Think the NHR Is Dead? What Expats Need to Know

When Portugal officially ended its Non-Habitual Resident (NHR) Tax Regime in 2024, many assumed the country’s popular expat tax break had come to an end, and were left wondering: “Is that it? Are the tax breaks gone? —The short answer is no. In fact, if you're a working professional considering moving to Portugal, you may be pleasantly surprised to find that most of the key benefits are still alive and well, just under a new name and structure.

Here’s what’s changed—and what hasn’t.

What’s Different in Portugal’s New Tax Regime?

Yes, Portugal’s old NHR tax regime has been officially closed to new applicants. But what’s taken its place is a new NHR tax regime, officially called Incentivo Fiscal à Investigação Científica e Inovação (IFICI) - designed for scientific research and innovation professionals, as well as a generous transition period for those who had plans in motion before the cutoff.

While the name and technical rules might have changed, the core tax advantages for working expats remain strikingly similar:

• The 20% flat tax rate on qualifying income? Still available.
• The exemption method for foreign income? Still applies in many cases.
• The 10-year benefit period? Also unchanged.
  

What’s really different? Mostly, the treatment of pensions— Retirees no longer receive special flat-rate taxation and are instead taxed under standard IRS progressive rates, a change that mostly affects retirees, and not the international working population.

Why You May Still Qualify, Even Without Realizing It

One of the biggest misconceptions is that the new regime is niche and only available to researchers in lab coats. That’s far from the truth.

If you work in any of the following areas, there’s a good chance you could qualify for the new incentive regime under Article 58.º-A of the Estatuto dos Benefícios Fiscais:

• Tech and product development.
• Startups.
• Export-focused companies.
• Scientific or academic institutions.
• Strategic industries recognized by IAPMEI or AICEP.
• Innovation centers and certified R&D entities.
  

In other words: If you would’ve qualified for NHR in the past, you likely still do.

This is particularly relevant to the types of expats Portugal has long sought to attract—highly skilled professionals, remote workers in innovative sectors, and entrepreneurs building globally-minded companies. The system now simply adds a bit more structure around who qualifies and how that's verified.

Same Benefits, Slightly Different Framework

While the headline benefit—a 20% flat tax rate on employment or self-employment income—is virtually the same, the mechanism for receiving it has changed slightly. Under the new regime:

• Your eligibility depends on the type of work, employer, or industry.
• Certification from recognized authorities (e.g., IAPMEI, FCT, Startup Portugal) is required
• This regime cannot be combined with the “Programa Regressar” or legacy NHR status.

Still, in most real-world cases, if you’re moving to Portugal for work or setting up a business here, you’ll get the same tax benefit as before—just through a more targeted pathway.

What About Foreign-Earned Income?

Another question people were left pondering was: “Will I still get tax exemptions on income from abroad?”
For many types of income the answer is yes, as long as the income is:

• Effectively taxed in the country of origin.
• Not from a blacklisted jurisdiction.
• Properly sourced (i.e., truly earned abroad, not simply paid by a foreign company while you're working from Portugal).

This applies to dividends, interest, royalties, capital gains, rental income, and even employment income, when compliant with relevant sourcing and residency rules. While such income is generally excluded from taxation, it may be included for rate calculation purposes (englobamento).

Pensions, however, are the one major exception. They’re no longer covered under any special flat-rate or exemption regime and are taxed at standard Portuguese Tax Rates.

Bottom Line: The NHR’s Legacy Lives On

If you’ve been discouraged by the headlines claiming “NHR is over,” take a second look. For working expats, the tax benefits are largely intact, and the new regime is in many ways a continuation of the same policy goal: to attract skilled, internationally mobile professionals to Portugal.

So don't count yourself out just yet—you might still qualify, and the savings can be substantial.

Want to Know if You Qualify?

Here at Tytle, our tax experts help expats understand which regime applies to them and how to make the most of it. We'll walk you through it step by step, so you know what to expect—and how to benefit fully from Portugal's tax rules for newcomers. You might still qualify, and the savings can be substantial.

At Tytle, we provide tailor-made services including:

• Obtaining a NIF number hassle-free.
• Accounting/bookkeeping.
• Accurate tax filing.
• Estate planning.
• Cross-border advice.
• Immigration services.
• And much more!

For more expert tax advice, feel free to explore: “Americans Freelancing in Portugal: Keep US LLC or Go Local?” and “Americans Lead Digital Nomad Visa Applications in Portugal”.