Portugal’s New Tax Regime for Highly Qualified Professionals
NHR 2.0, officially named the Tax Incentive for Scientific Research and Innovation (IFICI), is Portugal’s revamped tax regime designed to deliver substantial savings for highly qualified professionals. Replacing the long-standing Non-Habitual Resident (NHR) program after 15 years, this new framework aims to attract top talent, support the growth of Portuguese companies, and position Portugal as a leading hub for scientific research and innovation in Europe.
Why the Buzz Around NHR 2.0?
Ever since the concept was announced in October 2023, NHR 2.0 has been a hot topic among global investors. The recently published IFICI Ordinance (Ordinance No. 352/2024/1) outlines the program’s key regulations, including eligibility requirements, the application process, and critical deadlines.
Key Tax Benefits for New Residents
Much like its predecessor, NHR 2.0 offers a 20% flat tax rate on qualifying income for up to 10 years.
While Portugal’s residency-based tax system typically taxes residents on their worldwide income, NHR 2.0 introduces notable exemptions for certain types of foreign-sourced income, such as:
Dividends
Interest
Royalties
Capital Gains (on movable property/financial assets)
Rental Income
However, there are specific conditions:
Foreign income is only exempt if it’s taxed in the source country under an applicable Double Taxation Agreement (DTA) and isn’t classified as Portuguese-sourced income under Portuguese tax law.
Income tied to activities or assets with substantial links to Portugal may still be considered Portuguese-sourced and taxed accordingly.
Notably, while foreign-sourced capital gains on financial assets remain tax-free, pension income no longer qualifies for special treatment under NHR 2.0. It’s now taxed at progressive rates ranging from 14.5% to 53%. Additionally, income from jurisdictions on Portugal’s blacklist is subject to an aggravated tax rate of 35%.
Who’s Eligible?
To qualify for NHR 2.0, you must:
Be a new tax resident in Portugal (i.e., you haven’t been a resident in the past five years).
Earn income from activities considered strategically important to the Portuguese economy.
Work in a qualifying profession for a company that meets NHR 2.0’s eligibility criteria.
Keep in mind:
The regime can only be used once.
If you’ve already benefited from the original NHR or Portugal’s Return Program, you’re not eligible.
To maintain your status, you’ll need to continue earning income from qualifying activities every year.
Highly Qualified Professions Include:
General Managers and Executive Managers
Directors of Administrative and Commercial Services
Directors of Production and Specialized Services (excluding code 1349)
Specialists in Physical Sciences, Mathematics, Engineering, and Related Fields (excluding code 216)
Industrial Product or Equipment Designers
Doctors
Higher Education Lecturers
ICT (Information and Communication Technology) Specialists
Qualification Requirements:
A minimum of Level 6 on the European Qualifications Framework (EQF) (equivalent to a bachelor’s degree) plus three years of professional experience.
If you hold Level 8 (PhD/Doctorate), the professional experience requirement is waived.
Additionally, activities related to innovation or R&D may qualify, subject to approval by the relevant authorities. Directors and managers of companies benefiting from Portugal’s Tax Regime for Investment Promotion (RFAI) are also eligible.
Eligible Companies
Your employer must be an eligible company, such as:
Recognized technological and innovation centers
Certified startups
Companies benefiting from investment incentives like RFAI
The company’s primary activity must fall under one of these Portuguese CAE codes:
Extractive Industries (Divisions 05–09)
Manufacturing Industries (Divisions 10–33)
Information & Communication Activities (Divisions 58–63)
R&D in Physical and Natural Sciences (Group 721)
Higher Education (Subclass 85420)
Human Health Activities (Subclasses 86100–86904)
For service and export-oriented companies, at least 50% of turnover must come from exports to demonstrate their contribution to Portugal’s trade growth.
Considering Starting Your Own Company?If you’re thinking of setting up a startup or subsidiary in Portugal to benefit from NHR 2.0, both you and the company must meet the program’s eligibility criteria. This route can be effective for tax optimization but requires careful planning, considering potential administrative burdens, corporate tax obligations, and VAT registration.
How to Apply
To enroll, submit your application to the relevant Portuguese authority for your profession, such as the:
Portuguese Tax Authority
Startup Portugal
AICEP (Portugal’s Trade & Investment Agency)
IAPMEI (Agency for Competitiveness and Innovation)
Required Documents:
Proof of residency
Identification documents
Professional qualifications
Employment contract or offer letter
Proof of income from eligible activities
Deadlines:
Submit your application by January 15 of the year following your residency in Portugal.
If you became a tax resident in 2024, you have until March 15, 2025 to apply.
Since NHR 2.0 is still in its early stages, expect potential updates as the program evolves. We’ll continue to monitor developments, so stay tuned to B-Magazine for the latest insights.
Final Thoughts
Offering 10 years of special tax incentives, NHR 2.0 presents a unique opportunity for expats and investors aiming for long-term tax efficiency in Europe. While it comes with more stringent eligibility criteria compared to the original NHR, it reflects Portugal’s strategic push to attract global talent and boost innovation in key sectors like IT, Manufacturing, and R&D.
When combined with Portugal’s diverse residency options, NHR 2.0 solidifies the country’s status as a top destination for tax optimization and wealth preservation in Europe.
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Disclaimer: This article is for informational purposes only. We strongly recommend consulting with a legal or tax professional for personalized advice and to ensure full compliance with all requirements.
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