Portugal’s original Non Habitual Resident (NHR) tax regime was sunset at the end of 2023 leaving many wondering, what will replace NHR in Portugal? That replacement has now arrived - and it may be even more powerful, introducing the NHR 2.0.

In this guide we will cover what the NHR 2.0 is, what the benefits are and why it’s the most powerful Tax regime in the EEA (European Economic Area), with key sections on:

A short history of NHR

Who exactly is eligible for NHR 2.0 in Portugal?

NHR 2.0 In Practice: Income, getting paid and the tax rates for non habitual residents in Portugal

Working examples of how to qualify for NHR 2.0 (IFICI) in 2025

What does applying for the NHR 2.0 (IFICI) look like and how long does it take?

... let us begin.

What Is NHR 2.0 (IFICI)?

Despite the official name, the Incentivo Fiscal à Investigação Científica e Inovação (IFICI), can be thought of simply as NHR 2.0 and the concept behind this new tax regime is simple: attract and retain international talent, encourage innovation, and reward the contribution to Portugal’s economy with generous tax incentives.

A short history of NHR

The new NHR 2.0 represents a refinement in policy that is widely supported across the political spectrum within Portugal, however, this unilateral support was not always the case.

The original NHR was introduced in 2009 by the José Sócrates government and involved a simple 20% tax rate on Portuguese-based income alongside a blanket 0% tax rate on foreign income.

Most beneficiaries of this scheme were retirees from across Europe with minimal ‘working income’ (more on this later) but during Covid this all changed. From 2020 to 2023, Portugal experienced over 70,000 workers relocating to the country. This resulted in a near 250% increase in those leveraging the NHR compared to the entire decade previous.

With new scales of adoption from a different type of individual, the NHR was deemed no longer a net benefit to the Portuguese economy and was wound down in 2023.

Fast forward to 2025 and the NHR 2.0 is back up and running, continuing in the spirit of the original NHR but with a tighter focus on innovation, internationalisation, and - most importantly - value creation for the Portuguese economy.

Who is it for and what are the benefits?

Since its reincarnation, the NHR 2.0 is now working for Portugal and its economy. However, Europe’s most powerful tax regime could be for you.

Key personal benefits include:

✅ 20% Flat Tax Rate – Keep more of what you earn, with a simplified tax rate for qualifying income in Portugal.

✅ Tax-Free Foreign Income – Pay zero Portuguese tax on passively earned dividends, capital gains, or rental income earned abroad.

✅ 10-Year Guarantee – Lock in your tax benefits for a full decade, giving you long-term financial clarity.

🧠 Who exactly is eligible for NHR 2.0 in Portugal?

In reality, most people leveraging the NHR 2.0 will fall into the working professionals in high-value sectors camp. However, entrepreneurs and investors can also qualify for the scheme.

If you fall into one of these groups or can position yourself into one of them, you too are likely to be a prime candidate for leveraging Europe's most powerful tax scheme.

• Freelancers or consultants with global clients

• Employees working remotely via Portuguese entities

• Executives or team members in Portuguese start-ups

• Golden Visa investors taking active roles in Portuguese companies

• Founders launching start-ups in Portugal

🧾 List of Eligible Professions

NHR 2.0 is accessible to those practicing “high value-added” activities, which includes professions like:

• Software Developers

• Engineers & Architects

• Scientists & Researchers

• Financial Analysts

• Medical professionals (some roles)

The official government list is available in Article 1 of the implementing decree and updated periodically.

NHR 2.0 In Practice: Income, getting paid and the tax rates for non habitual residents in Portugal

This section will cover the two types of income one can receive when on the NHR scheme, how they get paid to you and how they differ in Portuguese and international tax liability.

The two types of income are: Working Income and Foreign Income. 

The majority of individuals on the NHR, are working Portugal tax residents. These individuals set up a Portuguese company, get paid for their work into that entity then pay themselves or just use the money in the company personally - which generally amounts to 100% of the company’s profits. It’s this income which is classified as Working Income and this gets taxed at a flat 20% rate which the individual is responsible for paying. There is then no further corporation tax - because the company is fiscally transparent - and no personal income tax for the NHR holder. 

The second type of income is Foreign Income. This is non-worked, often passive income from investments, capital gains, rentals or any other source of non-worked income, this gets paid directly into your personal bank account and is zero rated, meaning this income is also tax-free.

This is why the NHR 2.0 is the most powerful tax scheme in Europe.

Portugal has tax treaties with many countries and for most foreigners on the NHR, this means that relocating will effectively render them exempt from paying tax on worked income in their home countries. This means that the tax liability discussed above will be the only tax they will have to pay (or not pay) on worked and passive income.

Portugal NHR 2.0 for US Citizens

The USA is the exception, a country that famously taxes its citizens and even green card holders from abroad. If you’re from the USA, the way you structure your income and work setup in Portugal for the NHR may help you mitigate some of your US tax liability, but it’s likely that with conventional tax accounting, the IRS will require you to pay some tax at some point.

This is the narrative that many US citizens know and abide by when working abroad. However, there are two methods that can be used to mitigate US tax liabilities and these are called: the Foreign Earned Income Exemption and the Foreign Tax Credit. To learn more about leveraging these schemes we recommend booking a consultation with our tax team who can provide you with further information and plan to structure your work to limit and even write-off completely, US tax liabilities.

📚 Working examples of how to qualify for NHR 2.0 (IFICI) in 2025

Let’s get practical. Here are specific scenarios to help you understand exactly how to structure your career, company, or entire relocation setup to qualify under NHR 2.0.

Scenario 1. You’re a Freelancer with Global Clients

Perhaps you’re already operating as a freelance consultant, web designer, or developer in your home country (say, Germany or the Czech Republic), working with international clients.

Can you qualify for NHR 2.0?

✅ Yes — here’s how:

• Create your own Portuguese company (LDA or single-member sole proprietorship).

• Terminate your freelance registration in your current country.

• Continue providing services through your new Portuguese legal entity.

Nothing changes except the legal structure. As long as your profession appears on the “high-value” list, you’re in.

Bonus: If you're the sole owner and your services fall under liberal professions (like design, coding, consulting), the company may qualify for fiscal transparency. In that case, you won’t pay corporate tax — just a 20% flat rate on your income as an individual.

Scenario 2: You Have a Foreign Company but Want a Portuguese Tax Residency

Say you run a French consulting firm and want to move to Portugal. You don’t want to shut down your French company (due to contracts, employees, or legal ties).

Here’s how you can still benefit:

• Set up a new Portuguese company.

• Provide consulting services to your French company or directly to other clients.

• Ensure your Portuguese company’s activity aligns with the qualifying list.

You don’t even need to be employed by the Portuguese entity. You can be a board member and draw income, and the same 20% flat rate applies if you meet eligibility conditions.

Scenario 3: You’re Employed by a Foreign Company

Maybe you’re a UK-based employee of a tech company. You want to keep your job and work remotely from Portugal.

You can still qualify — under one important condition:

• Your company uses an Employer of Record (EOR) in Portugal.

This makes your employment technically “Portuguese.” If your profession is on the approved list, you’re eligible.

This is a common practice among distributed teams, and many global employers already work with EORs to comply with local employment regulations.

Scenario 4: You’re Building a Start-Up in Portugal 🚀🇵🇹

This may be the most exciting route.

Portugal is becoming the EU’s new tech hub. With an expanding VC scene, a young and talented workforce, and massive government support, launching a start-up in Portugal opens the door to NHR 2.0 — for founders and employees alike.

To qualify as a start-up in the eyes of the law:

You must either:

• Receive investment from a certified Portuguese VC fund or angel investor, OR

• Apply for recognition as a start-up through the relevant authority (based on innovation and growth potential).

🤔 Key advantages of qualifying via a start-up:

• No need for your job to appear on the profession list

• All employees (regardless of title) can qualify

• Access to €2.5 billion in innovation-focused funds

• Reduced corporate taxes

So if you’re building the next unicorn or launching a small SaaS tool, this route offers flexibility, credibility, and serious tax savings.

Scenario 5: You’re Not the Founder — Just an Employee in a Portuguese Start-Up

Even if you’re not founding a company yourself, being hired by a recognised start-up in Portugal automatically qualifies you.

No need to practice a listed profession as all employees are eligible.

This is the most inclusive path eligible under NHR 2.0

Scenario 6: You’re a Golden Visa Investor Who Now Wants to Live in Portugal

The Golden Visa was originally designed for minimal-residency investors, but some now wish to actually live in Portugal.

Here’s how to align your Golden Visa with NHR 2.0:

• You’ve invested in a Portuguese VC fund

• That fund has invested in a start-up

• You are appointed to the board of that start-up (especially if you bring relevant experience)

That board role gives you the professional link required to qualify for NHR 2.0.

This solution is straightforward but it can be very fiddly getting all parties aligned, Touchdown can assist in structuring this seamlessly.

Scenario 7: You Have a Team That’s Moving With You

Planning to relocate with your small team?

If your company is:

• Operating in a qualifying field (design, tech, consulting, etc.), and

• Your team members are providing those services within the Portuguese entity

…then your employees also qualify for NHR 2.0, assuming they relocate and become tax residents.

What does applying for the NHR 2.0 (IFICI) look like and how long does it take?

So you’re a Portugal tax resident, you’ve set up your company or made your investments and you’re ready to apply for NHR 2.0 - here is what you’ll need.

The entire application is submitted through the official Tax Authorities Portal, Portal das Finanças and here you’ll have to collect and submit a list of relevant documents:

• Certificate of Incorporation of the company

• Working contract if you are an employee of the company

• Declaration stating that you comply with the requirements

• Certificate of qualifications

• Your NIF number

How long does the NHR 2.0 application take?

NHR 2.0 applications are typically approved in four to eight weeks. The good news is that the NHR applies retrospectively from the date when you started to meet its requirements. Thus, as long as you can prove you complied with the NHR 2.0 requirements for your specific situation, you'll be eligible to claim the benefit on past and future income.

NHR 2.0 (IFICI) Frequently Asked Questions

Is Portugal NHR ending?

The original NHR ended in 2023. But the new NHR 2.0 (IFICI) is alive and kicking! 

Is Portugal getting rid of the NHR?

Portugal got rid of the original NHR tax scheme in 2023, but the new NHR 2.0 (IFICI) is now open and as of 2025, accepting new applications.

What is the tax rate for non-residents in Portugal?

Those on the NHR benefit from a flat 20% tax rate on working income and a 0% on passive, foreign income such as rental income, capital gains, crypto and savings interest (among others).

What is the non habitual resident capital gains tax in Portugal?

Capital gains from assets outside Portugal are not liable for taxation. Assets sold by NHR holders within Portugal are taxed a favourable 28%.

What are the conditions for non habitual residents in Portugal?

Most people leveraging the NHR 2.0 are professionals working in high-value sectors. However, entrepreneurs and investors can also qualify for the scheme.

The only universal condition is that you must be a tax resident of Portugal.

Conclusion: Strategy First, Paperwork Second

The new NHR 2.0 is much more than a tax perk. It's a forward-looking, politically popular incentive to position Portugal as a global magnet for innovation, investment, and expertise.

Whether you're a freelancer, founder, remote employee, or investor, there’s a path to eligibility — and serious tax benefits — if you structure things right.

The first step is deciding upon a strategic route for NHR 2.0 and to help with this, we’ve built the 👉Touchdown Advisor. Our free tool provides a personalised report on your eligibility for tax schemes and visas, providing serious clarity on what your opportunities are.

Want a partner to walk you through it?

Portugal’s new tax regimes are fantastic with the NHR 2.0 being at the very top – but only if you know how to make them work for you. That’s where Touchdown comes in.

We specialise in relocation, tax strategy, and business setup for global professionals landing in Portugal.

Join a growing, connected international community that is thriving in some of the fastest growing corners of the world. Portugal - now; Spain - soon; the rest of the world - to come.

Want to know more? We’ll walk you through it – no jargon, just straight answers. View our fully managed  NHR Service or answer a couple of questions in the Touchdown Advisor to book a free introduction call with our team.