Understanding the Benefits of the Old NHR in Portugal
In short
The NHR program's transformation in 2024 reflects Portugal's changing priorities and challenges in the global economic landscape.
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Portugal's Non-Habitual Resident (NHR) program was a cornerstone in attracting global talent and investment.
However, as 2024 and 2025 arrived, this program went through significant changes.
The termination of this previous NHR regime is driven by a strategic shift in Portugal's economic focus, targeting more specific sectors like scientific research and innovation.
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The previous NHR program officially ended on December 31, 2023, marking the closure of a chapter that has significantly influenced Portugal's expatriate and professional landscape.
Right now Portugal offers the NHR 2.0: IFICI, available since 2025.
What is the NHR?
The NHR program, introduced by the Portuguese government in 2009, and finished in 2024, was designed as an attractive tax regime for wealthy foreigners and investors. It aimed to rejuvenate Portugal's economy by enticing foreign investments and reducing unemployment, particularly in the wake of the global financial crisis.
The NHR offered substantial tax breaks, contributing to revitalizing industries like real estate and technology. It has been a significant factor in placing Portugal as a prime destination for foreign investors and businesses.
Under the previous NHR regime, non-habitual residents enjoyed a flat income tax rate of 20% on Portuguese-sourced income and were exempt from taxation on foreign-sourced income, provided it could be taxed in the country of source under an applicable Double Tax Treaty. This regime made Portugal an attractive destination for retirees, professionals, and investors, thanks to its favorable tax conditions compared to many other countries.
Can I Still Apply for NHR in 2025?
Yes and no!
Yes, you can apply if you fit the criteria from the new NHR: the IFICI regime.
And no, you can't apply under the rules of this previous one. For example, retirees no longer qualify for it.
How was the Requirements for Applying for NHR in 2023?
To be eligible for the Non-Habitual Resident (NHR) status in Portugal in 2023, applicants should have met several important criteria. These were divided into residency and tax requirements:
Residency Requirements
- Stay Duration: Applicants should have resided in Portugal for more than 183 days per year. This establishes their status as a tax resident in the country.
- Property Ownership: Alternatively, owning property in Portugal can also satisfy the residency requirement. You will need a Portuguese bank account for this.
- Residence Permit for Non-EU/EEA/Swiss Citizens: Non-EU, EEA, or Swiss citizens need a residence permit, obtainable through various visas such as the Golden Visa Program or passive income routes.
- EU/EEA/Swiss Citizens: These citizens can register for residency at their region’s city hall with a passport and EHIC Card.
Tax Requirements
- Portuguese Tax Number (NIF): Applicants must obtain a NIF, a nine-digit tax identifier in Portugal.
- Proof of Residence: Documents such as utility bills, rental contracts, residency certificates, visas, and passports were necessary to obtain a NIF and establish tax residency.
- Previous Tax Residency: Applicants couldn't been tax residents in Portugal for the five years preceding their application. This ensures the program targets new residents.
Additional Steps
- Register as Tax Resident in Portugal: The first step towards applying for NHR status involved registering as a tax resident, which includes having a NIF registered to a Portuguese address.
- Proof of Habitual Abode: Applicants need to provide proof of habitual residence in Portugal. This could have been a tenancy agreement for at least 12 months or property deeds if the applicant has purchased property.
- Application Deadline: The deadline for NHR applications was March 31 of the year following the year in which the applicant becomes a tax resident. For instance, if tax residency was established in December 2023, the NHR application deadline would have been March 31, 2024.
- Application Process: Register as a resident, apply for a NIF, register with the online Finanças portal, and then apply for NHR status through the portal.
How was the Application for NHR Status via the Finanças Portal
- Log in with NIF and Password: Access the Finanças portal using your NIF and the password sent to you.
- Navigate to Application Section: Go to the “Entregar Pedido > Inscrição Residente Não Habitual” section.
- Fill Required Fields: Provide details like the year of registration and country of foreign residence.
- Declaration: Confirm that you have not been a resident in Portugal for the five years prior to the year of starting your status as a non-habitual resident.
When you followed the steps carefully and ensured all documentation and registrations were correctly completed within the deadlines was crucial to successfully apply for NHR status in Portugal during its validity.
In 2024, Was It Be Possible to Apply for the Old NHR?
During 2024, the opportunity to apply for the old Non-Habitual Resident (NHR) regime in Portugal was no longer generally available. The previous NHR program, was known for several years, concluded on December 31, 2023. This means that for new tax residents, you can only access the IFICI regime, if you meet the criteria.
Key Changes in NHR
End of the Previous NHR Regime
The previous NHR regime ended on December 31, 2023. The significance of this end date is profound, as it marks the closure of one of Portugal's most attractive tax regimes for a broad range of professionals.
Transition to IFICI
In 2025 foreign nationals can apply for 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.
Continuation of Benefits
Current NHR 1.0 beneficiaries as of December 31, 2023, will retain the regime’s benefits for ten years. This provision ensures a smooth transition for those already under the NHR umbrella, safeguarding their tax advantages for a significant period.
Features of the New NHR Regime
Tax Incentives
The new NHR regime imposes a 20% tax on specific categories of employment and freelance income, alongside exemptions on various types of foreign-sourced income.
This structured approach aims to maintain Portugal's attractiveness for international professionals while focusing on its strategic economic sectors.
Regional Variations
The Autonomous Region of Madeira is expected to offer broader benefits, particularly for business and investment activities.
In contrast, mainland Portugal target its benefits more narrowly, focusing on start-ups, R&D companies, and other qualified occupations recognized by the government.
These regional variations demonstrate Portugal's commitment to diversifying its economic appeal across different regions.
Planning Your Move
As your move to Portugal approaches understanding the deadlines for the old regime's benefits and familiarizing yourself with the criteria of the new regime is essential.
This knowledge will be crucial in making informed decisions and optimizing the benefits available under Portugal's evolving tax landscape.
Final Words
The NHR program's transformation in 2024 reflects Portugal's changing priorities and challenges in the global economic landscape.
While the program's termination posed risks to Portugal's economic momentum, the new regime aims to continue attracting global talent and investment, albeit with a more focused approach.
Understanding these changes and planning accordingly will be crucial for anyone considering Portugal as their destination under the new NHR regime.
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