A New Non-Habitual Residents (NHR) Regime

Written By Manuel Poças

The Portuguese Government announced a new Non-Habitual Residents (NHR) regime yesterday. The ordinance is yet to go into effect while the implementation and clarification details are worked out.

Here is what we know so far.

 New Proposed NHROld NHR
Income Tax Rate20%20%
Pension Tax RateRemoved10%
Who is Eligible?Non-habitual residents that have not lived in Portugal for the last 5 years, have not benefited from the former regime, and that perform high-value added activities of a scientific and technical nature or other qualified professions (still to be announced)Non-habitual residents with professions that were considered high-value added activities of a scientific, artistic, or technical nature
DurationNo details yet10 Years
Current Legal StatusPendingExpired


According to the Financial Times, the Portuguese Minister of Finance, Joaquim Miranda Sarmento, intends to recover the measure that has been terminated by the former Government (the original NHR).

Yesterday, the Portuguese Council of Ministers approved a reintegration, and the Minister of Finance presented its general basic principle – to tax only 20% of the income obtained in Portugal by non-resident scientists and researchers, either foreigners or Portuguese immigrants, who have not lived in Portugal for at least 5 years.

The previous NHR regime allowed for a reduction of the personal income tax (IRS). It stipulated that Portuguese source income, from dependent work and self employment, earned from high-value added activities of a scientific, artistic, or technical nature, by non-habitual residents, was taxed at a special rate of 20%, if they did not opt for aggregation, regardless of the amount earned. Pensioners, on the other hand, paid 10% IRS, and until 2020 they were exempt from doing so. The regime was materialized in the State Budget for 2024, where the former Government created a rule in the Tax Benefits Statute, as it can be seen in the Portuguese IRS Code.

The new regime will be regulated through an ordinance, which, unlike laws and law-decrees, is an administrative act of power exclusive to the Government (according to the Portuguese Constitution of the Republic). It is important to consider that such an act is usually used to regulate details on a specific matter.

In accordance with the words of the Minister of Finance, the new regime will cover, exclusively, the A and B income categories, which will have a flat rate of 20%. This means (A) dependent work, and (B) any business and professional income. In terms of personal scope, it will apply to non-residents “who take up residence in Portugal and who have not resided in Portugal for the last 5 years,” and did not benefit from the previous regime.

The new Non-Habitual Residents regime designed to attract more talented individuals will extend to more professionals than the previous NHR. According to the Minister, the new regime will include scientists, researchers, and other qualified professionals. The goal is to “attract qualified talent to the Portuguese economy” by providing “a tax incentive for scientific research, innovation, and human capital, that covers a wide range of qualified professions and companies”.

Note that pensioners are excluded from this new NHR regime.

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