Portugal NHR Tax Regime Benefits and Requirements

Portugal’s Non-Habitual Residency (NHR) program was launched in 2009 to attract skilled professionals, retirees, investors, and remote workers by offering generous tax benefits for 10 years. By late 2023, nearly 90,000 people had applied, many from high-tax countries like France, Sweden, and the UK.

Under NHR, certain types of foreign income, like pensions, dividends, and royalties, could be taxed at 0%, while qualifying local income from high-value professions was capped at a flat 20%. The result? Portugal quickly became one of Europe’s most tax-friendly destinations for globally mobile individuals.

But the landscape shifted in 2024, when the government moved to phase out the regime amid political pressure and housing market concerns. A revised framework was introduced for 2025, keeping some benefits in place through a transitional model and creating new pathways for specific professions like researchers and tech workers. While the original NHR may be fading, the updated version still offers real advantages.

If you're considering a move to Portugal, understanding the current rules can help you make a smarter, more strategic decision.

Understanding Portugal’s NHR Tax Regime

What is the NHR Program?

The Non-Habitual Residency (NHR) program is a special tax status offered by the Portuguese government to individuals who become tax residents in Portugal but haven’t been taxed as such in the previous five years. It provides reduced or zero tax rates on certain types of income for a fixed period of 10 years.

The goal is to attract foreign income earners, especially retirees, high-skilled professionals, and entrepreneurs, by offering them a legally defined tax-friendly environment.

When Was It Introduced and Why?

The NHR regime was introduced in 2009 during Portugal’s economic recovery efforts following the 2008 financial crisis. The government needed to attract both human and financial capital without raising public debt.

Instead of offering incentives through citizenship or fast-tracked visas, Portugal created a tax regime designed to appeal to mobile global earners, offering low or zero tax on income earned abroad, and competitive flat rates for certain high-value professions working locally.

What Tax Benefits Does the NHR Offer?

These benefits apply for 10 consecutive years, as long as the individual remains a Portuguese tax resident during that time.

Recent Changes and Updates to NHR

Portugal’s NHR regime came under intense political pressure in 2023, with critics arguing it was fueling housing demand in Lisbon and pricing out locals. The government initially announced a complete phase-out of NHR starting in 2024, but after strong backlash, a more measured transition was introduced.

What Actually Changed?

• NHR closed to new applicants as of December 31, 2023, but with transitional rules

• Individuals who became tax residents in 2023 but hadn't yet applied could still register until March 31, 2024

• A new framework has been proposed to replace NHR, targeting specific talent categories like scientific researchers, tech experts, and academic professionals

This means that while the traditional NHR program is technically closed to most new applicants in 2025, some limited pathways remain open for those who meet certain criteria or fall under new exemptions.

Who Can Still Access NHR Benefits?

According to the transitional rules, you may still qualify in 2025 if:

• You already had a valid residence visa issued in 2023 but only moved in 2024

• You signed an employment or housing contract in Portugal before October 2023

• You enrolled in a Portuguese educational institution before the cutoff

These exceptions are narrow and strictly verified. The window is closing fast for any remaining access under the old system.

What Is the Government Replacing It With?

In 2025, a new tax regime is being developed (not yet named as of May 2025), focused on:

• Attracting high-skilled workers in sectors like R&D, renewable energy, and biotech

• Offering targeted incentives instead of broad exemptions

• Tying tax benefits to local economic contribution, rather than residency alone

Unlike NHR, which was based on non-residency history, the new model will likely tie benefits to specific professions and projects and will include stricter income sourcing rules.

What's the Outlook Going Forward?

• For those already approved under NHR: benefits continue through the full 10-year period, with no change

• For new movers: expect narrower eligibility, more documentation, and sector-specific focus

• There’s also growing scrutiny from EU tax authorities, meaning fewer blanket exemptions and more focus on substance-based taxation

If you're planning to move in 2025 or later, the strategy now shifts from simply “applying for NHR” to proving how you contribute to Portugal’s economy.

Key Benefits of Portugal’s NHR Status

Portugal’s NHR program stands out because it clearly outlines tax treatment across multiple income types. Whether you’re retired, running a business, freelancing remotely, or living off dividends, the benefits are built around practical tax relief, not vague incentives.

Tax Advantages for Foreign Income

Under the NHR regime, foreign-sourced income is either exempt from Portuguese tax or taxed at a flat, favourable rate, depending on the income type and whether your home country has a tax treaty with Portugal.

This structure benefits individuals with global income sources, particularly retirees, investors, and those with passive income.

Special Tax Rates for Professional Activities

If you earn income in Portugal from a "high value-added" profession (like IT, engineering, architecture, or medicine), you’re eligible for a flat 20% tax rate. This is significantly lower than Portugal’s standard personal income tax rates, which can reach up to 48%.

Example:
An IT consultant moving to Lisbon under NHR pays 20% on local income instead of being pushed into the higher tax brackets.

Pension Income Benefits

Pensioners previously paid 0% under NHR, but since 2020, a 10% flat tax has been applied to most foreign pension income. This is still considerably lower than the rates paid in countries like Sweden, the UK, or Germany, where pension income can be taxed at 30–50%.

Good to know: Some tax treaties offer ways to optimize pension income even further, depending on how it's classified (public vs private, employer-based vs state pension).

Investment Income Treatment

The NHR regime treats investment income from abroad favorably, especially if it's already taxed in the source country and Portugal has a double tax treaty in place.

What’s typically covered:

• Dividends from foreign companies
• Interest from overseas bank accounts
• Gains from intellectual property (royalties)

This is particularly attractive for entrepreneurs with international holdings or passive income from diverse assets.

Eligibility Requirements for NHR Status

Before applying, it's crucial to understand who qualifies for Portugal's NHR status. The requirements are straightforward but must be followed precisely. Missing a step can lead to delays or a rejected application.

What Are the Residency Criteria?

To apply for NHR, you must become a tax resident in Portugal. This happens when:

• You live in Portugal for more than 183 days in any 12-month period
  or
• You maintain a home in Portugal that’s considered your habitual residence

You don’t need to stay continuously for 183 days, what matters is the total number of days over any rolling 12-month window.

What Are the Tax Residency Requirements?

Once you're living in Portugal under one of the criteria above, you must register as a tax resident with the Portuguese tax authority (AT) and obtain a Portuguese NIF (tax number).

After this step, you can apply for NHR before March 31st of the year following your move.

What Is the "Non-Habitual" Requirement?

To qualify, you must not have been taxed as a Portuguese resident in the previous 5 years. This doesn’t mean you couldn’t have visited or owned property in Portugal, it simply means you weren’t registered as a tax resident.

Important:
The five-year period is verified by the tax authority, so if you’ve been in and out of Portugal in the past, make sure to confirm your past tax status before applying.

How Long Do NHR Benefits Last?

The benefits apply for 10 consecutive years, starting from the year you are granted NHR status.

Even if your income or location changes, the tax treatment stays consistent for the full duration, as long as you maintain Portuguese tax residency each year and continue filing your taxes correctly.

How to Apply for NHR Status in Portugal

Applying for NHR status isn’t complicated, but it’s essential to follow the process carefully and on time. A missed deadline or incorrect document can delay approval or even make you ineligible.

Quick Checklist:

What Is the Step-by-Step Registration Process?

Here’s how the application process typically works:

• Move to Portugal and establish residency: You must meet one of the tax residency criteria (183+ days in-country or a permanent home).

• Obtain a Portuguese NIF (Número de Identificação Fiscal): This is your tax ID number and is required for almost every legal and financial step in Portugal.

• Register as a tax resident with the Portuguese Tax Authority (Autoridade Tributária): You’ll declare your new Portuguese address and confirm your residency status.

• Apply for NHR through the online portal (Portal das Finanças): You submit your request for NHR status in the "Register/Change" section of the portal.

• Wait for confirmation: If approved, the tax authority will send written confirmation via the portal.

What Documents Do You Need?

To apply, you’ll need the following:

• Your valid passport or national ID
• Portuguese NIF (tax number)
• Proof of residence (rental agreement or property deed)
• Portuguese tax registration confirmation
• Possibly your visa or residency permit, depending on your nationality
• Declaration that you haven’t been a tax resident in Portugal in the last 5 years

How Long Does the Application Take?

• Standard processing time: 2 to 4 weeks
• Deadline to apply: March 31st of the year after becoming a tax resident

Should You Hire Professional Support?

You don’t need a lawyer or consultant to apply, but it’s highly recommended, especially if you have complex income sources or are unfamiliar with Portuguese tax law.

Situations where professional help is useful:

• You have multiple income streams across countries
• You’re unsure about double taxation treaties
• You want to structure your investments in a tax-efficient way
• You’re applying under a residency permit like the Golden Visa or D7

Professional Activities Under NHR

One of the most appealing parts of Portugal’s NHR regime is the flat 20% tax rate on income from certain high-value professions. This is significantly lower than Portugal’s progressive income tax rates, which can go up to 48%.

But not every profession qualifies, there’s a defined list, and your eligibility depends on what you do and how it's categorized under Portuguese law.

What Are Considered "High Value-Added" Activities?

Portugal classifies certain industries and job types as “high value-added” based on economic contribution, innovation, and international competitiveness. This list is periodically updated by the Ministry of Finance.

General categories include:

• Information technology and software development
• Scientific research and technical consulting
• Engineering, architecture, and urban planning
• Creative and artistic professions (select fields)
• Medicine and dentistry
• Senior executives and managers (for eligible companies)

These are roles seen as contributing to knowledge-driven industries or boosting Portugal’s economy and international competitiveness.

What Professions Qualify for the 20% Rate?

Below is a sample list of common qualifying professions:

Important:
Freelancers and self-employed professionals can qualify, as long as their services fall within these categories and are properly registered with Portuguese authorities.

What Tax Rates Apply?

This applies to income earned within Portugal. Foreign-sourced professional income may be exempt depending on tax treaties and sourcing rules.

What If Your Job Isn't on the List?

If your profession isn’t classified as “high value-added,” you won’t qualify for the 20% flat rate, but you can still benefit from other NHR features. For example, foreign income like dividends, royalties, or pensions may still be taxed at low or zero rates depending on their source.

So, even if you’re not a doctor or software engineer, NHR might still be worth it for the tax treatment on passive or foreign income.

NHR Status and Portuguese Residency Options

NHR isn’t a visa or immigration program, it’s a tax classification. To qualify, you must already have legal residency in Portugal. That’s why most NHR applicants come through one of three visa routes: the Golden Visa, the D7 passive income visa, or the Digital Nomad visa.

Here’s how each one aligns with the NHR strategy.

How Does NHR Work with the Golden Visa?

The Portugal Golden Visa allows you to invest in the country in exchange for a residency permit. It only requires minimal physical presence: 7 days per year on average.

How it connects with NHR:

• If you choose to spend more than 183 days/year in Portugal and register as a tax resident, you can apply for NHR.
• Many investors start with the Golden Visa, then move full-time later to trigger NHR eligibility.
• Good option for high-net-worth individuals who want flexibility and a path to future citizenship.

Example:
An investor from the U.S. buys a qualifying fund for €500,000. Two years later, they relocate to Lisbon full-time, become tax resident, and register for NHR.

What About the D7 Visa?

The D7 visa is designed for people with stable passive income, such as pensions, dividends, or rental income. It's often used by retirees or financially independent individuals.

How it connects with NHR:

• The D7 requires full-time residence in Portugal, which makes you tax resident by default.
• This is the most common path to NHR for retirees and remote investors.
• Applicants must prove a minimum income (around €820/month for a single person, but higher for comfortable approval).

Why it pairs well with NHR:
Passive income like pensions and dividends often gets favourable treatment under NHR rules, so the D7 + NHR combo is especially attractive.

Can Digital Nomads Qualify?

Yes. In 2022, Portugal launched a Digital Nomad Visa, specifically targeting remote workers earning at least 4x the minimum wage (currently around €3,480/month gross).

NHR fit:

• If you live in Portugal for more than 183 days/year and haven’t been a tax resident in the previous five years, you can apply for NHR.
• Many remote workers qualify for the 20% flat rate on self-employment income if they work in an eligible sector.

Bonus:
Some digital nomads split income across jurisdictions. With good planning, NHR can significantly reduce taxes on both local and foreign-sourced income.

Tax Planning Considerations Under NHR

NHR offers excellent tax advantages, but it’s not a one-size-fits-all solution. Proper planning is essential to make the most of the regime, especially if your income spans multiple countries, currencies, or asset classes.

How Do Double Taxation Agreements Affect You?

Portugal has over 75 double taxation treaties with countries worldwide. These treaties ensure that income isn’t taxed twice, once in the source country and again in Portugal.

What this means for NHR holders:

• Foreign income is often exempt in Portugal if it was already taxed in the source country
• If no tax is paid abroad, Portugal may still apply the NHR exemption depending on treaty wording
• Each income category (pension, dividends, royalties, etc.) is treated differently under different treaties

Example:
A retiree receiving a UK private pension may pay 0% in Portugal if the treaty assigns taxing rights to the UK and NHR conditions are met.

What Are the Tax Reporting Requirements?

Even if your foreign income is exempt under NHR, you still have to report it on your Portuguese tax return. Exemption doesn’t mean you can skip disclosure.

Key points:

• File an annual tax return (Modelo 3)
• Report all global income, including exempt categories
• Use the appropriate NHR codes for exemption claims
• Keep proof of taxes paid abroad (if applicable)

Failure to report can trigger audits or loss of NHR benefits.

How Are Different Types of Income Treated?

Each income stream is handled differently. Here's a high-level view:

Should You Restructure Investments?

Many NHR applicants restructure their holdings before moving to Portugal to optimize for:

• Dividend efficiency (e.g. using tax treaties)
• Capital gains timing (sell before residency starts if gains are taxable)
• Trust income treatment (Portugal does not recognize all offshore trust structures)
• Corporate distributions (owners of non-Portuguese companies may face different rules)

Tip:
Do this before establishing Portuguese tax residency. Once you register as a resident, asset sales or restructuring may trigger local taxation.

Common Scenarios and Benefits

Let’s look at how different types of individuals strategically use Portugal’s NHR program, beyond just the headlines. These are real-world applications, focused on structure, timing, and optimization that often go overlooked.

Retirees: Why Timing Matters More Than Income

For retirees, it’s about when they trigger Portuguese tax residency. Many choose to delay their official move until just after a tax year begins to stretch their NHR window across 11 calendar years, not 10.

They also review how their pensions are classified: public pensions (from former government jobs) often remain taxable in the origin country and may not benefit from NHR. Others convert pensions into annuities or lump sums pre-arrival for better control over taxation.

Key move: Strategic relocation at the start of the year to maximize the NHR duration.

Remote Workers: Balancing Work Location and Sourcing Rules

For digital workers, a critical detail is how income is sourced. If your freelance services are used abroad, it may qualify as foreign-sourced, even if you’re sitting in Lisbon.

But if you work for a Portuguese client or have a contract tied to a local entity, that income could be taxed as Portuguese-sourced, losing the exemption. Some solve this by working through foreign agencies or billing through international platforms with clear foreign sourcing.

Key move: Structuring contracts and invoices to clarify source of income before relocating.

Investors: Using Holding Companies for Tax Efficiency

NHR doesn’t automatically exempt all capital gains. That’s why many investors set up non-Portuguese holding companies (often in treaty-friendly jurisdictions) to accumulate returns without triggering Portuguese tax.

Once structured, these entities can distribute dividends under more favourable treaty terms or reinvest internationally. Trusts, meanwhile, require careful planning, Portugal treats many foreign trusts as transparent, especially if the beneficiary is also the settlor.

Key move: Holding structures outside Portugal can simplify exemption claims and reduce compliance risk.

Entrepreneurs: Managing Control to Avoid CFC Rules

Business owners must be cautious. If Portugal’s tax authority views your foreign company as being effectively managed from Portugal, it may treat it as a Controlled Foreign Corporation (CFC), bringing its income under Portuguese tax even if it’s legally registered elsewhere.

Smart founders' separate ownership from management and keep board meetings, decision-making, and banking offshore. Others appoint independent directors or use management companies abroad to preserve separation.

Key move: Keep operational control outside Portugal to avoid local corporate tax exposure.

Comparing NHR with Other Tax Regimes

Even with the 2024 changes, Portugal’s NHR remains one of the most tax-efficient programs in Europe, especially for those already accepted. But how does it stack up against competing regimes across Europe and beyond? And what do global mobility trends suggest about where tax residents are heading in 2025?

How Does It Compare to European Alternatives?

Several European countries have introduced expat-friendly tax regimes, but most are narrower in scope or shorter in duration.

Compared to these, Portugal’s NHR offered greater flexibility across income types, a longer duration (10 years), and applied to a broader population, not just employees or pensioners.

However, as of 2025, Greece and Italy are emerging as the closest alternatives, particularly for entrepreneurs and location-independent professionals.

What About Global Competitors Outside Europe?

Outside Europe, the competitive landscape includes more aggressive tax havens and low-tax jurisdictions, each with their own pros and trade-offs.

Portugal stands apart by being in the Schengen Area, offering EU residence rights, a significant advantage over non-European tax havens, especially for those seeking long-term lifestyle security or a future path to citizenship.

Thinking Beyond Tax: What Still Makes Portugal a Smart Move?

Even as NHR evolves, Portugal’s appeal goes beyond tax breaks. In 2025, it's one of the few countries offering a mix of EU mobility, mild residency entry points, and solid legal frameworks for managing global wealth. For people aiming to diversify their lifestyle, banking base, or investment exposure, Portugal remains a strategic choice, especially if you're coming from high-tax regions.

Whether you're planning a full relocation or just spending part of the year in Europe, your tax setup, visa path, and investment structure need to work together. If you want to relocate to Portugal and benefit from what remains of the NHR tax regime or its successor, Savory & Partners can guide you through the most suitable route, from Golden Visa investments to passive income visas or sector-specific eligibility under the new tax structure.

FAQs on Portugal's NHR Tax Regime in 2025

1. Is the NHR program still available in 2025?

Not in its original form. The general NHR regime closed to new applicants on December 31, 2023, but some transitional cases (e.g., pre-2024 visa holders) may still apply. A replacement tax incentive targeting certain professions is being developed.

2. If I already have NHR status, will I lose it under the new rules?

No. If you were granted NHR before the 2023 deadline, your 10-year benefit period remains fully valid, provided you maintain Portuguese tax residency and comply with reporting obligations.

3. What income types are still covered under NHR in 2025?

For existing NHR holders, foreign pensions, dividends, royalties, and qualifying employment or freelance income continue to receive favourable treatment, including exemptions or fixed tax rates, depending on the tax treaty and source.

4. Can I apply for the new regime replacing NHR?

Only if you meet the criteria. The proposed replacement focuses on specific sectors such as science, innovation, and academia. Details are still being finalized, but the benefits will be more selective and conditional.

5. Do I still need to file tax returns in Portugal if my income is exempt?

Yes. Even if income qualifies for exemption under NHR or a treaty, you must report it annually to the Portuguese tax authority using the correct codes. Non-reporting may result in penalties or status cancellation.

References

Autoridade Tributária e Aduaneira. (2024). Regime Fiscal para Residentes Não Habituais - Informação Atualizada. Retrieved from https://info.portaldasfinancas.gov.pt

Diário da República. (2023, October). Lei n.º 56/2023: Alterações ao Estatuto dos Benefícios Fiscais e Regime dos Residentes Não Habituais. Retrieved from https://dre.pt/dre/detalhe/lei/56-2023-222287271

Gabinete do Primeiro-Ministro. (2024). Plano Orçamental 2024 – Reforma do Regime Fiscal dos Residentes Não Habituais. Retrieved from https://www.portugal.gov.pt/pt/gc23/governo/comunicados-de-imprensa

Serviço de Estrangeiros e Fronteiras. (2024). Residência em Portugal: Vistos e Reagrupamento Familiar. Retrieved from https://www.sef.pt/pt/Pages/Homepage.aspx

Ministério das Finanças. (2025). Esboço para Novo Regime Fiscal de Talentos Qualificados. Retrieved from https://www.portugal.gov.pt/pt/gc24/ministerios/financas