At the end of 2023, the Portuguese government unexpectedly abolished the NHR scheme. The fallacious argument was that the property was unaffordable for the average Portuguese citizen. However, those who used the NHR scheme were active in a different property market. Naturally, those who had NHR status were able to continue to enjoy it.
A new scheme was announced, but for more than a year, no one knew what it would entail. Eventually, in the course of 2025, the fog surrounding NHR 2.0, officially known as
IFICI began to lift. IFICI stands for ’tax incentive for scientific research and innovation’ in Portuguese.
The aim now was to attract highly educated people to Portugal. More on this later.
The new scheme is somewhat more complex in terms of its structure, but it is generally
more favorable than the old scheme, because, for example, profits on shares (so-called capital
gains) are now also exempt.
For whom? The scheme is open to anyone who has the right to reside in Portugal
(an EU/EEA/Swiss citizen or a holder of a residence permit) and who has not been a tax resident of Portugal for the past 5 years.
What is the tax advantage? What is your advantage? Put simply, with a little creativity, you can keep all income earned outside Portugal out of Portuguese taxation for the first 10 years. This is certainly interesting in times of teleworking, as it offers many possibilities. Details follow below.
Understand the philosophy. Try to understand that the Portuguese tax authorities and government have introduced this system to attract wealthy individuals. The reasoning is that, even if you feel you are not paying taxes, you are still contributing to the Portuguese treasury. And that is what it is all about… If you are clever, you can avoid personal income tax, but you will still eat and drink in Portugal and pay VAT, and you will invest in property or rent, so you will still be contributing. The rule applies for 10 years. After 10 years, you will probably be fairly well integrated and will pay normal Portuguese taxes. This is just to say that the tax authorities are sympathetic to this system and will not check up on you to “kick you out” of the system. No, they want you to join the club!
You do not have to live there. To benefit from the NHR, you must have a “residence” in Portugal, i.e. rent or buy a house or flat. There is therefore no minimum stay requirement.
Tip. Are you a “digital nomad” who likes to travel the world or can’t sit still? No problem. You can be a taxpayer in Portugal and be exempt from taxes without worrying about the annoying 183-day rule that applies in most other countries. However, you must be careful not to stay in another country outside Portugal for too long, otherwise you will be taxed there.
We can give you some tips… contact us for more details, as always at: info@dehoon-dhp.com.
What income is currently exempt? The rule is that it must be income originating outside Portugal. This includes income from foreign sources, royalties, capital gains, and investments or rental income, which are exempt from Portuguese tax as long as they are subject to tax in the source country under a double taxation agreement or under the OECD model tax treaty.
Example: You receive dividends from a Bulgarian company because you have an IT business there. These dividends are therefore not taxed in Portugal for the first 10 years.
Please note! Furthermore, under applicable Portuguese law, such income may not be considered as originating in Portugal and may not originate in a blacklisted tax haven. So, for example, if you receive dividends from Panama, you are not tax-exempt in Portugal and do not benefit from the NHR.
Sometimes 20%. You may have income that is not exempt under the NHR. For example, you may be working locally in Portugal, opening a dental practice for Belgians and Dutch nationals in the Algarve, or becoming a real estate agent on Portugal’s Silver Coast. In that case, for the first 10 years, you will NOT pay the standard Portuguese taxes, which can reach 48%. No, for the first 10 years, you will only pay 20% on your salary, but you will also pay Portuguese social security!
Pensions are now excluded! Under the old scheme, pensioners could also benefit from the NHR and were exempt from tax on their pensions for 10 years. This has now come to an end, and pensions themselves are taxed at the progressive rate, which can be as high as 48%.
Procedure? To benefit from NHR 2.0, a few steps are required. But this is our job. You will need to set up a Portuguese limited company. From this, you will take a salary on which you pay social security contributions. More than half of this limited company’s activities must be focused on exports. In other words, send invoices to a company outside Portugal.
Depending on the activity, the company must be certified by the relevant government agency. This involves a lot of paperwork and formalities. Again, we take care of this for you. The result is still attractive: if you approach it wisely, you will pay virtually no tax on income generated outside Portugal for 10 years.
Contact us for more details: info@dehoon-dhp.com
