What is the New IFICI Tax Regime in Portugal?

Find out more about Portugal's new IFICI (commonly referred to as NHR 2.0) tax regime and how it benefits highly skilled professionals.

Portugal's new IFICI (Incentivo Fiscal à Investigação Científica e Inovação), commonly referred to as NHR 2.0, came into effect in 2025, replacing the previous Non-Habitual Residency (NHR) tax regime. This updated framework aims to attract highly skilled professionals in sectors such as scientific research, technology, finance, healthcare, engineering, education, and consultancy.

Key Features of IFICI (NHR 2.0):

  • 20% Flat Tax Rate: Applies to Portuguese-sourced income from eligible employment and self-employment activities for up to 10 years.
  • Tax Exemptions: Foreign-sourced income—including dividends, interest, rental income, royalties, and capital gains—is exempt from Portuguese taxation, provided it is declared for tax progression purposes.
  • Pension Income: Unlike the previous NHR regime, foreign pension income is no longer tax-exempt and is subject to standard progressive tax rates ranging from 14.5% to 53%.

The transition to IFICI has been well-received, with 83% of wealthy expats citing Portugal's tax and investment benefits as primary reasons for relocation.

David Vacani, Founder of Beacon Global Wealth Management, highlights the strategic advantages of the new regime:(beaconglobalwealth.com)

"The IFICI tax regime is a significant relief for expats who plan their financial and property portfolios wisely. The IFICI regime can be used by Entrpeneurs and Business Owners to plan their business exits while resident in Portugal. Also by keeping assets outside the UK, clients can ensure they remain free from the heavy burden of UK Inheritance Tax. When combined with the benefits of NHR or IFICI in Portugal, this offers significant planning opportunities."

For individuals considering relocation to Portugal, the IFICI (NHR 2.0) regime presents a compelling opportunity for tax optimisation and wealth management.

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