IFICI, the Successor to NHR

The IFICI is a special Portuguese personal income tax regime, commonly referred to as “NHR 2.0”. It is available to individuals who become Portuguese tax residents, have not been tax residents in Portugal during the previous five years, and perform eligible scientific, research, innovation or other qualifying professional activities under Article 58-A of the Portuguese Tax Benefits Code and the applicable implementing rules. Eligible taxpayers may benefit from a 20% special IRS rate on qualifying employment and self-employment income for ten consecutive years, starting in the year in which they register as tax residents in Portugal. The regime is subject to specific eligibility and ongoing residence and activity requirements and does not extend beyond the statutory ten-year period.

Individuals may qualify for Portugal’s IFICI regime if they become Portuguese tax residents, have not been tax resident in Portugal during any of the previous five years, and carry out one of the activities or professional roles listed in Article 58-A of the Portuguese Tax Benefits Code and its implementing legislation. Eligible categories include higher-education teaching and scientific research; positions and corporate-office roles in certified start-ups; qualified positions and corporate-office roles covered by contractual benefits for productive investment; highly qualified professions in companies benefiting from RFAI or in eligible industrial and service companies exporting at least 50% of their turnover; and R&D personnel whose employment costs qualify for the relevant business R&D tax incentive. Other qualified positions in entities pursuing activities recognised as relevant to the national economy may also qualify. The individual must satisfy the applicable qualification, activity, residence and exclusion requirements.

The IFICI regime applies a special 20% Portuguese IRS rate to qualifying net employment income and self-employment or business income derived from eligible activities. The benefit is available for ten consecutive years, starting in the year in which the taxpayer registers as a Portuguese tax resident, and applies to taxpayers becoming resident from 1 January 2024 onwards, subject to the applicable transitional rules. To benefit in each year, the taxpayer must remain Portuguese tax resident and continue to derive income from an eligible activity, while satisfying the other statutory requirements and retaining supporting documentation. No general six-month grace period between eligible activities or jobs has been confirmed in the sources reviewed.

No. Unlike the former NHR regime, IFICI does not provide a general exemption for foreign-source income. The IFICI benefit is principally a 20% IRS rate on qualifying Category A and B income from eligible activities. Foreign employment, self-employment, rental, capital-gains, investment and pension income is generally governed by the ordinary Portuguese IRS rules, applicable tax treaties and double-tax relief.

No. IFICI is unavailable to taxpayers who benefit or have previously benefited from the Portuguese non-habitual resident regime, or who have opted for taxation under the former-resident regime in Article 12-A of the Personal Income Tax Code. IFICI may be used only once by the same taxpayer. Registration is governed by Portaria No. 352/2024/1: applications are submitted through the Portal das Finanças to the relevant competent entities, while the Portuguese Tax Authority verifies the remaining legal requirements.

The IFICI regime includes a specific category for jobs and other activities carried out by tax residents in Madeira or the Azores. However, the relevant jobs and activities must be defined by regional legislative decree. The national IFICI legislation does not provide the list itself, and no applicable Madeira-specific list has been identified in the legislation reviewed. This does not necessarily prevent a Madeira resident from qualifying under one of the general national categories in Article 58.º-A(1)(a)–(f), provided that all applicable conditions are satisfied.

The special regime for former Portuguese residents, provided for in Article 12-A of the CIRS, excludes 50% of eligible employment and business/professional income from taxation for five years, subject to the statutory ceiling linked to the first bracket referred to in Article 68-A(1) of the CIRS. It applies to former Portuguese tax residents who become tax resident in Portugal by 2026, provided that they were not tax resident in Portugal during any of the preceding five years, had previously been resident in Portugal and have regularised tax affairs. The regime cannot be used by taxpayers who have requested registration as non-habitual residents.