What many were waiting for… is now a reality!
Portugal has brought back its star regime. After the end of the old NHR in 2024, the country is back on the international stage with a new tax program: NHR 2.0 or IFICI Portugal, designed to attract qualified talent and innovation.
For more than a year, uncertainty reigned — it seemed that Portugal had lost its edge compared to destinations like Cyprus, Andorra, or Malta. But the Portuguese have reinvented themselves. The new regime — the Fiscal Incentive Program for Scientific Research and Innovation (IFICI) — keeps the spirit of the old one, but with a more technical and selective focus: it rewards high-value profiles and innovative projects.
Beyond taxes, Portugal remains one of the most attractive tax residencies in Europe: mild climate, quality of life, stability, culture, and a growing international community. That’s why the announcement of the new NHR 2.0 has once again drawn attention to the country.
But it’s not as simple as it seems. While many present it as the return of the old NHR, the new regime is much more technical and restrictive. It’s no longer enough to just move or open a company — the new criteria now revolve around real economic activity, professional qualifications, and involvement in R&D or innovation projects. In other words, NHR 2.0 isn’t for everyone, and understanding its limits can make the difference between seizing a great opportunity, breaking the law, or being left out.
The big question now is clear: Is it worth moving to Portugal in 2025? Who can actually qualify for NHR 2.0, and under what conditions?
In this guide, you’ll find a clear and practical explanation of how the new regime works — its tax advantages, requirements, common pitfalls to avoid, and alternative options if it’s not the right fit for you.
What is Portugal’s NHR 2.0 Regime (IFICI)?
NHR 2.0 Portugal, the common name for IFICI (Incentivo Fiscal à Investigação Científica e Inovação), is the new tax regime for new residents that replaced the old NHR in 2024. It is not a visa — meaning it is not a residence permit by itself — but rather a tax benefit available to those who obtain tax residency in Portugal and have not been tax residents in the past five years.
Its goal is clear: to attract qualified talent, innovation, and high-value projects to the country. In other words, Portugal is no longer seeking just any new resident, but rather professionals and entrepreneurs who can bring real value to its economy.
The regime lasts for 10 consecutive years (non-renewable) and offers significant tax incentives for those who meet the criteria. The most notable one is a flat 20% income tax rate on Portuguese-sourced income and, in many cases, exemptions on foreign-sourced income.
That said, not all international income sources qualify. Portugal maintains a blacklist of non-cooperative jurisdictions, and if your income comes from any of those territories, tax rates of up to 35% may apply. Therefore, before taking the leap, it’s essential to analyze carefully where your income originates and how it fits within the new NHR 2.0 rules.
IFICI (New NHR) vs. Old NHR Regime
The new IFICI regime preserves the essence of the old NHR: a 10-year duration and a flat 20% tax rate on employment or professional income generated in Portugal, along with full exemption on various types of foreign income. Up to that point, nothing changes. What does change is who can access it.
The old NHR was broad: it was enough to carry out an activity considered “high added value,” which — combined with a rather lenient review process — led to a massive influx of almost any type of profile.
The new IFICI, however, restricts access to very specific profiles, linked to innovation, research, or business projects with a real impact on the Portuguese economy. In other words, being a generic remote professional or a digital entrepreneur with no real ties to Portugal no longer qualifies.
Even so — as we’ll see later — there are planning mechanisms that can allow access for profiles that might initially seem outside the regime.
The application process has also changed: it’s now more technical, involving online applications and more thorough verification procedures.
In summary: the tax regime remains attractive, but the entry filter is now much more demanding.
Tax Benefits of the New NHR 2.0 in Portugal
The new IFICI regime (NHR 2.0) keeps the best aspects of the previous model: a flat 20% tax rate on employment or professional income earned in Portugal, and exemptions on most foreign-sourced income.
The key lies in two questions: Where does your income come from, and what is your connection to Portugal?
In general terms, the regime rewards those who create value within the country — qualified employees, executives in certified startups, researchers, or professionals working for export-oriented companies — while maintaining the traditional exemption for income earned abroad.
However, if your income comes from countries included on Portugal’s blacklist of non-cooperative jurisdictions, the exemptions do not apply, and you may be subject to higher tax rates.
Let’s take a look at how each type of income is taxed under the new regime:
20% Income Tax under NHR 2.0
The core of NHR 2.0 is the reduced 20% tax rate on employment or professional income derived from eligible activities in Portugal.
It applies for 10 consecutive years, provided there is a real link with a recognized entity — for example, a certified startup, an R&D center, or an export-oriented company.
It’s not enough to simply “live and work from Portugal.” You must prove the eligibility of your position or activity. If you change company or project, the regime allows a short adjustment period to remain eligible without losing the benefit — as long as it is properly documented.
0% Tax on Dividends under NHR 2.0
Foreign-sourced dividends are generally exempt from taxation in Portugal, which means a real 0% tax rate for those who apply the regime correctly.
However, dividends from Portuguese companies are considered local income and are taxed either at 20% or under the general tax rules, depending on the structure.
0% Tax on Interest and Capital Gains under the IFICI Regime
Interest from foreign bank accounts, bond coupons, and capital gains from the sale of non-Portuguese shares or funds are generally exempt from taxation in Portugal under NHR 2.0 — unless they come from a blacklisted jurisdiction.
This allows you to design an international portfolio with near-zero taxation, taking into account any withholding taxes applied at source.
0% Tax on Rental Income under Portugal’s NHR
Rental income earned outside Portugal can also benefit from full exemption under Portuguese personal income tax (IRS), as long as you can prove its foreign origin.
It’s advisable to keep contracts, statements, and withholding certificates in case the Portuguese tax authority requests proof of source.
Pension Taxation under the Portuguese NHR
Under NHR 2.0 / IFICI, foreign-sourced pensions are no longer covered by the foreign income exemption. They are taxed in Portugal under the general IRS scale, although withholding at source and relief through double tax treaties may apply.
In some very specific cases, certain pensions or insurance products may benefit from partial relief under the IRS Code itself, but they are not part of the IFICI incentive and must be evaluated on a case-by-case basis.
Cryptocurrency Taxes in Portugal under the IFICI Regime
NHR 2.0 is not a crypto-specific regime, which means that as a resident in Portugal, you’re subject to the country’s general tax rules:
Gains from sales held for more than 12 months: exempt for individuals.
Sales held for less than 12 months: taxed at the general rate (28%).
Staking, mining, or regular trading: considered an economic activity and taxed as such.
If your crypto income comes from abroad (for example, staking rewards earned outside Portugal) and not from a blacklisted jurisdiction, it may fall under the general exemption rules of the regime.
Corporate Taxes in Portugal under the IFICI Regime
NHR 2.0 applies to personal income tax (Portuguese IRS), not corporate tax.
A Portuguese company is taxed at the standard corporate tax rate (IRC), but a partner or executive may benefit from the 20% rate on local income if their contract and role meet the regime’s eligibility requirements.
Taxes for Digital Nomads (Remote Employees) in Portugal under the NHR
If you work from Portugal for a foreign company, that income is generally considered Portuguese-sourced, since the work is physically performed within Portuguese territory.
Therefore, you can only benefit from the 20% rate if your employer or entity meets the IFICI requirements.
Otherwise, your salary will fall under the general tax regime. Only income from work physically performed outside Portugal can qualify as foreign-sourced and remain exempt.
Requirements to Qualify for the IFICI Tax Regime in Portugal
Qualifying for the new NHR 2.0 (IFICI regime) doesn’t just depend on moving to Portugal — it also requires meeting certain personal and economic conditions.
The starting point is clear: you must become a Portuguese tax resident and not have been one in the past five years.
In addition, the regime is not activated automatically — you must apply through the Portal das Finanças and provide documentation proving that you meet the eligibility criteria.
Once you pass this initial filter, the most important factor comes into play: your professional activity and your link with an eligible entity in Portugal.
The Easiest Way to Access NHR 2.0: Creating an Export Company
Of all the ways to qualify for IFICI, this is without a doubt the broadest and most flexible.
The regime aims to attract companies and professionals who create real value and export services or technology from Portugal to abroad.
Therefore, setting up your own Portuguese company that invoices primarily to clients outside the country (at least 50% of total income) can be the most effective gateway.
Imagine a consulting firm, tech agency, or software company with clients in other EU countries.
If your activity is innovative and you design a minimal structure in Portugal, you could benefit from personal taxation of:
20% tax on income earned in Portugal.
0% tax on foreign-sourced income.
In practice, this path allows many professionals to combine Portuguese tax residency with a solid operational structure, taking advantage of IFICI incentives without relying on third-party employers.
However, as we’ll see later, the costs of maintaining the structure, along with the need to properly justify the origin and legitimacy of foreign income, mean that the regime is most profitable for entrepreneurs and high-income professionals.
Other Pathways to Access the IFICI Regime in Portugal
Although setting up an export-oriented company is the most versatile option, there are other ways to qualify for the regime:
Universities and research centers.
Professors or researchers employed by Portuguese R&D institutions often meet IFICI requirements quite easily.Certified startups.
Being part of the management or technical team of a startup officially recognized by Portuguese authorities also grants access to the regime.Recognized innovation or investment projects.
Companies with projects validated by public bodies — or that can demonstrate real spending on innovation — may also qualify, even if they are not startups.
Portugal Golden Visa: Access to Europe and the NHR 2.0
For non-EU citizens interested in taking advantage of the NHR 2.0 regime, the best way to enter Portugal may be through the Golden Visa.
The Golden Visa is designed for non-EU residents who invest in Portugal, with contributions ranging from €200,000 (donation) to €500,000 (investment). It is one of the most accessible and flexible residence-by-investment programs in Europe, allowing investors to live, work, and start businesses in Portugal, reunite family members, and travel freely within the Schengen Area without a visa.
Although it does not grant citizenship immediately, it can lead to it after ten years (seven years for citizens of the European Union and Brazil). Its greatest appeal, however, lies in its residency flexibility: spending an average of just seven days per year in the country is enough to keep the residence permit active.
Thanks to this flexibility, it is also possible to maintain the Golden Visa and accumulate the required years to eventually apply for a European passport, while keeping tax residency in another country. Since it only requires a few days of presence each year, one does not automatically become a tax resident in Portugal.
Illegal Strategies and Common Mistakes with the NHR in Portugal
The old NHR regime in Portugal became so popular that it eventually turned into a marketing hook to sell artificial structures. The most common was the combination of NHR in Portugal with an LLC in the United States. For years, this seemed like a magic formula: you lived in Portugal, invoiced through a U.S. LLC, paid only a few hundred dollars in taxes there, and declared “dividends” exempt at 0% in Portugal. On paper it sounded perfect — but in practice, this setup is illegal from every angle.
The reason is simple: if the work is physically carried out from Portugal, the income is considered Portuguese-sourced, regardless of where the client or company paying the bill is located. That income cannot be treated as foreign income unless the activity itself is performed abroad. And if there is real economic activity carried out in Portuguese territory, you are required to pay into Portuguese Social Security, among other obligations.
You also can’t ignore VAT (IVA). If invoicing is effectively generated from Portugal, Portuguese VAT or EU VAT rules apply — not U.S. ones. Using an LLC to invoice clients “abroad” while working from Portugal can amount to significant VAT fraud.
An even more serious problem arises when the effective management of that LLC — meaning its decision-making, control, and operations — is based in Portugal. In that case, the Portuguese tax authority can consider the company a Portuguese tax resident, or at least a permanent establishment taxable in Portugal.
In short, the NHR + U.S. LLC setup that became widespread is a big mistake that should not be repeated under the new regime.
Under the new NHR 2.0 (IFICI), it’s still possible to plan structures involving foreign elements, but those foreign entities must have a real economic purpose, independent activity, and real business operations.
Having a company in Cyprus, the Emirates, or Delaware just because they “pay little tax” — or because someone recommended it in a YouTube video — is not a valid reason. If there’s no real business, staff, or operational purpose behind the company, the risk of non-compliance is very high.
The takeaway is simple: if you want to manage international operations while living in Portugal, you must structure everything properly and use the NHR regime legitimately. If, instead, you set up empty offshore companies to channel income that is actually generated from Portugal, you’ll expose yourself to unnecessary risk — while other countries may offer you the same tax benefits legally.
Best Alternatives to Portugal’s NHR
Portugal remains one of the most attractive tax residencies in Europe — with a pleasant climate, great connections to the rest of the continent, stability, safety, and a reasonable cost of living in many areas outside Lisbon or Porto.
However, the new NHR 2.0 (IFICI) is no longer as accessible as its previous version.
For many entrepreneurs or professionals with moderate income or small structures, Portugal may no longer be the ideal choice — the costs of setting up and maintaining the required structure outweigh the actual tax savings.
In those cases, the smartest move is to look toward jurisdictions with a better tax system or more favorable exemption regimes.
Among the strongest alternatives to Portugal’s NHR, the following stand out:
Paraguay, with its territorial tax system and flexible residency requirements.
Panama, another classic that allows international operations with very low (almost zero) taxation.
United Arab Emirates, for those seeking the largest networking hub with no personal income taxes.
Of course, there’s no one-size-fits-all jurisdiction. The best choice will depend on the type of income, earnings level, and personal or business plans in the medium term.
Are you interested in applying for the NHR 2.0 in Portugal?
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FAQs about Portugal’s NHR 2.0
How much tax do you pay under Portugal’s NHR?
Under the NHR 2.0 (IFICI) regime, income generated in Portugal is taxed at a flat 20% for 10 years, provided the activity qualifies.
Foreign-sourced income, meanwhile, can be exempt at 0%, except if it comes from countries on Portugal’s blacklist.
What’s the difference between the old NHR and the new IFICI Portugal regime?
The new NHR 2.0 keeps the same benefits — 20% tax on local income and 0% on much foreign income — but restricts who can qualify. Only professionals and companies linked to innovation, R&D, or export sectors are eligible. Being a generic remote freelancer with no connection to Portugal no longer qualifies.
How long does the new NHR 2.0 last?
The regime applies for 10 consecutive, non-renewable years. After that period, the taxpayer transitions to Portugal’s general IRS regime.
Which types of income are tax-exempt under NHR 2.0?
Foreign-sourced income — such as dividends, interest, capital gains, or rental income from abroad — may be exempt, provided it does not originate from jurisdictions on Portugal’s blacklist.
Which countries are on Portugal’s tax blacklist?
Portugal regularly publishes a list of non-cooperative jurisdictions, which includes countries such as Panama, Qatar, the Bahamas, and Monaco.
If your income comes from one of these, exemptions do not apply, and you could be taxed up to 35%.
How are dividends taxed under NHR 2.0?
Dividends from foreign companies are exempt in most cases, while dividends from Portuguese companies are treated as local income — taxed at 20% if the activity qualifies under the regime, or under the general IRS rules if not.
And what about cryptocurrency gains under the new NHR?
Cryptocurrencies follow Portugal’s general tax rules:
Exempt if held for more than 12 months.
28% tax if sold within a year.
Staking or mining are considered economic activities and taxed accordingly.
Can digital nomads in Portugal access NHR 2.0?
Only if you work for an eligible Portuguese entity (certified startup, export-oriented company, etc.) or if you create your own company in Portugal with innovative activity and international clients.
Working for a foreign company with no Portuguese link does not qualify for the 20% rate or exemptions.
How do you apply for NHR 2.0?
Applications are made online through the Portal das Finanças, once you become a tax resident in Portugal and can prove eligibility. Documentation is required for your contract, company, or project, along with evidence of effective residence.
What are the best alternatives to Portugal’s NHR?
Among the strongest alternatives are Paraguay, Panama, and the United Arab Emirates, which offer territorial tax systems or full income tax exemptions.
Each case must be evaluated based on income type, cost of living, and ease of implementation.