Planning on moving to Portugal? Beyond the golden beaches and glowing cities, Portugal offers something equally enticing: a world of fiscal opportunity.
In this article by MOVEFORCE – experts in relocating to Portugal and storage services – we’ll unpack Portugal’s tax benefits, especially for expats, retirees, and foreign investors.
Overview of Portugal’s Tax System for Residents
Portugal’s standard tax system uses progressive rates, i.e., income tax ranges from about 14.5% to 48%, depending on your earnings. Residents also pay social security contributions.
But here’s where it gets interesting: Portugal offers a range of tax benefits that can lower or even exempt tax on foreign income, pensions, dividends, and capital gains, especially for those who qualify for its special residency regimes.
Whether you’re working, investing, or retiring, there are meaningful advantages worth exploring – and MOVEFORCE can help ensure your move is planned to make the most of them.
The Non-Habitual Resident (NHR) Tax Regime Explained
Portugal’s renowned NHR program (2009–2023) officially closed under the 2024 budget. A transitional window ran until March 15, 2025; only approved residents retain its benefits now. Meanwhile, the Government launched a successor: the Tax Incentive for Scientific Research and Innovation Scheme (Incentivo Fiscal à Investigação Científica e Inovação – IFICI, originally), or NHR 2.0.
The Original NHR
- Eligibility: New residents with no Portuguese residency in the previous five years;
- Benefits: 20% tax on qualifying domestic income, exemptions on most foreign income, and a 10% pension tax for up to 10 years.
Transitional Relief
- Available for residents in 2024 who met specific documentation deadlines;
- These “last-chance” NHR applicants retain full old-regime benefits for 10 years.
The New IFICI Regime
- Open to new residents (from 2024 onward) in qualifying innovation roles, with no prior NHR status;
- Offers a 20% flat rate on domestic income, broad foreign income exemptions, but excludes pensions (taxed normally);
- Valid for up to 10 years with active eligibility maintained.
Tax Incentives for Retirees and Foreign Investors
For Retirees
- Old NHR: Foreign pensions taxed at a 10% flat rate (only applies to those who secured NHR status before the March 15, 2025, deadline);
- New IFICI: Foreign pensions taxed at progressive rates (up to ~53%);
- Key Point: If you plan to retire in Portugal tax-efficiently, applying under transitional NHR rules offers clear advantages.
For Investors
- Exemptions on foreign dividends and capital gains under NHR/IFICI;
- No wealth tax;
- No inheritance tax on transfers between close relatives;
- Special tax incentives for companies operating within the Madeira International Business Centre, offering corporate tax rates as low as 5% under certain conditions.
How Portugal’s Tax Benefits Compare to Other European Countries
Portugal competes strongly with:
- Spain and Italy, which offer regimes for inbound talent but often come with residency and employment restrictions;
- Greece, with a flat non-dom regime of €100,000 annual tax—simple, but less flexible than Portugal’s 10-year NHR and IFICI;
- Switzerland and Monaco, attractive for their tax breaks, but costly to relocate to and (in Monaco’s case) highly exclusive.
Portugal uniquely blends accessibility, expat-friendly taxes, and a welcoming lifestyle, making it a top choice for US citizens and others seeking a new life in Europe.
Steps to Apply for IFICI (NHR 2.0) Status
Getting started is easy—here’s how:
- Establish tax residency by spending at least 183 days/year in Portugal or by demonstrating habitual residence;
- Obtain a Portuguese NIF (tax ID) and register as a resident;
- Apply to the Portuguese Tax Authorities for IFICI status within the deadline – normally by January 15th of the year after becoming a tax resident (or as specified in official guidelines);
- Demonstrate that you are employed or engaged in a qualifying R&D, innovation, scientific, educational, or high-value role;
- File annual Portuguese tax returns and claim benefits accordingly.
After the paperwork is done, MOVEFORCE makes sure your move runs smoothly, coordinating transport and storage so your belongings arrive right on schedule.
Common Questions About Taxes When Moving to Portugal
Q1: Does IFICI Apply Automatically?
No. You must actively apply once you become a Portuguese tax resident.
Q2: Can I Hold NHR and IFICI Simultaneously?
Transitions exist: legacy NHR holders continue their current benefits, while new applicants may qualify under IFICI (NHR 2.0).
Q3: What About Capital Gains on Foreign Investments?
Typically exempt, as long as taxed abroad and not from tax-haven jurisdictions. Note that a higher foreign-source surcharge applies to incomes from blacklisted countries.
Q4: Can My Spouse and Kids Benefit?
Yes. General tax benefits in Portugal – like no wealth or inheritance tax—apply to all residents. However, IFICI status is individual. Only family members who qualify and apply can access its specific tax perks; others are taxed under standard resident rules.
Final Word
Whether you’re planning to work, invest, or enjoy your retirement here, understanding the tax benefits in Portugal – especially under the new IFICI scheme – can help you make the most of your move.
Ready to start your new life in Portugal? Let MOVEFORCE handle the logistics, so you can focus on settling in and making the most of everything your new home has to offer.
If you have any questions, we’re here to help – contact us or request a quote today.
Portuguese 
English