Portugal’s Non-Habitual Resident (NHR) Regime: What’s New in 2025?
Portugal’s famous Non-Habitual Resident (NHR) tax regime officially closed to new applicants at the end of 2023. In its place, a new program called the Tax Incentive for Scientific Research and Innovation (IFICI), often referred to as NHR 2.0, came into effect on 1 January 2024.
What Changed?
The original NHR program offered attractive tax benefits for foreign residents, particularly retirees and professionals. While those already approved under the original scheme can still benefit for up to 10 years, new applicants must now meet different criteria under the IFICI regime.
Eligibility Overview
- NHR 1.0: Closed to new applications after 31 December 2023. Transitional rules allowed applications until 31 March 2025 if relocation began in 2023.
- IFICI / NHR 2.0: Open to individuals who become tax residents after 1 January 2024 and were non-residents for the last five years.
Key Benefits Comparison
| Regime | Applicants Eligible? | Tax on Foreign Pensions | Portuguese Income Tax Rate | Foreign Income Taxation |
|---|---|---|---|---|
| NHR 1.0 | Closed – transitional period ended March 2025 | 0–10% or exempt | 20% flat rate (certain professions) | Mostly exempt |
| IFICI / NHR 2.0 | Open to new residents since Jan 2024 | Taxed progressively | 20% flat on eligible professions | Exempt (except pensions) |
Who Benefits from IFICI?
This regime is designed for:
- Scientific researchers and university lecturers
- Tech workers and startup founders
- Innovative professionals in key sectors
- Skilled workers contributing to the Portuguese economy
Why It Still Matters for Buyers of Algarve Property
While retirees may no longer benefit from the same tax advantages under the new system, professionals and families relocating to Portugal for work or investment still have access to generous tax incentives.
Whether you're interested in Algarve property for sale, planning to buy property in the Algarve, or researching the best towns to live in Algarve, understanding Portugal’s tax structure is essential. Tax optimization plays a key role in successful property investment in the Algarve.
How Quintas and Casas Can Help
At Quintas and Casas, we specialize in helping international buyers navigate every aspect of purchasing a home in Portugal — including the latest tax updates.
From coastal villas to countryside retreats, we offer a curated portfolio of Algarve real estate options for every lifestyle and investment goal.
Ready to explore properties for sale and discover the authentic Algarve lifestyle? Contact our team today to learn more about relocating to Portugal and making your move seamless.
This article is for informational purposes only and does not constitute financial or legal advice. Please consult with a tax advisor for personalized guidance.
