Portugal NHR 2.0 (IFICI) tax regime — The full 2025 playbook for expats

Portugal’s NHR 2.0, or IFICI, is considered one of the best tax regimes in Europe. Unlike Spain, Switzerland, France, or Italy, Portugal offers far more benefits to foreign tax residents if they meet all the eligibility requirements. 

In this guide, we’ll discuss what Portugal NHR 2.0 is, how it compares to the old NHR Portugal system, and who qualifies for it. 

TL;DR: Portugal NHR 2.0 (IFICI) tax regime

• NHR 2.0 replaced the old NHR in 2024 with stricter eligibility but better benefits - now limited to highly skilled professionals in approved sectors (tech, research, manufacturing, etc.) but includes capital gains exemptions that the old system lacked

• Multiple qualification pathways available - Portuguese employment, founding an eligible business, working for approved companies, freelancing with Portuguese entity registration, startup founders/employees, or Golden Visa investors taking executive roles

• 20% flat tax on Portuguese income plus foreign income exemptions - qualifying Portuguese earnings taxed at 20% for 10 years while most foreign dividends, capital gains, and rental income remain tax-free (except income from blacklisted jurisdictions taxed at 35%)

• Business structure matters significantly - Portuguese companies are often "fiscally transparent" so profits flow to owners at the 20% rate, but income streams must be properly separated and legitimate business expenses can be deducted

• Critical requirements and common pitfalls - must become Portuguese tax resident, cannot have used old NHR, need proper documentation for your qualifying pathway, and mistakes like wrong business structure or mixing income streams can disqualify your entire application

• Professional guidance essential for approval - application process involves multiple steps from NIF registration to Portal das Finanças submission, with 4-8 week processing times and potential for rejection if documentation isn't properly structured for your specific qualification pathway

What is NHR 2.0 (IFICI)? 

NHR 2.0, or Tax Incentive for Scientific Research and Innovation (IFICI), is a new tax regime introduced in 2024 by the Portuguese government. It replaced the older non-habitual resident Portugal scheme and targets highly skilled professionals in areas such as research, technology, engineering, and education.

To qualify, you must work in an approved sector or company recognized by Portugal’s investment and innovation agencies.

Quick comparison between old vs. new NHR Portugal system

Eligibility criteria for Portugal NHR 2.0 (IFICI) in 2025

The following are the eligibility requirements for Portugal’s NHR 2.0 tax regime:

Be a Portuguese tax resident

You must register as a Portuguese tax resident by meeting one of two requirements:

• You spend more than six months (183 days) in Portugal,

• Or have permanent residency there.

💡Touchdown Insight: Being a tax resident and a legal resident are two separate concepts. It’s important to understand both your immigration status and tax obligations separately to make sure you’re fully compliant with Portuguese law.

“Being a legal resident means that you have a valid residency permit in the country, while being a tax resident doesn't mean that you have a residency permit, but for some reason, you became tax liable as a resident in the country. So one can happen without the other,” explains Henrique, Head of Immigration at Touchdown.

Eligible pathways

You can qualify for the NHR Portugal 2.0 program through one of the following pathways:

• Have Portuguese-sourced Income: Earn employment income in Portugal linked to a qualifying profession.

• Have Your Own Eligible Business: Entrepreneurs who create a Portuguese company in an approved sector may qualify. This can include using an employer-of-record model if clients are abroad.

• Be Linked to an Approved Employer or Business: If you work for or are a board member of a Portuguese company operating in an approved sector, you may also qualify.

• Freelancers with Global Clients: Freelancers who register a Portuguese company providing services from Portugal and whose profession is on the approved list.

• Remote Employees Using Portuguese Entities: Remote workers employed via a Portuguese Employer of Record or subsidiary in an approved sector.

• Founders and Employees of Certified Startups: Startups backed by certified investors allow founders and employees to qualify, regardless of specific job titles.

• Golden Visa Investors: Investors holding a Golden Visa who take executive or board roles in Portuguese companies or startups.

Meet the 10-Year limit rule

You must not have already benefited from the old Portugal NHR tax program.

eligible sectors and professions under Portugal NHR 2.0 (IFICI)

Portugal NHR 2.0 (IFICI) tax implications 2025

Portugal uses a progressive tax system where income is taxed on a sliding scale. In 2025, rates range from 14.5% to 48%, with an additional 2.5%–5% solidarity surcharge applied to higher incomes. This system applies to residents who don’t qualify for NHR benefits or for income not covered by the special regime.

Here’s the complete breakdown of the Portugal NHR tax implications:

20% flat tax on eligible Portuguese income

If you qualify for the NHR 2.0, your employment income earned in Portugal from approved activities is taxed at 20% for up to 10 years.

Foreign income 

Most foreign income, such as dividends, interest, capital gains, and rental income, is tax-exempt under the current NHR Portugal program. While these earnings are not directly taxed in Portugal, they can still be considered when calculating the tax bracket that applies to your other Portuguese income, taxed at progressive rates.

For example, if you earn €50k in foreign dividends (exempt) and €40k in Portuguese salary (taxable at progressive rates), the total €90k is used to determine which bracket applies. The foreign €50k remains exempt, but the Portuguese €40k is taxed at the higher marginal rate corresponding to a €90k income.

Double tax agreements

A double tax agreement (DTA) is a deal between two countries to make sure you don’t pay tax twice on the same income under the Portugal NHR 2.0 tax regime. 

If your country has a DTA with Portugal, you either pay tax in Portugal and claim a credit at home, or Portugal exempts the income, so only your home country taxes it.

Pensions

Foreign pensions are not favored under IFICI and are taxed at normal progressive rates in Portugal.

Blacklisted jurisdictions

If your dividends, interest, or similar investment income come from a blacklisted jurisdiction, your income can be taxed in Portugal at a flat 35% under IFICI. 

💡Touchdown Insight: See this interview with Touchdown’s expert founder and tax consultant to learn more about NHR 2.0 tax implications:

Portugal NHR 2.0 Tax Implications Summary Table

How companies get taxed under the Portugal NHR 2.0 

Most Portuguese companies set up by NHR 2.0 beneficiaries operate as "fiscally transparent" entities. This means the company itself doesn't pay corporate tax on its profits. Instead, the profits flow directly to you as the owner, where they're taxed at your personal rate.

When company profits are attributed to you personally, they're taxed at the 20% flat rate rather than Portugal's standard progressive rates that can reach 48%. This applies to profits from your qualifying Portuguese business activities.

Your Portuguese company can deduct legitimate business expenses (e.g., office costs, salaries, and equipment) before calculating taxable profits. This includes costs naturally related to your business activity, which reduces your overall tax base before the 20% rate is applied.

For example, if your Portuguese company earns €100,000 in revenue and has €25,000 in qualifying business expenses, your taxable profit is €75,000. Under NHR 2.0, you'd pay 20% on this amount (€15,000 in tax) rather than the higher standard Portuguese rates.

💡Touchdown Insight: Many entrepreneurs assume they need to close their foreign companies to qualify for NHR 2.0. But you can keep operating your foreign business while setting up a Portuguese company for qualifying activities. This way, foreign income stays tax-exempt, and Portuguese business income is taxed at 20%.

Touchdown helps you with company setup in Portugal to maximize both business flexibility and tax benefits without disrupting your existing client relationships or revenue streams. Get started for free today! 

How freelancers qualify and are taxed under Portugal NHR 2.0

Freelancers can qualify for the NHR Portugal 2.0 regime if they appear on Portugal’s approved high-value list and are Portuguese tax residents. 

Many freelancers qualify by registering a Portuguese company within approved sectors. This allows them to benefit from a flat 20% tax rate on their qualifying Portuguese income for up to 10 years.

But Portugal also offers a Freelancer Regime, a tax program for self-employed individuals that doesn’t require company registration.

The freelancer program offers reduced tax rates initially, especially for younger freelancers, but taxes increase over time.

If you’re a freelancer staying long-term in Portugal or earning over €100,000 annually, NHR 2.0 often provides better overall tax advantages.

💡Touchdown Insight: You can compare Portugal NHR 2.0 and Freelancer tax programs to see which one’s best for you. 

Touchdown specializes in freelancer setup to help you navigate through Portugal’s tax systems. Whether you want to register as a freelancer or set up a company to qualify for NHR 2.0, we handle your application and the paperwork so you get maximum tax benefits.

Portugal NHR 2.0 application checklist (2025)

Here is the list of required documentation you need to apply for the NHR Portugal 2.0 tax program:

• Passport

• Proof of qualifications relevant to your profession or sector

• Proof of tax residency

• NIF number

• Employment contract with a qualifying Portuguese company (if applying as an employee or board member)

• Company registration documents or startup certification (if applying as a founder or business owner)

How to apply for NHR 2.0 in Portugal

Here’s a step-by-step guide on how to apply for the Portugal NHR 2.0 regime:

Step 1: Register for NIF and Tax portal access

Before applying, you must have a NIF Portuguese tax number. The NIF is required for all official financial and legal activities in the country, including opening a bank account, signing a lease, or registering a business.

Once you have your NIF, set up your access to the Portal das Finanças, Portugal’s online tax platform. This account will allow you to submit your IFICI application, track your request, and receive official notifications from the tax authority.

Step 2: Establish tax residency

To qualify for Portugal NHR 2.0, you must become a Portuguese tax resident in the year of application. 

The tax authority assesses your residency status, so keep evidence such as utility bills, lease agreements, or property ownership documents. If you plan to apply soon after moving, make sure you meet the residency requirement early to increase the duration of your benefits.

Step 3: Choose your qualifying path

Decide whether you’ll apply as an employee/board member of a qualifying company or as a founder with a Portuguese company/startup. It’s important to know which pathway you’re applying for to make sure you secure your application.

Use our free Eligibility Checker to check if you qualify for NHR 2.0 in Portugal. 

💡 Touchdown Insight: If your profession falls into multiple categories, always apply under the one with the clearest documentation. The tax authority prefers simple, unambiguous eligibility evidence.

Step 4: Submit the IFICI application

Once you’ve gathered all your documents, log in to your Portal das Finanças account and select the application option for the IFICI regime. 

Carefully complete each field, attach your documents in the required format, and double-check all details before submission. Errors or missing information can delay processing or result in rejection. 

After submission, monitor your Portal das Finanças messages regularly for updates or requests for clarification from the tax authority.

Step 5: Share with Your employer/payroll provider

Once approved, you will receive confirmation of your status under NHR 2.0. 

Share this with your employer, accountant, or payroll provider to make sure the tax benefit applies to your qualifying Portuguese income.

Benefits of the Non-Habitual resident portugal program for qualified residents

The following are the benefits of the Portugal NHR 2.0 tax regime for those who qualify:

20% Flat tax rate

The NHR 2.0 only charges a 20% flat tax rate on your income, which means you keep more of what you earn.

Tax-free foreign income

If you’re earning foreign passive income from dividends, rentals, or capital gains, you’re exempt from taxation in Portugal. 

Long-term financial clarity

The 10-year commitment means you're locked into the 20% rate and foreign income exemptions regardless of future Portuguese tax policy changes. 

If Portugal raises its standard income tax rates or eliminates other tax benefits during your 10-year period, you remain protected under the original IFICI terms you qualified for.

Investment and business planning security

Unlike annual tax incentives that governments can withdraw at any time, the decade-long guarantee allows you to make major financial commitments. 

You can purchase property, start a business, or relocate your operations, knowing your tax obligations won't suddenly change.

No wealth tax

Your accumulated assets aren't subject to annual wealth taxation in Portugal, which exists in other European countries.

Relocate teams together

If you relocate a team working through a Portuguese entity in qualifying sectors, your employees can also benefit under this program, once they become tax residents.

Common mistakes when applying for Portugal NHR 2.0

Here are some common mistakes you can make when applying for the NHR Portugal:

Choosing the wrong business structure

Some applicants register a company in Portugal without checking if their activity is on the IFICI-approved list.

Clarification: Only individuals engaging in activities from the official list are eligible for the 20% NHR 2.0 rate because the incentive is personal. Others will be taxed under the standard regime.

Mixing income streams

Some applicants combine their eligible work with unrelated services in one entity, assuming only the qualifying portion will be taxed at 20%.

Clarification: If income streams aren’t clearly separated, the reduced rate can be denied for all earnings.

Not structuring foreign income correctly

Some people assume that all overseas income, including dividends, royalties, or crypto gains, is exempt under the Portugal NHR 2.0.

Clarification: Tax-free treatment depends on the source country and double-taxation agreements. Income from blacklisted jurisdictions can be taxed at 35%.

How Touchdown helps you apply and secure Portugal NHR 2.0 (IFICI) 

Touchdown is Portugal's leading relocation platform. Backed by a veteran team of expert lawyers, we simplify the entire relocation journey by providing everything you need to set up and thrive in your new home through an integrated, easy-to-use platform. You can explore our NHR 2.0 package here.

We know that every relocation has its own unique goals and challenges. Whether you’re moving solo or bringing your family, Touchdown is designed to tailor a plan around your specific needs. Our free Eligibility Checker helps us quickly understand your profile and criteria within minutes. From there, we combine our in-house legal expertise with a digital platform that gives you complete visibility and step-by-step guidance.

From securing your visa, to structuring your taxes under the new NHR 2.0 framework, to ongoing support once you’ve settled in Portugal, Touchdown turns what can feel like a complex financial and immigration process into a smooth, stress-free experience.

Here’s how we assist you with the NHR Portugal application:

Free introduction call

We hold a 1:1 introductory call with you to understand your needs and priorities. Our team gives you free guidance on how you can secure tax benefits effectively.

Dedicated tax attorney

Whether you're applying as an employee, establishing your business in an approved sector, or doing the startup certification process, our dedicated tax attorneys handle the entire application process. This includes initial eligibility assessment to final approval confirmation.

All documents you submit are reviewed by our attorney, who makes sure they’re legally binding before applying. 

Company incorporation guidance 

If you're planning to qualify for NHR 2.0 through your own business, we handle the complete company setup process in Portugal. We help you:

• Register your Portuguese company in approved sectors (IT, research, manufacturing, etc.)

• Structure your business entity to meet the IFICI qualification requirements.

• Align company documentation with your NHR 2.0 application for seamless approval.

Personal application strategy 

We analyze your unique professional background and circumstances to determine the strongest pathway for your NHR 2.0 qualification. Our team creates a personalized tax strategy to reduce liabilities and earn maximum income. 

We also help you file for complex tax situations like cryptocurrency, securities, and capital gains.

Application filing

We file your tax application on your behalf by reviewing every single document and uploading it accurately. This helps you avoid any obvious errors. 

Your path to Tax-free life in Portugal starts with us

Portugal's NHR 2.0 (IFICI) regime is one of Europe's most attractive tax opportunities. But with strict eligibility requirements, you need expert advice and legal guidance to secure approval.

Whether you’re setting up a business, relocating, or earning passive income, Touchdown can handle the tax application, so you can focus on planning your new life in Portugal.

Use our free Eligibility Checker to see which visa option is the best for you and if you qualify for NHR 2.0.

Portugal NHR 2.0 (IFICI) FAQs

How long does the Portugal NHR 2.0 application process take?

The NHR 2.0 application is usually approved within four to eight weeks after submission. Timelines can extend if your case requires sector recognition or if documents are incomplete. 

Touchdown’s legal team reviews every document for accuracy and makes sure it meets Portuguese tax authority standards. We handle the full filing process, so you get approved faster.

Who doesn’t qualify for the Portugal NHR 2.0 tax-free scheme? 

You don’t qualify for the NHR 2.0 tax-free scheme if you:

• Have already used Portugal’s old NHR program or reached the 10-year limit for tax benefits.

• Work in a sector or profession that’s not on the government’s approved list.

• Can’t prove tax residency in Portugal for the year you apply.

• Earn income from a blacklisted jurisdiction, which is taxed at 35% instead.

Can I apply for Portugal NHR 2.0 under the D7 Visa? 

Yes. You can apply for NHR 2.0 under the D7 Visa if you meet all the eligibility rules, including becoming a Portuguese tax resident and working in an approved sector or profession. 

But the D7 visa or any visa doesn’t grant NHR benefits, so you must file a separate application with the tax authority after you move to Portugal.

Does owning property in Portugal make me a tax resident?

No. Owning property in Portugal doesn’t automatically make you a tax resident. You become a tax resident if you spend more than 183 days in the country in 12 months or if you have a permanent home in Portugal that you intend to use as your main residence.

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

The tax rate for non-residents in Portugal depends on the type of income. This can include work performed in Portugal or income paid by a Portuguese company, including wages, self-employment, and pensions.

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

Under the non-habitual resident Portugal regime, you pay a flat 28% tax on share gains. If you choose progressive taxation, the law only taxes 50% of your real estate capital gain at the applicable rates.

Is Portugal NHR ending?

Yes, Portugal’s old Non-Habitual Resident (NHR) program ended in 2024 and was replaced with the NHR 2.0 regime. But people who are already approved under the old NHR keep their tax benefits for the rest of their 10-year period.

How does the US-Portugal tax treaty impact the Portugal NHR for US citizens?

The U.S.–Portugal tax treaty allocates taxing rights between the two countries and helps prevent double taxation. However, the right to claim a foreign tax credit (FTC) for Portuguese taxes paid comes from U.S. internal law, not the treaty.

 If Portugal doesn’t tax certain income under the NHR regime, you cannot claim a credit, and that income remains fully taxable in the U.S.