The NHR Program in Portugal: Understanding the New IFICI+ Regime in 2025

For years, Portugal’s NHR Program (Non-Habitual Resident) was one of the main reasons why professionals, entrepreneurs, and retirees moved to the country. The program offered a flat 20% tax rate for qualified professionals and exemptions on foreign income, making Portugal a tax haven for thousands.

However, in 2024, the Portuguese government ended the NHR Program for new applicants and replaced it with a new system: IFICI+ (Incentivo Fiscal à Inovação e Competitividade Internacional), which translates to Tax Incentive for Innovation and International Competitiveness in English.

Now, in 2025, many people still have questions about what has changed, who qualifies for the new tax regime, and whether Portugal remains an attractive destination.

Let’s break it down.

1. What Happened to the NHR Program?

The Non-Habitual Resident (NHR) Program was introduced in 2009 to attract foreign talent, entrepreneurs, and retirees to Portugal. Under this program, eligible individuals benefited from:

• A flat 20% tax rate on qualified professions (instead of Portugal’s progressive income tax, which goes up to 48%).

• A 10-year period of reduced taxation.

• Full tax exemptions on foreign income (such as pensions, dividends, and capital gains), as long as they were taxed in another country.

While the program was highly successful, it also led to criticism, particularly for driving up property prices and offering tax breaks to wealthy foreigners that were unavailable to locals.

In response, the government announced that the NHR Program would be discontinued at the end of 2023.

As of December 23, 2024, the IFICI+ tax regime became fully operational, replacing the NHR Program with a more targeted system aimed at professionals in specific industries.

2. How the IFICI+ Regime Works in 2025

With the end of the NHR Program, the new IFICI+ tax regime came into effect. However, this new system is much more restrictive instead of being open to all foreign residents.

IFICI+ stands for "Incentivo Fiscal à Inovação e Competitividade Internacional," which translates to "Tax Incentive for Innovation and International Competitiveness." The goal of this program is to attract skilled professionals who can contribute to Portugal’s economy.

Key features of IFICI+ in 2025:

• A reduced 20% tax rate remains, but only for professionals in strategic sectors.

• No more tax exemptions on foreign income – retirees and passive investors no longer receive special treatment.🔹 The 10-year duration remains, offering long-term tax benefits for eligible individuals.

• A clear focus on economic growth, prioritizing jobs in science, technology, innovation, and research.

Unlike the NHR Program, which applies to a wide range of professions, the IFICI+ regime is only available to individuals working in key industries.

3. Who Can Benefit from the IFICI+ Regime?

One of the biggest differences between IFICI+ and the NHR Program is eligibility. Under the old system, investors, freelancers, and retirees could all benefit. That’s no longer the case.

In 2025, the IFICI+ tax regime is only available to:

• Highly qualified professionals in fields like engineering, technology, science, and healthcare.

• Entrepreneurs and startup founders whose businesses contribute to Portugal’s innovation ecosystem.

• University professors and researchers working in recognized institutions.

• Employees of companies benefiting from investment incentive programs or those with significant exports.

4. Key Industries That Benefit from IFICI+

Unlike the NHR Program, which applies to a broad range of industries, the IFICI+ regime is designed to support sectors that drive Portugal’s economic growth.

In 2025, the following industries will receive priority for tax benefits:

• Research & Development (R&D)

• Technology & Innovation

• Startups & Entrepreneurship

• Healthcare & Engineering

• Sustainable Energy & Environmental Science

• Higher Education & Scientific Research

If you work in one of these areas and are employed by a recognized company or institution, you may qualify for the 20% tax rate.

5. How to Become a Tax Resident in Portugal Under IFICI+

If you want to apply for the IFICI+ tax regime, you first need to become a tax resident in Portugal. This means meeting the following requirements:

• Spending at least 183 days per year in Portugal or proving that you have a permanent residence in the country.
  

• Not having been a tax resident in Portugal in the previous five years.
  

• Working in an eligible industry or for a qualified company.
  

• Submitting your application by January 15 of the year following your tax residency.

If you became a tax resident in 2024, you have until March 15, 2025, to complete your application. Once approved, your tax benefits will last for 10 years.

6. Is Portugal Still an Attractive Destination in 2025?

With the end of the NHR Program, many people wondered if Portugal would lose its appeal as a tax-friendly destination. The answer depends on your situation.

• If you work in technology, science, or research, Portugal still offers one of the lowest tax rates in Europe for skilled professionals.
  

• If you’re an entrepreneur, Portugal continues to encourage startups and innovation, making it an attractive place to launch a business.

Overall, Portugal remains a great choice for highly skilled professionals and entrepreneurs.

Restriction for Former NHR Beneficiaries

If you previously benefited from the NHR Program, you cannot apply for IFICI+. However, this does not affect any existing benefits to which you were already entitled.

• If you were approved for NHR before it ended, you can continue enjoying its tax benefits until the end of your 10-year period.

  
  

• If you received tax incentives under the Regressar regime, you will not lose them, but you cannot transition into IFICI+ afterward.

  
  

This rule was introduced to attract new skilled professionals rather than extending benefits to individuals who had already taken advantage of previous tax incentives.

Conclusion

The NHR Program was officially replaced in 2024, and the IFICI+ tax regime now takes its place with stricter eligibility criteria. While Portugal still offers excellent tax benefits, they are now limited to professionals working in strategic industries.

If you’re considering moving to Portugal, it’s crucial to understand the new rules and determine whether you qualify for the 20% tax rate under IFICI+. Consulting a tax specialist can help you plan your move and maximize your benefits.

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