How Portugal’s IFICI (NHR 2.0) Tax Regime is Evolving in 2025

Portugal has long been a popular destination for wealthy expats, drawn by its exceptional quality of life, Mediterranean climate, and favourable investment opportunities. However, a key driver behind this relocation has been Portugal’s advantageous tax incentives.

As Portugal transitions from the popular Non-Habitual Residency (NHR) tax regime to the newly introduced Tax Incentive for Scientific Research and Innovation (IFICI), also known as the NHR 2.0 tax regime, investors, professionals, innovators, and entrepreneurs are taking notice.

Portugal's IFICI (NHR 2.0) tax regime offers compelling fiscal incentives, including a 0% tax on foreign-derived dividends and capital gains, reinforcing the country's status as a prime destination for international private wealth.

The Impact of IFICI Tax Incentives on Wealth Relocation

According to the 2025 Wealthy Expats in Portugal Survey Report, an overwhelming 83% of wealthy expats cited Portugal’s tax and investment benefits as one of the primary reasons for their relocation. The transition from the old NHR tax regime, which ended to new entrants at the end of 2024, to the IFICI (NHR 2.0) tax regime is expected to reshape the investment landscape while maintaining the country’s appeal to high-net-worth individuals, especially value creators and skilled professionals.

The old NHR tax scheme allowed qualifying expats to benefit from a 0% tax on foreign-sourced passive income, such as dividends and a 10% tax on overseas pensions for a period of ten years. The new IFICI (NHR 2.0) tax regime has introduced a 20% flat tax on professional income for individuals engaged in highly qualified activities while maintaining a 0% tax on non-Portugal-sourced dividends and also now capital gains. These provisions make Portugal an attractive hub for skilled professionals, investors, and innovation-driven businesses.

It is important to talk to a Portugal Pathways cross-border tax expert who can walk you through how this might apply to your own personal situation via an initial no-obligation discovery call.

Portugal's New Era of Tax Incentives

The IFICI (NHR 2.0) tax regime has, this month, broadened its eligibility, targeting professionals including those in scientific research, technology, finance, healthcare, engineering, education, and consultancy sectors. The government’s focus on knowledge-based industries aims to position Portugal as an international centre for high-value talent and investment.

Portugal remains highly attractive, with no inheritance tax or gift taxes for direct family members.

Additionally, strategic cross-border tax planning can further optimise financial outcomes for expats, particularly those from the United States and the United Kingdom, where tax structures differ significantly.

The Allure of Portugal for Expats

While taxation is a significant pull factor, expats also highlight Portugal’s broader lifestyle benefits. The Wealthy Expats in Portugal Survey Report 2025 found that wealthy expats rated the following attributes highly:

• Climate and Natural Beauty (83%) – Over 300 days of sunshine per year, diverse landscapes, and a mild Mediterranean climate.

• High Quality of Life (77%) – Affordable luxury, top-tier healthcare, and a safe environment.

• Investment-Friendly Real Estate Market (91%) – Strong property appreciation and demand in affluent areas like Lisbon, Cascais, and the Algarve.

• Happiness Index (88%) – Wealthy expats reported greater satisfaction in Portugal compared to other global destinations.

Additionally, Portugal's strategic location provides easy access to the rest of Europe, making it a convenient base for international professionals and investors. 90% of surveyed expats cited Portugal's proximity to other European countries as a key advantage.

The Future of Wealth Relocation to Portugal

While the shift from NHR to IFICI (NHR 2.0) brings new conditions, it also creates opportunities for a fresh wave of skilled professionals and business leaders.

The IFICI (NHR 2.0) tax regime’s emphasis on high-value industries aligns with global trends toward innovation-driven economies, ensuring that Portugal remains competitive in attracting top talent and investment.

Moreover, Portugal’s stability, cultural richness, and Golden Visa residency by investment opportunities continue to reinforce its appeal against alternative destinations such as Dubai, Singapore, and Spain.

The Japan Credit Rating Agency (JCR) raised Portugal’s sovereign risk rating from ‘A’ to ‘A+’ in 2025. This recognition highlights Portugal’s diversified economy, structural reforms, and fiscal discipline, reinforcing its ability to withstand external economic pressures.

In January 2025, Portugal’s consumer price inflation fell to 2.5% from 3.0% in December 2024, demonstrating a consistent downward trend and bolstering confidence in the country’s economic policies.

According to Finance Minister Joaquim Miranda Sarmiento, Portugal’s government projects GDP growth of 1.8% in 2024 and 2.1% in 2025.

The Wealthy Expats in Portugal Survey Report’s findings suggest that Portugal will maintain its stronghold as one of the world’s top destinations for affluent expats, particularly those seeking long-term residency with favourable tax structures and a superior quality of life.

‍

Download the Wealthy Expats in Portugal Survey Report 2025 here

‍

About Portugal Pathways

Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and provides expert guidance through its professional supply chain network on luxury property, wealth management, and tax optimisation, including post-NHR tax regime planning, as well as private healthcare, IFICI tax incentive applications, money transfers and bespoke relocation solutions to enhance life and investments in Portugal.

About Portugal Investment Owners Club

The Portugal Investment Owners Club, or P Club for short, is a unique investor membership community designed for discerning individuals, families, and organisations committed to exploring and capitalising on life in Portugal and enjoying money-can't-buy experiences and exclusive events.

‍

Disclaimer: The information on the Portugal Pathways and Portugal Investment Owners Club (P Club for short) websites and in email communications is for general informational purposes only and should not be construed as legal, tax, or financial advice. You should consult and check with a qualified professional advisor before relying on any information provided on this website or in email communications. As it relates to investments in Golden Visas or other wealth management solutions offered by regulated and professional advisors, it is important to note that past performance is no guarantee of future returns. Private equities can be highly illiquid and come with risk and should always be under professional independent advice.

‍

‍