, auditors, doctors, lawyers, IT professionals and management consultants.

Foreign-source income: frequently exempt from Portuguese tax where the income could be taxed in the source country under a tax treaty with Portugal (the “might be taxed” standard, not “was actually taxed”).

Capital gains on foreign assets: often exempt under the foreign-income exemption rules, depending on asset type and source country.

Why NHR was abolished

The Portuguese government’s Mais Habitação (More Housing) package of late 2023 abolished the NHR regime as part of measures to address housing affordability concerns. Critics argued that NHR was disproportionately benefiting high-income foreign residents and contributing to property price inflation in Lisbon, Porto and coastal areas.

What replaced it: IFICI (2024 onwards)

The IFICI (Incentivo Fiscal à Investigação Científica e Inovação) regime retains the 20% flat rate and 10-year duration but restricts eligibility to:

• Researchers and academics employed by Portuguese research institutions or companies with qualifying R&D activities
• Professionals employed by Portuguese-certified startups (under the Startup Portugal certification programme)
• Specific technology and innovation roles defined by ministerial regulation

General entrepreneurs, retirees, passive investors and most professional service providers do not qualify for IFICI. This represents a fundamental narrowing of the regime compared to NHR.

Current position for Spanish nationals

A Spanish national who established NHR status before 31 December 2023 retains their remaining years of NHR benefit. New applications under NHR are no longer accepted. Spanish nationals considering Portugal in 2026 must assess either IFICI eligibility (narrow) or standard Portuguese residency (progressive rates to 48%) against the Spain-Portugal double tax treaty framework.

Related terms: Tax Residency | Exit Tax Spain

Related service: International Tax Advisory