Portugal's NHR regime: making sense of the new rules

What is the NHR?

The NHR (Non-Habitual Resident) is a preferential tax regime that Portugal offers to new residents. It runs for ten years. NHR status lets you lower the tax rate on foreign income and, in some cases, be fully exempt from tax altogether.

What happened?

Late last year, panic spread among people planning to move to Portugal. News spread that the NHR - the very thing many were relocating for - was being scrapped, and that in 2024 only those who had begun the residency process back in 2023 would still be able to apply for the benefits.

What is actually going on?

It is true that paying no tax at all is no longer possible. But the preferential regime has not disappeared.

If you work in IT, scientific research or innovative business, or if you launch a startup in Portugal, your income will be taxed at 20% for ten years. Compared with the standard income tax of up to 48%, that is a very attractive rate. It applies to business owners and even to freelancers and sole traders.

To decide whether a company counts as "innovative," the authorities will rely on business activity codes. CAE is the official classifier. If your company falls into one of the priority sectors - IT, science, innovation and so on - you qualify for the tax breaks even without any additional certification.

As before, you can also register as a sole trader in Portugal and receive payments from projects abroad through it.

If you are a highly qualified professional, you can simply opt into the new NHR successor scheme. The list of eligible occupations has not been published yet and still needs to be approved separately, but it is unlikely to change much - IT and business will certainly be on it.

What applies in 2026

The NHR regime was closed by the 2024 State Budget Law, and the transition period ended in 2025. Those who obtained the status keep it until the end of their 10 years. New residents have other regimes:

Non-residents pay 25% on Portuguese-source income.

How to apply for IFICI

The application goes to the Portuguese tax authority (AT) by 15 January of the year after you became resident: moved in 2026, deadline 15 January 2027. If missed, the relief applies only from the year of registration, and the 10 years are not extended. Conditions: no Portuguese tax residence in the previous 5 years and no prior NHR. Using IFICI forfeits IRS Jovem, so calculate both before applying.

When you become tax resident

You are resident after more than 183 days in Portugal in any 12-month period starting or ending in the tax year - a rolling window, not a calendar year. The second ground is a home you use as your habitual residence. More on rates on the Portugal taxes page.

Taxes for the self-employed and pensioners

Without NHR most new residents pay under general rules. The self-employed can use the simplified regime, where part of income is treated as expenses by a fixed coefficient, with social contributions of 21.4%. If one client provides 50% or more of income, the client pays an extra 7%, from 80% - 10%. With turnover up to EUR 15,000 a year, about $16,900, you can work without VAT. New residents' foreign pensions are taxed on the general 12.5-48% scale.

Taxes when buying a home

A non-resident buying a home pays property transfer tax (IMT) of 7.5% and stamp duty of 0.8%. Portugal has no wealth tax or separate inheritance tax, but gifts and inheritances outside close family carry 10% stamp duty. Dollar amounts at the European Central Bank rate of 05.10.2026, rounded up.

How to move without NHR

Tax regimes do not give the right to live in the country; that requires a residence permit. Remote workers and entrepreneurs most often use the remote work visa: the 2026 benchmark is income of about $4,200 a month and about $12,400 in savings. More on the Portugal digital nomad visa and Portugal residence pages.

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