After NHR: Portugal's IFICI tax regime for Brits

The NHR regime that made Portugal a byword for tax-light retirement has closed to newcomers. Its successor, IFICI, offers a 20% rate, but only to people doing qualifying skilled work, and it does nothing for pensions.

The short version

The non-habitual resident (NHR) regime was repealed from 1 January 2024 by the 2024 State Budget Law. People already registered keep it until their ten years run out [4].
A transitional route let some people who became resident by 31 December 2024 still register, if they had a qualifying job, lease, purchase, school place or visa process in place by late 2023 [4].
The replacement is IFICI (Incentivo Fiscal à Investigação Científica e Inovação), sometimes called "NHR 2.0", in Article 58-A of the Tax Benefits Statute [3].
IFICI taxes qualifying Portuguese employment and self-employment income at a flat 20% for ten years, and exempts most foreign income. Pensions aren't on the exempt list [3].
You register on the Portal das Finanças by 15 January of the year after you become resident [3].

What happened to NHR

For 15 years, NHR was the reason many British retirees picked the Algarve or Cascais over the Costa del Sol. It ran for ten years from registration and, in its later form, taxed foreign pensions at a flat 10%. The 2024 State Budget Law (Law 82/2023) ended it for new applicants from 1 January 2024 [4].

If you already have NHR

You keep it. The AT (Autoridade Tributária, the Portuguese taxman) says people registered as NHRs on 1 January 2024 keep the regime until their ten consecutive years end; someone who started in 2021, for example, runs to 2030 [4]. The AT's rate tables for 2026 still carry the special 10% rate for NHR pensions and the 20% rate for high-value work [2]. When your ten years end, you move onto ordinary IRS rates, which run up to 48% in 2026 [2]; our guide to Portuguese taxes for Brits has the bands. Plan for that cliff edge before it arrives.

The transitional route

If you became resident in 2024, you could still register for NHR if you met the usual conditions (not tax resident in Portugal in the previous five years) and held one of these [4]:

What you had	Deadline
A job offer, employment contract or posting agreement for work in Portugal	Signed by 31 December 2023
A lease or other agreement to use a home in Portugal	Signed by 10 October 2023
A reservation or promissory contract to buy a home	Signed by 10 October 2023
Children enrolled at a school in Portugal	By 10 October 2023
A residence visa or residence permit	Valid at 31 December 2023
An immigration process with the authorities	Started by 31 December 2023

The normal deadline for these applications was 31 March 2025. Late applications are still possible, but you lose the years that have passed: the AT's own example is that someone applying on 27 August 2027 would get NHR from 2027 to 2033, seven years instead of ten [4]. Keep every document, because the AT can check later [4].

If you're arriving from the UK in 2026 with none of the above, NHR is gone for you. Ignore anyone online still selling it.

IFICI: who qualifies

IFICI took effect for people becoming resident from 1 January 2024 [3]. You must [3]:

Become tax resident in Portugal in the year the regime is to start (see Portuguese taxes for Brits for the 183-day and habitual home tests).
Not have been tax resident in Portugal in any of the previous five years.
Not have had NHR, or IFICI before, and not have used the Regressar programme for returning emigrants or, from 2025, the IRS Jovem regime for young workers.
Do an eligible job or activity, and earn income from it, in each year you claim.

The eligible activities are the narrow part. In broad terms, the AT lists [3]:

Teaching and scientific research at universities, research bodies and recognised technology centres.
Qualified jobs at companies with contractual investment benefits, or at companies recognised by AICEP (Portugal's trade and investment agency) or IAPMEI (its small-business agency) as relevant to the economy.
Highly qualified professions, meaning a doctorate, or a degree plus three years' proven experience, in occupations listed in the regulations (directors and chief executives, engineers, doctors, university lecturers and ICT specialists among them) [6], at companies with qualifying investment projects or at exporting industrial and service companies that sell at least half their turnover abroad.
Research and development staff at companies that use the business R&D tax credit.
Research or innovation jobs at certified startups, and board members of those startups.

Notice what isn't there: retirement, passive income and most ordinary remote jobs for a UK employer. A software developer working from a flat in Arroios for a London firm won't usually qualify unless the role fits one of those boxes.

What IFICI gives you

Income	Under IFICI
Portuguese employment and self-employment income from the eligible activity	Flat 20% for ten consecutive years [3]
Foreign employment, business, investment, property and capital gains income	Generally exempt in Portugal [3]
Foreign income from blacklisted tax havens	Taxed at 35% [3]
UK State Pension and other pensions	Not on the exempt list, so normal IRS rates apply

Your employer withholds tax at 20% once you've applied [3]. You can opt to have the income taxed at normal rates instead if that works out better, for instance on a modest salary where the low IRS bands beat 20% [3].

A word on that foreign income exemption. Portugal not taxing your UK rent or dividends doesn't mean nobody does. Under the 2025 UK–Portugal convention, the UK can still tax rent from a UK property and take its capped share of UK dividends and interest [5], so check the UK side too. See UK income while you live abroad.

How to register

Become resident and update your address with the AT so your NIF shows you as resident. See NIF, NISS and AIMA.
Apply on the Portal das Finanças (Cidadãos > Serviços > Benefícios Fiscais > Inscrição no IFICI) by 15 January of the year after you became resident [3].
Upload the paperwork: your employment contract, academic certificates and, for some categories, a declaration from your employer. For highly qualified professions, the AT asks your employer to confirm instead, by 15 March [3].
Wait for the check. Depending on your category, FCT (the science foundation), AICEP, IAPMEI, ANI (the innovation agency) or Startup Portugal confirms your eligibility to the AT, and your status appears in your Portal area by 31 March [3].
File Anexo L with your Modelo 3 tax return every year you use the regime [3].

Miss the January deadline and you don't lose the regime entirely, but you lose years: the AT's example is someone resident from 2025 who registers in January 2029 and gets six years, 2029 to 2034 [3]. If your job changes, report it by 15 January of the following year; a new eligible job that starts within six months of the old one ending keeps you going [3].

What it means for British retirees

For most Brits retiring to Lisbon on a UK pension, the honest answer is that there's no special regime any more. Your State Pension is taxed only in Portugal under the new treaty, at normal IRS rates [5], and it still rises every April. UK civil service, NHS and armed forces pensions stay taxable in the UK [5]. Portugal remains good value on many fronts, but the days of the 10% pension deal for new arrivals are over.

If you're weighing up Portugal against Spain or Italy on tax, look at the whole picture: income tax, wealth and property taxes, and what you'll actually spend. Cost of living in Lisbon helps with the last bit.

Never move a pension to chase a tax regime. UK pensions can be paid to you in Portugal as they are. Transfers need regulated financial advice, may trigger the overseas transfer charge and attract scammers; see UK workplace and private pensions abroad and the FCA's ScamSmart warnings.

The FCDO suggests professional advice on Portuguese tax [1], and it's sound: a tax adviser who knows both countries can check whether your job qualifies before you sign the contract. Plenty of members of our community group for Brits in Portugal have been through the IFICI paperwork and will tell you how long it really took.

After NHR: Portugal's IFICI tax regime, and who can still use the old one