IFICI vs NHR: eligibility and tax differences
The 2024 State Budget law closed NHR to new entrants from 1 January 2024, keeping it only for existing beneficiaries and the protected transitional cases, and created the IFICI incentive. IFICI requires an eligible activity and no Portuguese residence in the previous five years, excludes current and former NHR beneficiaries, and its foreign-income exemption does not cover pensions.
IFICI vs NHR, in one answer
If you are moving to Portugal now, NHR is no longer available to you. The regime open to eligible new residents is IFICI, the Tax Incentive for Scientific Research and Innovation.
The two regimes share a 20% flat rate on qualifying Portuguese-source income and a 10-year window, but they are built differently: NHR was open to almost any new resident, while IFICI is activity-based and only applies if your work fits one of its qualifying paths.
The question now is whether your activity qualifies for IFICI, and how Portugal taxes the income IFICI does not cover.
IFICI vs NHR: side-by-side comparison
| Dimension | IFICI | NHR Legacy and Transition |
|---|---|---|
| Entry | Portuguese residence after five years of non-residence plus an eligible IFICI activity and no disqualifying prior regime | Preserved entitlement under the NHR transitional rules; earlier residence and transition evidence matter |
| Portuguese Work Income | 20% on qualifying net Category A/B income, with an aggregation option | 20% on qualifying listed high-value activity income under the preserved rules |
| Foreign Income | Exemption with progression for Categories A, B, E, F and G under the IFICI foreign-income rules, with the listed-jurisdiction exception; Category H pensions excluded | Category-specific exemption or pension treatment under the preserved version of the law |
| Pensions | Ordinary pension rules and treaty allocation | The applicable legacy version may provide exemption or 10% taxation; the entry date and conditions decide |
| Duration | Ten consecutive years measured from the first residence year, with statutory continuation/resumption conditions | Remaining part of the original ten-year period |
| Registration | Normally 15 January after the residence year; late registration starts benefits in that year for the remainder | Historic or transitional registration, including the statutory late-registration consequence |
The table distinguishes entry rules from tax treatment. See the IFICI eligibility rules, the foreign-income exemption and credit rules, the NHR transitional provisions alongside the Portuguese tax-residence rules and AT’s registration guidance.
Why the switch from NHR to IFICI matters
NHR rewarded becoming a Portuguese resident. IFICI rewards a qualifying activity. NHR used a broader residence-based entry test, but the result still differed by income category, qualifying activity and applicable exemption or pension rules. Under IFICI, eligibility turns on what you do and how your role is classified, so two people with the same income can land in different positions.
The group most affected is people who would have qualified for NHR almost automatically but do not have a qualifying IFICI activity. Pensioners are the clearest example: foreign pensions sat inside NHR, but they fall outside IFICI. For them the move is not "NHR closed, use IFICI instead", it is "plan the position without a special regime". Getting that wrong before arrival is expensive to unwind afterwards.
Who can still use each regime in 2026
- NHR: existing beneficiaries and people whose earlier residence and evidence satisfy the statutory transition rules may retain the remaining part of their original 10-year period. Qualifying late registration can start relief only for the remaining period; a new 2026 arrival does not enter NHR merely by moving.
- IFICI: new tax residents whose qualifying activity fits one of the regime's paths and who register for it with the evidence it requires.
- Neither: many new residents, including most pensioners, who need the position planned under the standard rules and the relevant treaty.
Which box you fall into is rarely obvious from a job title alone. IFICI eligibility depends on how the activity is classified and which authority governs it. If you want a quick indicative read first, try the IFICI eligibility checker.
Frequently asked questions
Is NHR still available in 2026?
NHR is not a new-entry route for someone first becoming Portuguese tax resident in 2026. Existing beneficiaries and qualifying historic or statutory transitional cases depend on residence dates and evidence. An eligible late request can apply from its registration year for the original period remaining; it does not start ten new years. IFICI is a separate option for new residents whose work and other circumstances meet its conditions.
Is IFICI just NHR with a new name?
No. They share a 20% flat rate on qualifying Portuguese-source income and a 10-year window, but NHR was open to almost any new resident while IFICI is activity-based. Many people who would have qualified for NHR do not qualify for IFICI.
Does IFICI give foreign pensions the old NHR treatment?
Foreign pensions fall outside IFICI. Pensioners who would once have relied on NHR generally need the position planned under the standard rules and the relevant tax treaty, rather than a special regime.
How do I know if my activity qualifies for IFICI?
IFICI eligibility depends on how your role is classified and which authority governs the path, such as innovation, R&D, listed professions, recognised investment projects, or university and research.
What if I do not qualify for either regime?
You are taxed under the standard Portuguese rules, with treaty relief where it applies. With planning, residency timing and income structure still matter.
Related guides
- Guide · Law as at
IFICI: register by 15 January 2027
IFICI was created by the 2024 State Budget law, the same law that closed NHR to new entrants. - Article · Law as at
Portugal NHR: existing rights and transition rules
The 2024 State Budget law closed the non-habitual resident (NHR) regime to new entrants from 1 January 2024. - Guide · Law as at
How Portugal taxes foreign pensions in 2026
Portugal taxes a resident's foreign pension as Category H income at the progressive IRS rates, after the standard specific deduction of EUR 4,587.09 per recipient in 2026.
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