If you’ve been researching a move to Portugal, you’ve almost certainly come across NHR — the Non-Habitual Resident tax regime that made Portugal highly attractive to expats from 2009 onwards. The short version: NHR ended for new applicants in 2024 and has been replaced by a more targeted scheme called IFICI. Most relocating families are not significantly affected by this change, but it’s worth understanding clearly.
This guide explains what NHR was, what replaced it, who IFICI applies to, and what the tax situation looks like in 2026 for families moving to Portugal on a D7 or Digital Nomad visa.
⚠️ Tax rules change frequently. This guide provides general orientation only — not tax advice. Always consult a licensed Portuguese tax adviser before making decisions based on your specific income and circumstances.
What Was the NHR Regime?
Portugal’s Non-Habitual Resident (NHR) regime, introduced in 2009, offered significant tax advantages to new Portuguese residents for a 10-year period. The main benefits were:
- A flat 20% income tax rate on qualifying Portuguese-source employment and self-employment income
- Exemption from Portuguese tax on most foreign-source income (pensions, dividends, rental income, capital gains) — provided it was taxable in the source country under a double tax treaty
- A flat 10% rate on foreign pension income
For retirees drawing foreign pensions, remote workers earning abroad, and families relocating with foreign-source income, NHR was extremely valuable. It made Portugal’s tax position one of the most competitive in Europe for new arrivals.
The regime closed to new applicants at the end of 2023, with a transitional period running until March 2025. Anyone who registered under NHR before the cutoff continues to benefit from the full 10-year period — so families already in Portugal under NHR are not affected.
What Replaced NHR: The IFICI Regime (NHR 2.0)
IFICI — the Incentivo Fiscal à Investigação Científica e Inovação (Tax Incentive for Scientific Research and Innovation) — replaced NHR from January 2025. It’s also referred to as NHR 2.0, though it’s significantly more restricted than its predecessor.
What IFICI offers:
- A flat 20% personal income tax rate on qualifying Portuguese-source employment or self-employment income
- Exemption on most foreign-source income (dividends, interest, capital gains, rental income outside Portugal)
- Valid for 10 years from becoming a Portuguese tax resident
- Non-renewable
Who qualifies for IFICI:
This is where IFICI differs significantly from NHR. Eligibility is limited to highly qualified professionals working in specific sectors:
- Higher education teaching and scientific research
- Employees or directors of government-certified start-up companies
- R&D personnel in companies eligible for Portugal’s SIFIDE tax incentive
- Professionals in companies that export more than 50% of their revenue
- Roles connected to large productive investment projects (over €3 million)
You must also hold at least a bachelor’s degree (EQF Level 6) or have 3+ years of relevant professional experience, and not have been a Portuguese tax resident in the previous 5 years.
Who IFICI does NOT apply to:
- Retirees drawing foreign pensions — the 10% pension rate that made NHR so valuable to retirees is gone
- Generic remote workers — simply working remotely for a foreign company is not sufficient; your employer or your own company must meet specific criteria
- Passive income earners without qualifying employment
What This Means for Families on D7 and D8 Visas
This is the practical question for most relocating families.
D7 families (passive income, pensions, remote work):
If you’re relocating on a D7 visa — living on savings, investments, rental income, pension, or remote work — and you don’t qualify for IFICI, you’ll be taxed under Portugal’s standard progressive income tax rates. These range from 13% to 48%, with solidarity surcharges above €80,000.
This is a meaningful change from the NHR era. For families who planned to use NHR to shelter foreign pension or investment income, the calculation has shifted considerably. The lifestyle case for Portugal remains strong — the tax case for non-qualifying arrivals is less automatic than it was.
D8 families (Digital Nomad Visa, tech/innovation workers):
Remote workers in technology, engineering, research, and innovation sectors may qualify for IFICI — but only if their employer or their own company meets the structural criteria (certified startup, majority export revenue, R&D centre, etc.). Standard employer-of-record (EOR) arrangements typically do not qualify. Verify with a tax adviser before assuming you qualify.
Good news for D7 families: Portugal’s standard tax system still has meaningful features — a double tax treaty network with over 80 countries prevents double taxation on most income types, and the cost of living advantage means that even under standard rates, the overall financial picture for many families is still favourable compared to their home country.
Portugal’s Standard Income Tax Rates (2026)
For families who don’t qualify for IFICI, these are the progressive rates:
| Annual income | Rate |
|---|---|
| Up to €7,703 | 13% |
| €7,703–€11,623 | 18% |
| €11,623–€16,472 | 23% |
| €16,472–€21,321 | 26% |
| €21,321–€27,146 | 32.75% |
| €27,146–€39,791 | 37% |
| €39,791–€51,997 | 43.5% |
| €51,997–€80,000 | 45% |
| Above €80,000 | 48% |
Investment income (dividends, interest, capital gains) is generally taxed at a flat 28%. Rental income outside Portugal is typically exempt under double tax treaty provisions if taxable in the source country.
Families should factor these rates into their budget modelling — particularly families with significant investment income or foreign pensions who had previously planned around NHR.
What to Do If You’re Planning a Move in 2026
- Engage a Portuguese tax adviser before moving — not after. The tax position has become more complex since NHR ended, and your specific income composition matters significantly.
- Check IFICI eligibility specifically — don’t assume you qualify or don’t qualify without professional assessment. The sector and employer criteria are specific.
- Model your budget under standard rates — assume you don’t qualify for IFICI as a planning baseline. If you do qualify, it’s a bonus; if you don’t, you’re not caught short.
- Understand double tax treaties — Portugal has treaties with over 80 countries that prevent double taxation. Your adviser will map your income against the relevant treaty.
Tax rules change frequently and this article is for general orientation only. Nothing here constitutes tax advice. Always consult a licensed Portuguese tax professional before making decisions based on your specific financial situation.
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