Portugal’s non-habitual resident regime (NHR) , launched in 2009, has long offered expats the opportunity to live and work in Portugal under a highly favourable tax regime. It provided significant relief on both Portuguese and foreign-sourced income for a fixed, non-renewable period of ten years.
However, in 2024, the regime was officially closed to new applicants, replaced by a more restrictive framework under the Incentivised Tax Status (ITS). These reforms introduced stricter eligibility criteria and revised tax treatment for foreign income and pensions.
This guide offers a detailed comparison of the original and updated NHR in Portugal programmes, explains the transition provisions, and explores tax-efficient solutions for expats nearing the end of their NHR benefits – including compliant investment structures that can reduce exposure to Portugal’s standard tax rates of up to 58.2%.
What You Will Learn
- What is Portugal’s NHR program, and why was it created?
- Who was eligible for NHR, and what were the associated tax benefits?
- What programme has replaced NHR in Portugal, and who qualifies under the new rules?
- How can you apply for the Incentivised Tax Status (ITS)?
- What are the tax implications after your NHR status expires, and how can expats plan effectively?
What Is NHR in Portugal?
The non-habitual resident (NHR) regime is a tax incentive introduced by the Portuguese government in 2009 to attract qualified expats to reside and work in Portugal.
It provided a preferential tax framework to stimulate economic growth and enhance Portugal’s global competitiveness.
NHR status is granted for a non-renewable period of 10 consecutive years, during which eligible individuals may benefit from substantial tax advantages.
This period remains valid irrespective of temporary relocations abroad, provided Portuguese tax residency is maintained.
After the NHR term expires, individuals are subject to the standard tax regime – up to 48%, or 58.2% including social contributions – one of the highest in the OECD.
Is NHR Still Available in Portugal?
The NHR was officially terminated in January 2024, with new applications no longer accepted after 31 March 2024.
However, a transitional provision allowed expats who met stricter eligibility criteria to apply until 31 March 2025. Applicants were required to demonstrate one of the following:
- An employment contract signed on or before 31 December 2023.
- Enrolment of a dependent child in a Portuguese educational institution by 10 October 2023.
- A legally binding contract confirming the purchase or lease of residential property in Portugal prior to 10 October 2023.
- A residence visa or permit valid from 31 December 2023, or evidence of an application submitted before that date.
- A household member who qualified for NHR under any of the above criteria.
Expats who met at least one of these transitional eligibility criteria were granted NHR status until 31 December 2033.
If you had already been granted NHR status before the programme ended, you can retain the full range of benefits for the original 10-year period.
These changes mark the transition to a new tax framework under the Incentivised Tax Status (ITS) programme, introduced in 2024.
What Were the Requirements for NHR in Portugal?
Between 2009 and 2023, expats establishing residency in Portugal for the first time – or after a prolonged absence – could apply for NHR. Applicants were considered “new tax residents” if they had not been tax residents in Portugal during any of the five years preceding their application.
To qualify for NHR status, applicants were required to meet at least one of the following conditions:
- Residing in Portugal for at least 183 days per year.
- Purchasing residential property in Portugal.
- Serving as a crew member on a Portuguese-registered vessel or aircraft as of 31 December of the relevant tax year.
- Performing public service on behalf of the Portuguese government in the preceding year.
What Are the Tax Benefits of NHR in Portugal?
Under the original NHR provisions, foreign-sourced income was exempt from Portuguese taxation provided the individual was a Portuguese tax resident and their country of origin maintained a double taxation agreement (DTA) with Portugal.
Portugal has DTAs with over 70 countries, including the UK, the US, the UAE, Singapore, and Switzerland.
A DTA prevents the imposition of tax on the same income by both Portugal and the individual’s home country.
Categories of foreign-sourced income – such as employment income, capital gains, and dividends – may be exempt from Portuguese taxation if taxed in the jurisdiction of origin, depending on the DTA provisions.NHR beneficiaries were also exempt from wealth, inheritance, and gift taxes.
In the absence of a DTA, the OECD Model Tax Convention may be applied. This internationally recognised framework helps interpret and apply tax treaty benefits.
Portuguese-sourced income or foreign employment income from a jurisdiction with no DTA and not an OECD member was subject to a 20% flat tax rate – available only to professionals in sectors of high cultural or economic value, including science, medicine, and education. Others were taxed at Portugal’s standard progressive rates up to 48%.
Initially, NHR exempted foreign pensions from Portuguese tax. However, the 2020 State Budget introduced a flat 10% tax on foreign pensions for NHR beneficiaries.
Planning Opportunity
After the 10-year NHR period ends, individuals are taxed under Portugal’s standard regime. To mitigate higher tax exposure on pensions, dividends, and gains, financial planning is essential.
One effective solution is the Utmost International Apex Portugal Bond, structured via Dublin. It offers compliant tax deferral with gains potentially taxed at just 11.2% after eight years.
Its Dublin-based structure avoids Portugal’s blacklist rules that apply to providers in jurisdictions such as the Isle of Man.
Which Programme Replaced NHR in Portugal?
In 2024, Portugal replaced the NHR regime with the Incentivised Tax Status (ITS) programme – formally known as the Tax Incentive for Scientific Research and Innovation (IFICI).
This updated framework is designed to attract highly skilled professionals by offering targeted tax incentives. However, these are more limited in scope than those under the NHR regime and subject to stricter eligibility criteria.
The primary differences between NHR and ITS are summarised in the table below:
| Criteria | ITS | NHR |
|---|---|---|
| Validity Period | Non-renewable 10-year period. | Non-renewable 10-year period. |
| Foreign Pension Taxation | Taxed as regular income. | Flat 10% rate. |
| Capital Gains, Dividends, Rentals | May be exempt under DTA or OECD Convention. | Typically exempt from Portuguese tax. |
Who Qualifies for the New NHR in Portugal?
To qualify for the ITS programme, applicants must not have been Portuguese tax residents within the past five years. The scheme is open to both EU and non-EU nationals who meet strict professional or economic criteria.
Eligible sectors include:
- Manufacturing.
- Information Technology and Telecommunications.
- Agriculture, Aquaculture, and Forestry.
- Multimedia and Audiovisual Production.
If you are not employed in one of the designated priority sectors, you may still qualify for ITS by meeting one of the following alternative criteria:
- Employed by a company certified by AICEP or IAPMEI.
- Participating in an R&D project under the SIFIDE tax incentive scheme.
- Working as a director or employee of a recognised Portuguese startup.
- Maintaining employment and tax residency in Madeira or the Azores.
What Are the Tax Benefits Under the New NHR Rules in Portugal?
Under ITS, tax treatment depends on whether income is Portuguese or foreign-sourced, the existence of a double tax treaty (DTA), and whether the source jurisdiction is on Portugal’s blacklist. The latter includes jurisdictions like the Isle of Man, where income may be taxed at a punitive rate of 35%.
The following table outlines the principal tax treatments under the ITS regime:
| Income Type | Portuguese-Sourced Income | Foreign-Sourced Income |
|---|---|---|
| Employment income | 20% flat rate for qualifying professions; otherwise up to 48%. | Same rates apply; DTA or OECD Convention may provide exemptions. |
| Capital gains, royalties, and real estate | Rental income taxed at 28%; capital gains up to 50%. | May be exempt with a DTA; else taxed at 28% or progressive rates; 35% if blacklisted. |
| Pensions | Taxed at progressive rates between 13% and 48%. | Taxed as regular income unless a DTA offers relief. |
| Professional income and assets | 50% exemption on professional income up to €250,000 for 5 years. | The same applies; foreign assets remain exempt from Portuguese wealth tax. |
How To Apply for NHR in Portugal Under the New Rules?
If you meet the eligibility criteria for Portugal’s Incentivised Tax Status (ITS) regime, the first step is to obtain official proof of residency in Portugal.
Step 1: Establish Residency
- EU/EEA/Swiss Nationals: You may register your residence at the local municipal office without a visa. Required documentation includes a valid passport and a European Health Insurance Card (EHIC).
- Non-EU/EEA/Swiss Nationals: You must obtain a Portuguese residence permit, most commonly through the following visa routes:
- Golden Visa: Granted to individuals who invest at least €250,000 in a qualified cultural project, €500,000 in an approved investment fund, or the same amount in scientific research. It provides a five-year residence permit.
- D7 Visa: Available to individuals with stable passive income from pensions, real estate, intellectual property, or financial assets. Minimum annual passive income requirements are:
- €10,440 for the main applicant.
- €5,220 for a spouse or partner.
- €3,132 per dependent child.
Step 2: Acquire an NIF Number
Before you can register as a tax resident, you must obtain a Número de Identificação Fiscal (NIF) from the local tax office. You will need to present:
- A valid passport or ID card.
- Proof of residency in Portugal.
Step 3: Register on the Portuguese Tax Portal
Create an account on the official Portal das Finanças. Submit your NIF, contact information, and Portuguese fiscal address. Login credentials are typically issued by mail within two weeks.
Step 4: Submit the ITS Application
Gather and submit the following documentation:
- Tax returns for the previous five years.
- A declaration affirming non-residency in Portugal during the preceding five years.
- Proof of a qualifying employment contract or business activity in a designated sector, or certification from an authorised body (e.g. AICEP or IAPMEI).
- Evidence of residential property purchase or rental in Portugal.
Applications must be submitted via the official Portuguese government platform.
Given the complexity of the ITS criteria and the implications for long-term tax planning, expats – particularly those with cross-border income or high-net-worth assets – are strongly advised to consult with a regulated financial adviser.
Accurate compliance from the outset helps ensure eligibility and optimises future tax efficiency.
New NHR Portugal -What Happens After 10 Years?
The Incentivised Tax Status (ITS) is granted for a non-renewable period of 10 years. Upon its expiration, individuals are reclassified as standard Portuguese tax residents and become subject to the general personal income tax regime.
This framework imposes significantly higher tax rates than those available under ITS.
Key Tax Liabilities for Standard Portuguese Residents (as of 2025)
- Personal income tax (PIT): Progressive rates ranging from 13% to 48%. In addition, a solidarity surcharge applies:
- 2.5% on annual income between €80,000 and €250,000.
- 5% on annual income exceeding €250,000.
- Capital gains tax:
- 50% of gains from most assets are subject to PIT rates.
- Capital gains from share disposals are taxed at a flat rate of 28%.
- Property Tax:
- Municipal Property Tax (IMI) ranges from 0.3% to 0.45% of the Property Tax Value (PTV).
- Rental income is taxed at 5% to 28%, depending on contract duration and property classification.
- Dividends and Interest:
- Taxed at a default flat rate of 28%, or can be voluntarily included in total income and taxed at progressive PIT rates.
If a double tax agreement (DTA) exists between Portugal and your home country, most foreign-sourced income may benefit from tax relief or exemptions. Nevertheless, correct application of DTA provisions can be complex.
To determine if you qualify for exemptions, consider working with an experienced cross-border financial consultant, like those at Titan Wealth International.
Book Your Complimentary Tax Residency Review
In just 15 minutes with Titan Wealth International’s cross-border tax specialists, you will:
- Discover how the end of your NHR status in Portugal or entry into the ITS regime impacts your global tax exposure.
- Understand how to structure your income, pensions, and investments to minimise Portuguese tax - now and post-ITS.
- Receive expert, compliant advice on using tax-efficient solutions such as the Utmost International Apex Portugal Bond.
Key Takeaway
While NHR status in Portugal is no longer available following the regime’s closure in 2024, eligible expats may still access favourable tax treatment for expats under the Incentivised Tax Status (ITS) programme.
ITS serves as a replacement with distinct qualification criteria and a more limited scope of benefits – particularly regarding pensions and foreign-sourced investment income.
This guide has explained the implications of the NHR update in Portugal, clarified the differences between the former NHR regime and the new ITS programme, and outlined the current requirements for expatriates seeking to optimise their tax position in Portugal.
At Titan Wealth International, our financial advisers offer bespoke support to expats in structuring tax-efficient portfolios, managing residency transitions, and applying double taxation agreements. Our expat tax planning strategies are designed to maximise long-term compliance and reduce exposure to Portugal’s standard tax rates post-ITS.
To ensure you remain compliant and tax-efficient beyond the NHR or ITS period, schedule a personalised consultation with our cross-border advisory team today.
