For a decade, Portugal’s Non-Habitual Resident (NHR) regime was the headline draw for expats and retirees: a flat 10% on foreign pensions and broad exemptions on other foreign income for 10 years. Portugal closed NHR to new applicants from 2024 and introduced a successor, formally the Incentivo Fiscal à Investigação Científica e Inovação — IFICI, nicknamed “NHR 2.0”. It is a different beast.
NHR vs IFICI at a glance
| Feature | Old NHR (closed) | IFICI (NHR 2.0) |
|---|---|---|
| Status | Closed to new applicants from 2024 | Open to qualifying new residents from 2024 |
| Portuguese-source qualifying income | 20% flat | 20% flat |
| Most foreign-source income | Largely exempt | Largely exempt |
| Foreign pensions | 10% flat | Taxed at ordinary rates (up to 48%) |
| Duration | 10 years | 10 years |
| Eligibility | Broad (incl. retirees) | Activity-based (workers, researchers) |
Headline rules for 2026 from PwC Worldwide Tax Summaries. General information, not tax advice — verify with the Portuguese tax authority.
Who can get IFICI
IFICI is aimed at attracting talent and innovation, not retirees. To qualify you generally must:
- become Portuguese tax resident from 2024 onward;
- not have been Portuguese tax resident in the prior five years;
- never have benefited from NHR; and
- take up a qualifying activity — scientific research, higher-education teaching, roles in certified startups, or another highly-qualified profession on the eligible list.
The application deadline is 15 January of the year after your residency begins. Because IFICI hinges on an eligible activity, it is effectively a workers’ regime.
What you get
- A flat 20% rate on Portuguese-source employment and self-employment income from the qualifying activity.
- Exemption on most foreign-source income — foreign dividends, interest, capital gains, rental and employment income (subject to anti-abuse and blacklisted-jurisdiction rules).
- The benefit runs for 10 consecutive years.
The catch for retirees
Under old NHR, a foreign pension was taxed at a flat 10% — the reason so many retirees chose Portugal. Under IFICI, foreign pensions are not exempt and not flat-rated. They are taxed as ordinary income at Portugal’s progressive scale, up to 48% plus a solidarity surcharge. A retiree living mainly on a pension gets little from IFICI.
Retirees comparing options should look at Greece’s 7% pensioner regime, Italy’s 7% southern-towns regime, territorial Panama or Costa Rica, or Cyprus — see the best countries for foreign-pension retirees.
Bottom line
IFICI is a genuine incentive for qualifying skilled workers moving to Portugal, with a 20% rate and broad foreign-income exemption. But it is not the retiree haven NHR was. Read the full Portugal profile and compare it with Spain and Italy before deciding, and confirm the current IFICI eligibility list with a Portuguese tax adviser.