Portugal’s NHR 2.0: the gift that keeps on giving

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Portugal’s NHR 2.0: the gift that keeps on giving

Sponsored by

sponsored-firm-mlgts.jpg
expo-1107244 (1).jpg

António Queiroz Martins and Carolina Braga Andrade of Morais Leitão, Galvão Teles, Soares da Silva & Associados explore how Portugal’s new non-habitual resident regime is designed to attract top talent through targeted tax benefits

Portugal has recently taken a decisive step in refining its tax regime aimed at attracting qualified professionals, researchers, and entrepreneurs. Known as NHR 2.0, this incentive, officially known as Incentivo Fiscal à Investigação Científica e Inovação (the Tax Incentive for Scientific Research and Innovation), was established through the 2024 State Budget Law and came into effect on January 1 2024. However, it only gained full operability after the publication of Ordinance No. 352/2024/1 on December 23, which clarified its implementation.

A shift from the old NHR regime

The original non-habitual resident (NHR) regime had long been a popular option for foreign retirees, professionals, and high-net-worth individuals. However, the Portuguese government phased out this broader scheme and NHR 2.0 has been introduced in its place as a more targeted regime focused on innovation, research, and national economic impact.

Overview of NHR 2.0

NHR 2.0 offers tax benefits to highly qualified professionals who become Portuguese tax residents, and is applicable for a non-renewable period of ten consecutive years starting from the year of residence registration.

Under this regime, income derived by qualified professionals – either from employment (Category A) or self-employment (Category B) – is taxed at a flat rate of 20%, instead of the general progressive rates (up to 53%). All other Portuguese-sourced income is taxed at the standard general tax rates.

Foreign-sourced income is generally exempt from tax in Portugal, though all worldwide income must be reported to the Portuguese tax authorities. The amount is factored into determining the applicable tax rate on the remaining taxable income, which may be subject to progressive rates (i.e., other than any income exempted or that is taxed at a flat rate).

In contrast with the previous NHR 1.0, foreign-sourced pensions are now taxed at progressive rates, but foreign-sourced capital gains shall be exempted.

Eligible professions and sectors

Unlike the former regime, which was available to anyone who became a resident in Portugal but had not been in the previous five years, NHR 2.0 places a strong emphasis on highly qualified professions and export-orientated businesses, requiring applicants to develop in Portuguese territory one of the following activities:

  • Teaching in higher education and scientific research;

  • Performing qualified jobs or serving as a member of a corporate body within the scope of contractual benefits for productive investment;

  • Carrying out highly qualified activities as defined in the annex to Ordinance No. 352/2024/1 on December 23;

  • Performing another qualified job or serving as a member of a corporate body in an entity carrying out economic activities recognised by the Portuguese Trade and Investment Agency (Agência para o Investimento e Comércio Externo de Portugal) or the Agency for Competitiveness and Innovation (Agência para a Competitividade e Inovação) as relevant to the national economy, particularly in terms of attracting productive investment and reducing regional asymmetries;

  • Working as R&D personnel whose costs are eligible under the corporate R&D tax incentive system (i.e., expenses for personnel with a minimum education level of four in the National Qualifications Framework, directly involved in R&D tasks);

  • Performing any job or serving as a member of a corporate body in an entity certified as a start-up, provided that it complies with certain requirements; or

  • Carrying out jobs or other activities in the Azores or Madeira, under terms to be defined by a regional legislative decree.

Application requirements and verification

Eligibility depends on verification of the requirements regarding the type of activity carried out by the individual, the validation of which is the responsibility of each of the entities to which the applications are submitted (as set out in Ordinance No. 352/2024/1 on December 23), whereas the verification of other legal requirements is the responsibility of the tax authorities.

Final thoughts on the NHR 2.0 regime

Although the NHR 2.0 regime has the potential to attract highly skilled professionals who can contribute to the Portuguese economy – primarily by offering a flat 20% tax rate on qualifying income – it is still relatively new and will require the tax authorities to gain experience and establish a track record in its swift application.

Eligibility decisions are critical, considering that there are different criteria and several application routes. This creates the need for proper planning to overcome administrative hurdles and practical issues that may hinder the full application of the regime.

Further developments are still awaited regarding the publication of the regional legislative decrees by the Azores and Madeira, which will define additional eligible job positions or activities for the application of the NHR 2.0 regime to taxpayers who become tax residents in the autonomous regions. Despite the current uncertainty, these upcoming rules may present a valuable opportunity for professionals seeking to benefit from the regime and relocate to Portugal, and help to attract a talented workforce to the country.

NHR 2.0 represents a positive initiative, reinforcing Portugal’s position as an appealing destination for innovation-driven and high-value professionals. If effectively implemented, it could significantly enhance the country’s scientific and economic ecosystem.

more across site & shared bottom lb ros

More from across our site

The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
The tax agency has increased compliance yield from wealthy individuals but cannot identify how much tax is paid by UK billionaires, the committee also claimed
Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
Gift this article