The Non Habitual Residence Scheme was closed at the end of 2023 and is now being replaced by the Fiscal Incentive for Scientific Research and Innovation (IFICI) Program.  It is still possible to take advantage of the NHR scheme if you meet certain conditions and the new scheme gives opportunities to encourage qualified individuals to move to Portugal. 

Who Can Take Advantage of the old NHR scheme?

If NHR status had been granted by the end of 2023 you will be able to take advantage of the NHR scheme for the full ten years.

Even if you arrive in Portugal after the scheme ended at the end of 2023 the NHR program may still be available if you meet the following criteria:

1. On December 31st, 2023, you met the conditions to qualify as tax resident in Portugal.
2. Become tax resident by the end of 2024, and one of the following eligible tests is met.
   1. Promise or work contract, promise or agreement of secondment was in place by  December 31st, 2023 and the duties are to be performed in Portugal; or,
   1. A lease agreement or other agreement granting the use or possession of real estate in Portugal was in place by October 10th, 2023; or
   1. Dependents enrolled in an educational establishment in Portuguese territory, completed by October 10th, 2023;
   1. Residence visa or residence permit valid by December 31st, 2023;
   1. Application for a residence visa or residence permit initiated by December 31st, 2023;
   1. Being a family member of the applicants in any of the situations above.

What is the new scheme replacing NHR?

The Fiscal Incentive for Scientific Research and Innovation (IFICI) Program was introduced for highly qualified professionals who are moving to Portugal. Your reason for relocation can be for both residence and employment purposes to be qualified for the new tax program.

Those who qualify will be subject to a 20% Personal Income Tax rate. It may be dependent or independent work-related income for a period of 10 years and it is not renewable.

What are the eligibility criteria for the IFICI scheme?

The IFICI focuses on attracting professionals in Higher Education & Research, Technology & Innovation Centres, Highly Qualified Professions, Jobs in Strategic Sectors (within organizations approved by IAPMEI or AICEP –  specific industries have not yet been identified), R&D Personnel, (eligible for the R&D tax incentive program (SIFIDE) in Portugal), Startups (Directors or employees of startups in Portugal who have been accredited and show a lot of development potential or have raised venture financing).

People who live in Azores & Madeira will be subject to local laws.

Professions Regarded as High Added Value

Some professions are considered as a high added value to Portugal. These professions mainly have economic and cultural worth. So, individuals who practice one of the professions listed below are given generous tax exemptions:

General Managers	Executive Managers	Administrative Managers
Commercial Managers	Production Managers	Specialized Services Managers
Hospitality, Restaurant, Retail, and Other Services Managers	Specialist Physicists, Mathematicians, Engineers, and related Technologists	Medicine Doctors
Dentists and Stomatologists	Teachers in University and Higher Education	ICT Technologists
Authors, Journalists, and Linguists	Creative and Performance Artists	Intermediate level Science and Engineering Technicians and Professionals
ICT Technicians	Market-oriented Farmers and qualified Agriculture and Animal Husbandry workers	Market-oriented Forestry, Fisheries, and Hunting qualified workers
Industry, Construction, and Handicraft qualified workers	Plant and Machine Operators and Assembly Workers

The professionals listed on the list above should hold at least a level 4 qualification under the European Qualifications Framework, or level 35 of the International Standard Classification of Education, or five years of duly proven professional experience.

What are the Tax Benefits of the New IFICI Program?

The main benefit of this new program is the 20% income tax rate on employment  You will also benefit from exemption from income tax on various foreign sources of income. 

Foreign income sources are as follows:

• Employment
• Independent work
• Capital investment income (interest or dividends)
• Royalties
• Capital gains 
• Real estate income or gains

Unlike the old NHR scheme, foreign pensions are not covered by this exemption and will be subject to taxation in Portugal at the normal progressive rates (14.5% to 53%).

What are the differences between the old NHR scheme and IFICI?

These are the differences in requirements:

Conditions	IFICI	NHR
Residency Requirement	Not tax resident in Portugal for the previous 5 years	Not tax resident in Portugal for the previous 5 years
Minimum Stay Requirement	There is no minimum stay requirement	There is no minimum stay requirement
Validity Period	10 years (non-renewable)	10 years

These are the differences in the tax treatment under the two schemes:

Types of Income	IFICI Tax Treatment	NHR Tax Treatment
Employment income (High-Value Added Activities)	Flat rate of 20% on eligible activities	Flat rate of 20% on eligible activities + eligible entities
Pension income	10% fixed rate	10%
Rental income & Royalties	There is an exemption (if it is taxable abroad under DTA or OECD Tax Model)	Exempt
Dividends & Interest	There is an exemption (depending on if it is taxable abroad under DTA or OECD Tax Model)	Exempt
Capital gains	There is an exemption (depending on if it is taxable abroad under DTA or OECD Tax Model). Gains from the sale of moveable assets are not generally exempt.	Exempt