End of Portugal's NHR: what the new IFICI gives (and takes)
The NHR ended and the IFICI replaced it with a 20% rate and exemption on foreign income — but left pensions and retirees out. For whom does it still pay?
For over a decade, Portugal had a simple, powerful argument to attract newcomers: the Non-Habitual Resident (NHR) regime. Retirees saw their pension taxed at a low rate or exempt; qualified professionals paid 20% on Portuguese income; and much foreign income was exempt. It was the engine of an entire migration.
That regime is gone. The 2024 State Budget repealed the NHR, which stopped accepting new applications. In its place, Portugal created the IFICI — Tax Incentive for Scientific Research and Innovation, nicknamed “NHR 2.0”. And although the nickname suggests continuity, the change has a consequence that reshapes many people’s decision: the new regime left retirees out.
This article explains what the IFICI keeps, what it abandoned, for whom it still pays — and where, honestly, another jurisdiction has come to serve better.
The NHR is gone, but not for everyone
First, a clarification that avoids panic. Anyone already registered under the NHR keeps the right to apply it until the end of the original ten-year period. The repeal affects new applications: since 1 January 2024, the classic NHR accepts no new entrants.
If you are already an NHR, your regime continues. If you were thinking of obtaining it now, it no longer exists — what exists is the IFICI, with different rules.
What the IFICI offers
The IFICI took effect on 1 January 2024, but its practical regulation was only published at the end of December 2024 — which, in practice, delayed the regime’s operation. Its benefits, for those who qualify:
- A 20% IRS rate on net employment and self-employment income from a Portuguese source, when tied to eligible activities — instead of the progressive rates, which reach 48% plus a surcharge (up to 53%).
- Exemption on most foreign-source income — employment, interest, dividends, rental income and capital gains — generally with progression.
- A ten-year duration.
So far, it looks like the NHR. The difference is in what was left out — and in who can enter.
What the IFICI took away
Two exclusions change the calculation decisively.
Pensions are out. Unlike the NHR, which gave favourable treatment to foreign pensions, the IFICI grants no specific benefit to pensions. For the retiree who saw Portugal as a tax-efficient destination, the main draw disappeared.
Income from tax havens is out. Income from jurisdictions on Portugal’s tax-haven list does not enjoy the exemption.
And there is a structural change: the IFICI is activity-based. It is not enough to be a generic qualified professional — you must carry out an eligible activity, tied to research, technological innovation, exporting sectors or management roles in certain companies. The NHR was broad; the IFICI is selective. It is also a once-in-a-lifetime option: anyone who already used the NHR or equivalent regimes cannot join.
Before and after, side by side
| Dimension | NHR (until 2023/transition) | IFICI (from 2024) |
|---|---|---|
| New applications | Closed | Open, but selective |
| Qualified Portuguese income | 20% | 20%, eligible activities only |
| Foreign income | Broad exemption | Exemption, except pensions and havens |
| Foreign pensions | Favourable treatment | No benefit |
| Eligibility | Broad | Restricted to specific activities |
| Application deadline | Until 31 March of the following year | Until 15 January of the following year |
The tight deadline and the regime’s “doors”
An operational detail that costs the benefit to anyone who ignores it: the IFICI application must be made by 15 January of the year following the one in which the person becomes a tax resident in Portugal — a much shorter deadline than the old NHR’s. For those who became resident in 2024, there was an exception, extended to 15 March 2025.
Beyond the deadline, the application may fall to different bodies depending on the activity. Choosing the wrong “door”, or failing to prove the eligible activity, delays or defeats the benefit.
A note on responsibility: the IFICI is set out in the Tax Benefits Statute and detailed in regulation, and the list of eligible activities, the competent bodies and the deadlines may be revised. The rules in this article reflect what was verified in the official Portuguese sources in July 2026. Actual eligibility must be confirmed case by case, and the choice between the IFICI and progressive taxation should be modelled with firm numbers before any move.
For whom it still pays — and honesty about who lost
It is worth being direct, because migration marketing rarely is.
The IFICI is still attractive for a specific profile: professionals and entrepreneurs carrying out eligible Portuguese-source activities, with meaningful foreign income that benefits from the exemption. For that profile, paying 20% on qualified Portuguese income, with exemption on much of what comes from abroad, remains a real advantage.
For the retiree, the picture changed. With pensions outside the benefit, the main reason many retirees chose Portugal has gone. In that scenario, it makes sense to compare, with numbers, other jurisdictions — including Uruguay, whose regime for attracting new residents offers years of exemption on foreign income under its own conditions, a thread that runs through Retirees in Uruguay. We do not claim Uruguay is better for everyone; we claim that, for anyone who chose Portugal for the pension, the comparison must be redone.
And there is the origin-country layer: moving to Portugal, to Uruguay or anywhere requires correctly formalising the exit from tax residence and understanding the difference between legal and tax residence, covered in Legal and tax residency in Uruguay. The destination’s benefit only materialises if the origin side is resolved.
Frequently asked questions
I am already an NHR. Do I lose the benefit?
No. Anyone already registered keeps the NHR until the end of the original ten years. The repeal affects only new applications.
Can I obtain the classic NHR today?
No. The NHR has accepted no new applications since 2024. What exists is the IFICI, with different rules.
I am a retiree. Does the IFICI help with my pension?
No. The IFICI grants no specific benefit to pensions — this is the main change from the NHR.
Does any qualified professional enter the IFICI?
No. You must carry out an eligible activity. The regime is selective, and joining is once in a lifetime.
How to verify for yourself
- Legal basis of the IFICI — the Tax Benefits Statute (Article 58-A) and the regulation, in the Diário da República.
- End of the NHR — the 2024 State Budget.
- Classification and application — Portugal’s Tax and Customs Authority and the competent bodies by activity.
If any point differs from the official source when you read it, the official source prevails.
Where to start
The end of the NHR did not close Portugal — but it rewrote who it works for. The IFICI is a good door for those in the right activities with foreign income to protect; it is a closed door for the retiree who counted on the pension benefit.
The right question is no longer “how do I get the NHR?” It is “given my profile, which destination and which regime serve me, and what must I resolve at home for it to work?”
That is what our work in tax residency and tax planning is about: comparing destinations honestly and modelling the effective rate before the move.
One conversation is enough to know whether Portugal is still your best door — or whether another has become it.
Informational content. It does not constitute legal, tax, accounting or investment advice. The rules cited were verified against the official sources indicated in July 2026 and may change. Eligibility and the choice between regimes depend on individual analysis, with impact modelling.