NHR 2.0 instead of NHR: how the new IFICI regime works in Portugal

The NHR 2.0 / IFICI Concept

In 2025, Portugal effectively launched its updated tax regime, Incentivo Fiscal à Investigação Científica e Inovação (IFICI), also known as NHR 2.0.

This system replaced the classic NHR regime that had been in place since 2009, but it has a different concept. It does not continue the old model, but rethinks it, focusing on supporting industries that create real added value for the economy.

For businesses, the new regime opens up more specific and predictable opportunities. NHR 2.0 is aimed not only at individuals, but also at companies that attract or employ highly qualified specialists. If a company operates in certain sectors (technological, scientific, industrial, or innovative), it can become a base for employees or managers to participate in the NHR 2.0 regime.

Thus, business owners, IT professionals, and startup founders can structure their activities through a Portuguese company that meets the requirements of NHR 2.0 and enjoy the benefits of the regime.

Tax benefits

Fixed income tax rate (IRS) 20%

Income from employment (category A) or self-employment or entrepreneurial activity (category B) obtained within the scope of activities and cooperation with a company or project that meets the requirements of the IFICI regime is taxed at a fixed rate of 20%. Under the general IRS regime, a progressive tax scale applies, up to 48%.

Exemption from taxation of foreign income

The regime provides for exemption from tax on income received outside Portugal. Such income includes:

• dividends;
• interest;
• rent;
• royalties;
• capital gains and other passive income.

At the same time, this income is taken into account when calculating the effective tax rate for other income in Portugal, but is not taxed again.

The exception is pension payments, which are taxable under the general rules.

Unlike the old NHR regime, in which foreign income was exempt from taxation only if such income was taxed in the country of origin or was taxable under the applicable double taxation convention, under the IFICI regime, the exemption applies automatically.

At the same time, it cannot be ruled out that in practice, individual tax authorities may continue to follow the previous rules, in particular, requiring confirmation of taxation of income in the source country.

Duration of the regime: 10 years

NHR 2.0 preferential status is granted for ten consecutive years, provided that the taxpayer:

• remains a tax resident of Portugal;
• carries out activities that fall within the highly qualified professions covered by the regime;
• works (or, in certain cases, provides services, including as a sole trader) with a company that meets the eligibility requirements.

If the conditions are not met during a given year, the regime may be suspended, but it will be reinstated within 10 years after the requirements are met again.

Comparison of NHR 1.0 and NHR 2.0 modes

The main change is that the NHR 2.0 regime requires the actual performance of qualified activities throughout the entire period of validity of the benefits. While under NHR 1.0, obtaining status did not require professional activity, now the preservation of benefits directly depends on the continuous performance of permitted activities.

A break of up to six months is allowed without loss of status, but a longer break may be grounds for temporary suspension or loss of the right to preferential treatment.

Below is a comparison of the key tax rates and approaches provided for by the NHR and IFICI regimes.

Requirements for obtaining status

To benefit from the scheme, applicants must meet the basic conditions, in particular:

• acquire Portuguese tax residency;
• not have been a Portuguese tax resident for the previous five years;
• not have previously used NHR 1.0, IRS Jovem, or other special regimes;
• receive income from activities that fall under the list of qualified professions or positions and are carried out within companies that meet the established criteria.

Highly skilled professions:

• teachers at higher education institutions;
• doctors and healthcare professionals;
• scientists and researchers in the fields of physical sciences, mathematics, engineering, and technology;
• company directors and members of executive bodies (CEOs, management positions);
• heads of administrative, financial, and commercial services;
• specialists in the field of information and communication technologies.

The applicant must confirm that they have the relevant education and qualifications:

• a degree at least equivalent to level 6 of the European Qualifications Framework (bachelor’s degree) and at least three years of proven work experience;
• a level 8 degree (PhD/Doctor of Philosophy), which exempts the applicant from the experience requirement.

Requirements for companies

The IFICI regime covers only income derived from employment or, in certain cases, from the provision of services in companies that meet the established economic criteria. The conditions depend on the type of activity.

Industrial and service companies

For companies in the industrial or service sectors, the regime applies if the company:

1. exports at least 50% of its turnover in the current or any of the two previous financial years;
2. belongs to one of the permitted sectors of economic activity according to the CAE classification, in particular:

– extractive industries (sections 05-09);

– manufacturing industries (sections 10-33);

– information and communications (sections 58-63), including:

• publishing activities;
• production of film, video, and television content, sound recording, and music editing;
• software development and IT consulting;
• data processing, hosting, and related services;
• activities of news agencies.

-research and development in the field of natural and exact sciences;

-higher education;

-health care.

Companies recognized as economically significant

Companies whose activities are recognized by AICEP (Agência para o Investimento e Comércio Externo de Portugal) or IAPMEI (Agência para a Competitividade e Inovação) as important for the national economy, particularly in terms of attracting investment or regional development, may also participate in the program. For such companies, the export criterion is not mandatory.

Other acceptable grounds for participation

The regime also covers the following categories of applicants:

• researchers whose activities are funded under the SIFIDE tax program;
• directors or employees of certified startups;
• specialists working in the autonomous regions of the Azores or Madeira (in accordance with regional acts).

Conclusion

NHR 2.0 (IFICI) is not a classic “new resident benefit” but a tax planning tool for those who actually work or develop business in Portugal.

The regime sets a 20% tax rate on income from employment or professional activities in certain sectors and exempts most foreign passive income from taxation, including dividends, interest, and, most importantly, capital gains.

The benefits are only available if you have a real economic presence. You need to work for a qualified company or run your own business that meets IFICI requirements and prove your professional qualifications.

For entrepreneurs and owners of international structures, IFICI offers the opportunity to move their operational or management center to Portugal, combining a legal reduction in tax burden with access to the EU single market and stable rules for ten years.