Portugal's NHR Successor: What the New IFICI Regime Means for HNW Residents
Portugal's non-habitual resident regime has been replaced. The successor IFICI structure is narrower, but still useful for the right profile.
The end of an era
Portugal's non-habitual resident regime — the NHR — was, for over a decade, one of the most generous tax structures in Europe for relocating professionals and retirees. A flat ten percent tax on foreign pension income, exemption on most foreign-source investment income, and a flat twenty percent rate on Portuguese employment income for high-value-added professions made Lisbon, Cascais and the Algarve magnets for European HNW relocators throughout the 2010s and early 2020s.
The regime closed to new applicants at the end of 2023 following political pressure tied to housing affordability in Lisbon and Porto. Existing NHR residents retained their status for the remainder of their ten-year window, but new arrivals from 2024 onward could no longer access it.
What replaced it
The successor regime, formally the Incentivo Fiscal à Investigação Científica e Inovação — IFICI — was introduced in 2024. It is structurally narrower than the NHR. Eligibility is restricted to specific professional categories: scientific researchers, university lecturers, qualified personnel in certain technology and innovation sectors, and employees of recognised startups or research institutions.
For those who qualify, the regime offers a flat twenty percent rate on Portuguese-source employment and self-employment income for ten years, and exemption on most foreign-source income. The economic substance is similar to the NHR for the narrow population it covers. The structural difference is who can access it.
Who Portugal still works for
Despite the narrower regime, Portugal continues to attract HNW residents — but the profile has shifted. Founders and senior tech professionals relocating to Lisbon or Porto with qualifying employment in a recognised innovation business can access IFICI. Retirees with substantial foreign pension income now find Portugal less attractive than during the NHR years and are increasingly looking at Italy, Greece or Cyprus instead.
The country's broader tax framework — outside of any special regime — remains relatively competitive. There is no wealth tax. There is no inheritance tax for transfers to spouses, children or parents. Capital gains on the sale of a primary residence are exempt under reinvestment rules. The combination of climate, lifestyle, EU membership and a still-functional tax framework keeps Portugal in the conversation for HNW relocators, even if it is no longer the headline destination it was five years ago.
The cross-border angle
For HNW families with US, UK or other significant non-Portuguese tax exposure, the integration of Portuguese residency with the wider household tax position is the central planning challenge. The IFICI regime, like the NHR before it, interacts in non-obvious ways with the tax positions of the United States, the United Kingdom post-non-dom reform, and the EU jurisdictions in which many HNWs hold business interests.
A relocation to Portugal at this tier is rarely a single-jurisdiction decision. It is a multi-jurisdictional restructuring that requires coordinated counsel — Portuguese tax advisers working alongside the household's primary tax counsel in their existing jurisdictions, with someone holding the integrated brief.