📜 NHR Is Gone — But Here's What Replaced It

Happy Sunday, expat family ☀️

I got my first sunburn of the season yesterday… despite being within arm’s reach of sunscreen. Rookie mistake, I know, but I genuinely didn’t expect Portugal’s sun to rival the African sun I grew up with this early in the year. Lesson learned the hard way 😅

Thankfully, when it comes to the important stuff (like taxes and legal structures), we don’t have to learn through painful (or expensive) mistakes. That’s where our monthly experts come in, generously sharing their insights so we can stay informed and make smarter decisions.

Today’s newsletter is all about the newly approved NHR 2.0 / IFICI: what it actually is, who it applies to, and just as importantly… who it doesn’t. This is the final part of our two-part series, so if you missed the first article, you can catch up here.

On a lighter note, if this warmer weather has you reaching for a chilled glass of something 🍷, I found an incredible site listing upcoming wine festivals and events across Portugal, and it was too good not to share:

👉 https://vinhosabeber.pt/agenda-2026-upcoming-wine-festivals-in-portugal/

On the menu today:

And more…

Let’s dive in, shall we? 👇

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The Town of Arraiolos is a town seat of the Arraiolos Municipality in the Évora District of Portuga. Arraiolos stands out in the Alentejo for a craft tradition that has shaped the town’s identity for centuries. It is best known for its hand-embroidered carpets, made with a distinctive stitch and patterns that blend local Portuguese influences with older ornamental traditions, giving each piece both decorative value and historical weight. More than a decorative art form, the Arraiolos carpet remains a defining symbol of the town itself, linking local heritage, skilled workmanship, and cultural continuity in a way few places in Portugal can match.

Let's be honest about what IFICI (commonly called NHR 2.0) actually is. It was approved under Portugal's 2024 State Budget, and yes, it offers a flat 20% income tax rate for 10 years plus broad exemptions on most foreign-source income. That part sounds familiar.

But here's the part that often gets glossed over: this is not a like-for-like replacement for NHR. It won't apply to everyone. Eligibility depends on the type of work you do and the structure you do it within: think scientific research, certified startups, or highly qualified roles inside qualifying companies. Simply living here and working remotely doesn't automatically qualify you.

I asked the team at Fresh Portugal to write the full breakdown, and this is the second and final piece in our two-part series with them on this regime. Their article covers who qualifies, what the common misconceptions are, and what to do if you're not sure where you stand. Let’s hand things over to the experts:

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Since the termination of NHR, one question keeps resurfacing: “Is there a new NHR? What is NHR 2.0? And do I qualify?”

What is commonly referred to as “NHR 2.0” is in fact the Tax Incentive for Scientific Research and Innovation (TISRI in English or IFICI in Portuguese), introduced under the 2024 State Budget.

While the comparison is understandable, it is important to clarify from the outset that IFICI is not a direct replacement for NHR. It is a different regime, based on a different underlying logic, and with distinct rules, benefits and deadlines.

In simplified terms, IFICI is a special tax regime for Personal Income Tax that provides a 10-year flat tax rate of 20% applicable to income derived from qualifying activities carried out in Portugal, subject to the fulfilment of specific legal requirements.

It also provides, in broad terms, an exemption from Personal Income Tax on most categories of foreign-source income, with notable exceptions such as pension income and income derived from blacklisted jurisdictions.

Unlike NHR, however, it is not structured as a general incentive for new residents. It is an activity-based regime, meaning that eligibility depends primarily on the nature of the functions performed and the framework in which they are carried out.

At a high level, access to the regime requires that the individual:

In addition, the regime is not available to individuals who have previously benefited from NHR and applies for a maximum period of 10 consecutive years.

The legislation identifies several categories of qualifying activities, including:

However, the classification of a profession as “highly qualified” is not, in itself, sufficient.

A key requirement, and often the decisive factor, is that the activity must be performed within a qualifying structure. This may include, for example:

This dual requirement (activity and framework) is central to understanding how the regime operates in practice.

In practice, a number of recurring assumptions tend to arise:

These assumptions are not necessarily correct.

In practical terms, the regime is most relevant for individuals whose relocation is directly linked to an identifiable economic function within Portugal, which makes planning ahead very important.

By contrast, individuals relocating independently, without integration into a qualifying structure, will fall outside the scope of the regime. In certain situations, alternative structuring options may be explored in advance (for example, through incorporation of a qualifying business or investment into an existing project), depending on the individual’s profile and objectives.

The narrower scope of IFICI reflects a broader policy shift. Rather than offering a generalised tax incentive to attract new residents, Portugal is increasingly focusing on attracting activities that contribute to innovation, investment and international competitiveness.

From a technical perspective, this results in a regime that is more complex and more selective than NHR. At the same time, for individuals who meet the conditions, the regime may offer a more favourable outcome in certain scenarios, particularly in relation to foreign-source income.

The practical implication is that eligibility under IFICI cannot be assessed solely by reference to an individual’s profession or intention to relocate. It requires a structured analysis of:

Where these elements align, the regime can offer a meaningful benefit. Where they do not, the comparison with NHR becomes less relevant, and the relocation decision is likely to depend on factors beyond the scope of this specific incentive. In either case, advance tax planning is key.

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With thanks to our collaborators at FRESH Portugal, for their valuable insights and contributions to this article.

_{The legal team at Fresh Portugal is composed of experienced professionals with expertise in tax, immigration, real estate, estate planning, and corporate law. They advise individuals and businesses on relocation, investment, compliance, and tax planning. With extensive experience working with international clients, the team delivers clear, practical, and forward-thinking solutions to help expats thrive in Portugal.}

Email: [email protected]

Fresh Portugal have also put together a short video walking through 2025 application approvals. Worth a watch if you want to hear it explained rather than read it.

Have you ever heard Portuguese people say "dum" or "duma" and wondered what it means?

In European Portuguese pronunciation, native speakers often merge words when speaking quickly. That’s why you’ll frequently hear:

• dum → contraction of de um

• duma → contraction of de uma

These contractions are extremely common in spoken Portuguese and understanding them will help you sound much more natural when speaking European Portuguese.

🗣 Do you want to learn European Portuguese in a structured and fun way and become part of our community within Mia Esmeriz Academy? Try the free course “Kickstart Your Portuguese - The Basics”.

💡 Mia from Mia Esmeriz Academy is a Portuguese teacher from Porto with more than 15 years of experience teaching foreigners. She helps expats become fluent in Portuguese in a clear and practical way. Alongside her courses, she also shares free content on Instagram, Facebook, and TikTok.

Thanks for reading! 💌

Hustle on!

Angelique🧞‍♀️

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