Relocating to Portugal: Who Still Qualifies for Portugal’s New Tax NHR 2.0 Incentives

Portugal’s popular Non-Habitual Resident (NHR) tax regime officially ended in 2023 but it wasn’t the end of incentives for newcomers. In 2024, the government introduced a new scheme often referred to as “NHR 2.0,” offering updated tax benefits for specific groups of people looking to relocate. For many considering properties in Portugal, especially those thinking long term, these incentives can make a meaningful difference.

Why the NHR Was Replaced

The original NHR programme drew tens of thousands of foreign residents to Portugal, thanks to its generous tax breaks on foreign pensions, employment income, and more. However, as the scheme expanded, it faced growing criticism around inequality and housing pressure. The revised programme narrows eligibility to focus on sectors and profiles the government believes contribute directly to national priorities—such as innovation, education, and healthcare.

NHR vs IFICI

As Portugal phases out the original Non-Habitual Resident (NHR) regime, many potential residents are now hearing about the Incentive for Scientific Research and Innovation (IFICI) – often referred to as the replacement or evolution of NHR. But how do they compare, and who benefits from each?

IFICI is not a direct continuation of NHR but a more targeted tax incentive programme. It’s meant to attract talent that contributes to strategic sectors of Portugal’s economy rather than offering sweeping benefits to all foreign residents.

If you’re exploring properties in Algarve Portugal with plans to live and work here, and your background aligns with IFICI criteria (like tech, research, education), the benefits are still significant. But casual retirees or passive income earners may need to explore other tax strategies.

What Are the Main Benefits?

Eligible individuals can access:

• 20% flat tax rate on qualifying income earned in Portugal (for up to 10 years)

• Exemptions or partial exemptions on some foreign-source income, depending on bilateral tax agreements

• Continued access to Portugal’s non-discriminatory inheritance and gift tax policies, which remain attractive compared to other EU countries

Does It Still Make Portugal Attractive?

Yes. particularly for people planning to work, invest, or develop projects in Portugal. If you’re eyeing Tavira real estate as part of a relocation plan, this updated regime offers a balanced incentive: less sweeping than before, but still competitive within the EU. It also supports long-term residency over short-term tax arbitrage.

Final Thoughts

The updated tax regime marks a shift in Portugal’s approach, prioritizing long-term contribution over broad incentives. For those who meet the new criteria, it presents a practical framework that supports relocation plans while aligning with the country’s current economic and social goals.