Portugal Tax Residency: NHR is Gone — Here Is What Replaced It

For most of the 2010s and early 2020s, Portugal's Non-Habitual Resident (NHR) regime was one of Europe's most attractive tax relocations for Spanish professionals, entrepreneurs and retirees. Foreign pension income was taxed at 0% (later changed to 10%). Professional income from 'high value-added activities' was taxed at a flat 20%. Capital gains on foreign assets were often exempt. Then, on 1 January 2024, the NHR regime was abolished. What replaced it — the IFICI regime (Incentive for Scientific Research and Innovation) — is substantially narrower, targeting researchers, scientists, specific technology roles and companies certified as startups. Most Spanish nationals who would previously have qualified for NHR no longer qualify for IFICI. The landscape has fundamentally changed, and much of the information circulating online about 'Portugal NHR' is outdated.

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How we work

From first contact to case completion

  1. Eligibility Assessment

    We determine whether you qualify for IFICI based on your professional profile, employer and income sources. For those who do not qualify for IFICI, we analyse the standard Portuguese tax position and the Spain-Portugal treaty framework.

  2. Exit Tax and Treaty Analysis

    We quantify the Spanish exit tax under Article 95 bis LIRPF, analyse the Spain-Portugal Double Tax Convention (signed 1968, substantially updated), and identify the income categories that benefit from treaty protection in Portugal.

  3. Implementation and Registration

    If you proceed with Portuguese residency, we coordinate with Portuguese advisers on NIF registration, tax residence application, AT (Portuguese Tax and Customs Authority) registration, Portuguese Social Security and the Form 030 deregistration in Spain.

  4. Ongoing Monitoring

    We monitor your position in both countries during the transition period, manage any AEAT information requests and coordinate the annual IRPF non-resident filing for Spanish-source income.

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The problem

For most of the 2010s and early 2020s, Portugal's Non-Habitual Resident (NHR) regime was one of Europe's most attractive tax relocations for Spanish professionals, entrepreneurs and retirees. Foreign pension income was taxed at 0% (later changed to 10%). Professional income from 'high value-added activities' was taxed at a flat 20%. Capital gains on foreign assets were often exempt. Then, on 1 January 2024, the NHR regime was abolished. What replaced it — the IFICI regime (Incentive for Scientific Research and Innovation) — is substantially narrower, targeting researchers, scientists, specific technology roles and companies certified as startups. Most Spanish nationals who would previously have qualified for NHR no longer qualify for IFICI. The landscape has fundamentally changed, and much of the information circulating online about 'Portugal NHR' is outdated.

Our solution

BMC analyses your eligibility for the current IFICI regime and, where you do not qualify, identifies the alternative structuring options: standard Portuguese tax residency combined with exit-tax planning in Spain, the Spain-Portugal double tax treaty position, or other jurisdictions that remain attractive for your specific income profile.

Process

How we do it

1

Eligibility Assessment

We determine whether you qualify for IFICI based on your professional profile, employer and income sources. For those who do not qualify for IFICI, we analyse the standard Portuguese tax position and the Spain-Portugal treaty framework.

2

Exit Tax and Treaty Analysis

We quantify the Spanish exit tax under Article 95 bis LIRPF, analyse the Spain-Portugal Double Tax Convention (signed 1968, substantially updated), and identify the income categories that benefit from treaty protection in Portugal.

3

Implementation and Registration

If you proceed with Portuguese residency, we coordinate with Portuguese advisers on NIF registration, tax residence application, AT (Portuguese Tax and Customs Authority) registration, Portuguese Social Security and the Form 030 deregistration in Spain.

4

Ongoing Monitoring

We monitor your position in both countries during the transition period, manage any AEAT information requests and coordinate the annual IRPF non-resident filing for Spanish-source income.

20%
IFICI flat rate on qualifying income for eligible professionals — applicable for 10 years
2024
Year the original NHR regime was abolished and replaced by the narrower IFICI regime
10 years
Duration of both the original NHR and the current IFICI tax benefit period

We had planned a Portugal relocation based on NHR eligibility. BMC's analysis came a month before we would have committed to the move and confirmed we did not qualify for IFICI. We reallocated the planning effort to an alternative structure that was available. It saved us a significant amount of wasted relocation cost.

Managing Partner Professional services firm (Madrid)

Portugal’s Non-Habitual Resident (NHR) regime attracted hundreds of thousands of foreign residents — including a significant number of Spanish nationals — between its introduction in 2009 and its abolition on 1 January 2024. The combination of a 20% flat rate on qualifying income, a 10% rate on foreign pensions, and exemption of foreign capital gains in many circumstances made it one of Europe’s most competitive personal tax regimes. That regime no longer exists for new applicants. Understanding what replaced it — and what does not — is the starting point for any 2026 analysis of Portuguese tax residency.

The original NHR regime (2009–2023): what it offered

NHR provided qualifying Portuguese tax residents with a 10-year beneficial period:

  • Foreign pension income: originally 0%, changed to 10% from 2020 onwards
  • Income from ‘high value-added activities’ (including a broad list of professions): 20% flat rate on Portuguese-source income; foreign-source equivalent income often exempt
  • Foreign capital gains: exempt from Portuguese tax in many circumstances, depending on the source country and the nature of the asset
  • Foreign dividend and interest income: frequently exempt or reduced rate

The “high value-added activities” list was broad enough to include most professionals: architects, engineers, auditors, medical practitioners, management consultants, IT professionals, investors, and others. This breadth made NHR accessible to a wide range of Spanish nationals.

The IFICI regime (2024 onwards): who qualifies

The IFICI regime retains the 20% flat rate and the 10-year duration but restricts eligibility to:

  • Researchers employed by Portuguese research centres, universities or companies with R&D tax credits
  • Professionals working for Portuguese-registered startups (certified under the Startup Portugal programme)
  • Qualified professionals in specific technology and innovation roles as defined by ministerial regulation
  • Certain academic and scientific positions

The key exclusion: general entrepreneurs, self-employed professionals, passive investors, retirees and most service professionals do not qualify for IFICI. A Spanish lawyer, consultant, financial adviser or business owner who could have obtained NHR in 2022 almost certainly cannot obtain IFICI in 2026 unless they are employed by a qualifying startup or research institution.

Standard Portuguese tax residency without NHR or IFICI

For Spanish nationals who do not qualify for IFICI, standard Portuguese tax residency offers:

  • Progressive tax rates from 14.5% to 48% on earned income (plus a solidarity surcharge for income above €80,000)
  • A 28% final rate on Portuguese-source investment income (dividends, interest, capital gains on Portuguese assets)
  • The Spain-Portugal treaty framework, which can reduce withholding on Spanish-source income
  • No wealth tax equivalent to Spain’s Impuesto sobre el Patrimonio

Whether standard Portuguese residency makes sense compared to remaining in Spain depends entirely on the individual’s income composition, asset structure and lifestyle. BMC conducts this analysis quantitatively before any recommendation is made.

What comes next

FAQ

Frequently asked questions

Portugal's Non-Habitual Resident (NHR) regime was introduced in 2009 and provided qualifying residents with 10 years of beneficial tax treatment: foreign pension income taxed at 0% (later 10%), income from 'high value-added activities' at a flat 20%, and frequent exemption of foreign capital gains. On 1 January 2024, the Portuguese government abolished the NHR regime as part of the Mais Habitação (More Housing) package, citing concerns about its impact on housing costs. The final applications under NHR were accepted for those who established Portuguese residency before 31 December 2023.
The IFICI (Incentivo Fiscal à Investigação Científica e Inovação) regime applies a flat 20% tax rate on Portuguese-source income for a 10-year period. Unlike NHR, IFICI is targeted at specific professional categories: researchers and academics employed by Portuguese research institutions; professionals in technology, R&D, product design and data science employed by companies certified as 'startups' under Portuguese law; and qualified individuals in certain other innovation-related roles. General entrepreneurs, retirees, passive investors and most professional service providers do not qualify.
Yes, but the benefit is more limited and requires more careful structuring. Under standard Portuguese tax residency, personal income is taxed at progressive rates up to 48% (plus solidarity surcharge to 53% above €80,000). However: Portugal does not tax foreign-source capital gains on assets held by individuals outside Portugal, under some circumstances; the Spain-Portugal double tax treaty allocates certain categories of income exclusively to Portugal; and Portugal's effective rates on dividend and investment income may be lower than Spain's depending on the individual's profile. BMC analyses each case to determine whether a Portuguese residency makes sense without IFICI.
The Spain-Portugal Double Tax Convention (signed 1968, updated through protocols) follows the OECD Model. Key provisions: employment income is taxable in the country where the work is performed; dividends are taxed at source at a maximum of 10% (reduced from 15% by protocol); interest at 15%; royalties at 10%; capital gains on shares are generally taxable only in the residence country (Portugal), which can be advantageous for a Portuguese resident with Spanish investment portfolios; pensions are taxable only in the residence country, which was the basis of the NHR pension planning (now less favourable since Portugal taxes foreign pensions at 10% even under IFICI).
Yes. Article 95 bis LIRPF applies when a taxpayer ceases Spanish tax residency and holds qualifying assets (shareholdings above 25% or €1M, or total unrealised gains above €4M). Portugal is an EU member state, so the exit tax can be deferred in five annual instalments without providing guarantees for gains below €10M. The deferrals must be monitored annually and may become immediately due if the assets are sold or the taxpayer ceases to be an EU resident. BMC quantifies the exit tax exposure before any residency decision.
Portugal shares a border with Spain and is subject to EU automatic exchange of tax information (DAC). The AEAT has access to Portuguese tax registration data, financial account information and real estate records. The standard AEAT challenge criteria apply: where the taxpayer's family, business interests and daily patterns remain centred in Spain, the AEAT can contest the residency change. Portugal is a smaller territory than Andorra and Spanish nationals with strong Spanish ties who 'move' to Portugal while maintaining their Spanish lifestyle are exposed to the same challenges.
Yes. In the EU: Italy has the 'forfettario' flat-tax regime for high-net-worth individuals (€200,000/year flat tax on foreign income); Cyprus has a 60-day residency option for EU residents with low income tax rates; Malta has a non-domicile regime with beneficial treatment of foreign income. Outside the EU but in the EEA: Norway has no wealth tax equivalent to Spain's. Switzerland has various cantonal lump-sum tax options. BMC analyses each client's income profile, asset position and lifestyle requirements to identify the most appropriate jurisdiction.
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Frequently asked questions

Questions about Portugal NHR Regime: What Spanish Nationals Need to Know in 2026

Portugal's Non-Habitual Resident (NHR) regime was introduced in 2009 and provided qualifying residents with 10 years of beneficial tax treatment: foreign pension income taxed at 0% (later 10%), income from 'high value-added activities' at a flat 20%, and frequent exemption of foreign capital gains. On 1 January 2024, the Portuguese government abolished the NHR regime as part of the Mais Habitação (More Housing) package, citing concerns about its impact on housing costs. The final applications under NHR were accepted for those who established Portuguese residency before 31 December 2023.
The IFICI (Incentivo Fiscal à Investigação Científica e Inovação) regime applies a flat 20% tax rate on Portuguese-source income for a 10-year period. Unlike NHR, IFICI is targeted at specific professional categories: researchers and academics employed by Portuguese research institutions; professionals in technology, R&D, product design and data science employed by companies certified as 'startups' under Portuguese law; and qualified individuals in certain other innovation-related roles. General entrepreneurs, retirees, passive investors and most professional service providers do not qualify.
Yes, but the benefit is more limited and requires more careful structuring. Under standard Portuguese tax residency, personal income is taxed at progressive rates up to 48% (plus solidarity surcharge to 53% above €80,000). However: Portugal does not tax foreign-source capital gains on assets held by individuals outside Portugal, under some circumstances; the Spain-Portugal double tax treaty allocates certain categories of income exclusively to Portugal; and Portugal's effective rates on dividend and investment income may be lower than Spain's depending on the individual's profile. BMC analyses each case to determine whether a Portuguese residency makes sense without IFICI.
The Spain-Portugal Double Tax Convention (signed 1968, updated through protocols) follows the OECD Model. Key provisions: employment income is taxable in the country where the work is performed; dividends are taxed at source at a maximum of 10% (reduced from 15% by protocol); interest at 15%; royalties at 10%; capital gains on shares are generally taxable only in the residence country (Portugal), which can be advantageous for a Portuguese resident with Spanish investment portfolios; pensions are taxable only in the residence country, which was the basis of the NHR pension planning (now less favourable since Portugal taxes foreign pensions at 10% even under IFICI).
Yes. Article 95 bis LIRPF applies when a taxpayer ceases Spanish tax residency and holds qualifying assets (shareholdings above 25% or €1M, or total unrealised gains above €4M). Portugal is an EU member state, so the exit tax can be deferred in five annual instalments without providing guarantees for gains below €10M. The deferrals must be monitored annually and may become immediately due if the assets are sold or the taxpayer ceases to be an EU resident. BMC quantifies the exit tax exposure before any residency decision.
Portugal shares a border with Spain and is subject to EU automatic exchange of tax information (DAC). The AEAT has access to Portuguese tax registration data, financial account information and real estate records. The standard AEAT challenge criteria apply: where the taxpayer's family, business interests and daily patterns remain centred in Spain, the AEAT can contest the residency change. Portugal is a smaller territory than Andorra and Spanish nationals with strong Spanish ties who 'move' to Portugal while maintaining their Spanish lifestyle are exposed to the same challenges.
Yes. In the EU: Italy has the 'forfettario' flat-tax regime for high-net-worth individuals (€200,000/year flat tax on foreign income); Cyprus has a 60-day residency option for EU residents with low income tax rates; Malta has a non-domicile regime with beneficial treatment of foreign income. Outside the EU but in the EEA: Norway has no wealth tax equivalent to Spain's. Switzerland has various cantonal lump-sum tax options. BMC analyses each client's income profile, asset position and lifestyle requirements to identify the most appropriate jurisdiction.
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