Learn About NHR 2.0 Portugal

What is NHR 2.0 or IFICI?

NHR 2.0 (IFICI) is the restructured version of the original Non-Habitual Residency program. While it carries forward the 10-year tax benefit period, it introduces stricter eligibility requirements, focusing on industries and professions that contribute to Portugal’s innovation economy.

The goal is twofold:

1. To attract highly qualified researchers and professionals specifically in scientific research and innovation sectors.
2. To promote job creation in critical innovation-driven industries with stringent economic and professional criteria.

Professionals must work in certain fields that meet certain criteria and show that they directly contribute to Portugal's strategic innovation ecosystem.

What do I need to know about IFICI in Portugal?

10-Year Non-Renewable Tax Benefits

Qualified applicants enjoy a carefully structured 20% tax rate on specific professional income, with nuanced foreign income taxation rules.

Flat 20% Income Tax Rate

Portugal taxes income from highly specific eligible professions at a fixed 20% rate, which differs significantly from previous iterations:

• Applies only to professionals in certified innovation-focused roles
• Subject to progression rules
• Foreign income considered in marginal tax calculations Punitive 35% rate for income from tax havens

Foreign Income Tax Exemptions

Foreign income is subject to an "exemption with progression" mechanism:

• Some foreign-sourced income may be exempt.
• Exempt income is still considered for overall tax marginal rates.
• Pension income is completely excluded from tax benefits.
• Tax haven income is taxed at 35%.

Focus on Innovation and Research Ecosystem

The program prioritizes professionals in highly specific, high-value industries, targeting roles that demonstrate direct contribution to Portugal's strategic innovation development goals.

Restricted Entrepreneurial Flexibility

Compared to the previous regime, there are significantly fewer entrepreneurial options:

• It must be connected to entities with a substantial economic presence in Portugal.
• Excludes freelancers working for non-resident companies.
• Strict verification of professional qualifications and innovation contributions.

Who can apply for the IFICI?

To qualify for NHR 2.0 or IFICI, applicants must meet specific residency, professional, and activity-related criteria. Let’s break them down:

1. Residency Requirements

To apply for NHR 2.0:

• You must become a tax resident in Portugal (either as an EU citizen or a non-EU citizen), which is achieved by:
• Spending more than 183 days in Portugal in a calendar year, or
• Maintaining a permanent residence in the country by December 31 of the relevant year.
• In the five years prior to your application, you cannot have been considered a Portuguese tax resident.

2. Eligible professions

IFICI targets professionals working in highly specific, high-value innovation industries. Applicants must derive income from strictly defined categories:

A. Highly Specialized Innovation Industries

These include:

• Scientific Research and Innovation: Researchers and academics engaged in specific projects under Portugal's advanced R&D tax incentive programs.
• Technology and Innovation Centers: Professionals working in certified innovation entities.
• Industrial Companies: Businesses exporting at least 50% of their turnover.

B. Academic and Research Specializations

• Professors at Portuguese universities with specific research credentials.
• Researchers working in entities certified by the Foundation for Science and Technology (FCT) with proven innovation contributions.

C. Startup and Innovation Ecosystem

• Founders or employees of highly specific, certified Portuguese Startups. Startups must meet stringent criteria: active for less than 10 years, employing under 250 staff, and generating less than €50 million in turnover.

D. Regional Specific Innovation Zones

• Professionals working in designated innovation zones in Madeira or the Azores may qualify for additional specialized incentives.

⚠️ Ministerial decrees will update the definitive list of eligible professions. Applicants are advised to consult the Portuguese Tax Authority (AT) for the most current information.

3. Employment or business status

One of the current misunderstood aspects of NHR 2.0 is the employment requirement. The employment requirements are now much more restrictive:

• Mandatory connection to Portuguese economic entities with substantial innovation presence.
• Employment through certified innovation-focused companies.
• Strict verification of professional qualifications and direct contribution to Portugal's innovation ecosystem.
• Professionals and freelancers who work for non-resident companies without a Portuguese economic presence are excluded.

⚠️ With the assistance of a professional consultant, you may find some flexibility to fit your current employment situation. The opportunities for NHR 2.0 are broad enough to attract legitimate talent.

⚠️ Retirees are no longer eligible for NHR.

4. Income requirements

To maintain IFICI status, applicants must earn income from one of the eligible professions during each year of the 10-year benefit period.

How to apply for IFICI in Portugal?

Applying for NHR 2.0 or IFICI involves multiple steps. Here’s a simplified roadmap:

Step 1: Obtain your NIF (Taxpayer Number)

Before anything, you’ll need a Portuguese NIF (Número de Identificação Fiscal). Check here how to get a NIF in Portugal.

Step 2: Register as a Portuguese tax resident

Declare your tax residency by meeting the 183-day rule or registering a permanent residence in Portugal.

Step 3: Determine your eligibility

Verify that your profession and activities align precisely with the requirements of NHR 2.0.

Consultation with specialized tax advisors is strongly recommended due to the complex and restrictive nature of the new regime.

Step 4: Submit application to the competent authority

Prepare and submit all necessary documents, including the following, to the the assigned governmental Authority. Documents are:

• Proof of tax residency.
• Extensive documentation of professional qualifications.
• Certification from innovation-focused entities.
• Proof of connection to Portuguese economic innovation ecosystem.

Submittion must be made, according to your eligibility criteria, to one of the following:

• Tax Authority (Autoridade Tributária e Aduaneira)
• Foundation for Science and Technology (Fundação para a Ciência e Tecnologia, I.P.)
• Portuguese Agency for Investment and External Trade (Agência para o Investimento e Comércio Externo de Portugal, or AICEP, E.P.E.)
• IAPMEI – Agency for Competitiveness and Innovation
• National Innovation Agency (Agência Nacional de Inovação, S.A.)
• Startup Portugal – the Portuguese Association for the Promotion of Entrepreneurship

Step 5: Await approval

Once approved, you will formally join the IFICI regime and start taking advantage of the tax benefits.

The approval process is significantly more complex, with thorough verification of professional credentials and innovation potential.

How much does it cost to apply for NHR 2.0 as an expat?

Officially, nothing!

However, as with most tax obligations, you might feel more comfortable hiring an accountant or a tax consultation expert to guide you through—or completely handle—this situation for you. So keep that in mind when planning for IFICI in Portugal.

However, the financial implications are substantial:

• Recommended professional consultation: €200 - €2,000
• Potential additional documentation preparation costs.
• Comprehensive tax planning consultation.
• Verification of professional eligibility.

Should I hire a tax consultant to apply for IFICI in Portugal as an expat?

If you are not familiar with Portuguese-IRS and are not a Portuguese speaker, we strongly encourage you to hire a professional! You'll have:

• Deep understanding of innovation sector criteria.
• Expertise in Portuguese tax law.
• Ability to navigate complex documentation requirements.
• Specialized knowledge of innovation ecosystem qualifications.

Portugal conducts its tributary service in Portuguese, which can pose a challenge if you are not a native speaker. Besides that, Portuguese IRS rules may seem hard to navigate if you are not fully integrated into the system and its laws and rules.

So, to avoid any fines and make the process easier, consider hiring an accountant or a tax consultant. Here at AnchorLess we have a tax consultation service where a Portuguese bar-associated tax lawyer will guide you through the dos and don'ts of your tax and IRS obligations.

Is IFICI Portugal worth it?

It depends on your situation!

For those outside the eligible fields, or with an income below 28,000 euros per year, it may be more advantageous to use the Youth IRS, a progressive discount program for tax residents in Portugal with 35 years or less. The Youth IRS program spans 10 years, beginning with a substantial 100% discount in the first year of the Portuguese IRS declaration and gradually decreasing to 25% in the 10th year.

For professionals in eligible fields and not eligigle for the Youth IRS, NHR 2.0 offers a pathway to significant tax savings and the chance to live in one of Europe’s most desirable countries. With its focus on innovation and research, the program is an attractive option for those looking to build a future in technology, science, or entrepreneurship.

NHR 2.0 or IFICI is more than a tax scheme—it’s an opportunity to integrate into Portugal’s growing innovation ecosystem.

Ideal Candidates:

• Highly qualified researchers.
• PhD holders in innovation sectors.
• Professionals in cutting-edge technology fields.
• Founders of innovative startups.
• Experts in strategic innovation areas.

Less Attractive For:

• General expatriates.
• Freelancers.
• Professionals outside specified innovation sectors.
• Retirees (explicitly excluded).

Keep in mind:

⚠️ The regime is designed to attract specific high-value professionals.

⚠️ Strict annual compliance requirements.

⚠️ Continuous verification of professional status.

⚠️ Potential for retrospective tax adjustments.