Portugal spent a decade attracting foreign residents with a regime that no longer accepts applications. The non-habitual resident regime was repealed with effect from 1 January 2024, and the questions that reach this desk about it now divide into two, which have different answers. What happens to the people already inside it, and what is available to someone considering the move today.
A good deal of the material still circulating describes the old regime as though the door were open. It is not. What exists is a closing population holding acquired rights that run out year by year, and a separate and much narrower incentive built around scientific research and innovation. The second is not a continuation of the first, and an adviser who treats it as one will misprice the decision.
What was repealed, and what survives
The Portuguese tax authority states the position plainly. The regime was repealed with effect from 1 January 2024 by the revocation of paragraphs 8 to 12 of article 16 of the personal income tax code, and it continues to apply only to taxpayers who meet the conditions in paragraphs 3, 4 and 5 of article 236 of Lei 82/2023, the State Budget law for 2024. Everything else about the regime, including the professions list and the treatment of foreign income, survives only for that group.
The transitional provision has four limbs, not the two most summaries describe: anyone already registered as a non-habitual resident when the repeal took effect; anyone who on 31 December 2023 already met the conditions to be treated as resident; anyone who became resident during 2024 holding one of the pre-repeal commitments the statute lists, such as an employment contract agreed by 31 December 2023; and members of those taxpayers’ households. Only the last two can still produce a new registration today.
For all of them the arithmetic is fixed and unforgiving. In the wording of article 16 that the transitional rule preserves, the benefit runs for a maximum of ten consecutive and non-extendable years, counted from the year in which residence was established. It is not ten years of benefit; it is ten calendar years on a clock that starts whether or not the application has been filed.
The deadline that quietly costs years
That last point produces the most common loss of value in the transitional population. For those who can still apply, registration is to be submitted by 31 March of the year after the taxpayer became resident. Applications filed after that date are not rejected. They are accepted, but the benefit begins only in the year of the request, while the ten-year window still runs from the year residence began.
The tax authority gives its own worked example. A taxpayer who became resident in 2024 and filed the request in 2026 is recorded with 2026 as the start year and 2033 as the end year, eight years rather than ten. Those years are not recoverable.
Where a client arrived in Portugal during the transitional window and has not yet checked the date on which the registration was actually accepted, that is the first thing to verify. It is a matter of record, it takes one enquiry, and it determines the value of everything built on top of it.
It also determines when the planning has to be redone. A family inside the transitional regime is not in a stable position; it is on a countdown with a known end date, after which ordinary Portuguese rates apply to income that has never been taxed at them. In one mandate we found the countdown expiring two years earlier than the family believed, because residence had been established in the year before the year they associated with the move. The consequence was not a penalty. It was a distribution policy that had to be brought forward by two years, on assets that took longer than that to reposition.
The regime that took its place
The successor is the incentive for scientific research and innovation, known by its Portuguese initials as IFICI, created by the same budget law that repealed the old regime and codified in article 58-A of the Estatuto dos Benefícios Fiscais. It was regulated by Portaria n.º 352/2024/1 of 23 December 2024, later amended in its article 4, and the tax authority published guidance in Ofício-Circulado n.º 20276/2025 of 26 February 2025. Neither the 2025 nor the 2026 State Budget law touched article 58-A.
The access conditions resemble the old ones in form. The applicant must not have been resident in Portugal for tax purposes in the previous five years, must become resident, and must carry on one of the activities the article covers. The regime may be used only once, and it is closed to anyone who has already benefited from the non-habitual resident regime or who has opted for the returning-resident treatment in article 12-A of the personal income tax code.
The benefit is a special rate of 20 per cent applied to net income in categories A and B derived from the qualifying activity, for ten consecutive years counted from the year of registration as resident. Income that does not come from the qualifying activity is taxed under the ordinary rules, which is the point most often missed.
Activity is the gate, not status
The decisive difference between the two regimes is what is being rewarded. The old one attached to a person who met a residence history and, in its high value-added branch, to a listed profession. The new one attaches to an activity carried on within a defined institutional perimeter, and that perimeter is policed mostly outside the tax authority.
Higher education teaching and scientific research are registered through the Fundação para a Ciência e a Tecnologia, research and development through the Agência Nacional de Inovação, certified start-ups through Startup Portugal, and the highly qualified professions through the tax authority itself, with the Azores and Madeira left to regional decree. Qualified posts under the contractual benefits for productive investment go through AICEP alone. Other qualified posts, in entities recognized as relevant to the national economy, go through AICEP where, as the tax authority reads the division, consolidated turnover in the preceding year reached 75 million euros or the work sits in a project of potential national interest or an interior investment project, and through IAPMEI otherwise.
That architecture has a practical consequence. Eligibility is not a self-assessment made in a tax return. It depends on a registration held by an employer or a certifying body, which means it can be lost when a job changes even though the individual has not moved.
What happens to foreign income
Under the new incentive the general rule for foreign-source income is exemption, with the exception of category H, which covers pensions. Article 81 of the income tax code grants it to categories A, B, E, F and G of foreign income, aggregated to set the rate on everything else. Income paid by non-resident entities domiciled in a territory on the Portuguese list of clearly more favourable tax regimes is taxed at 35 per cent, by withholding where a Portuguese-established entity pays or channels it and autonomously under article 72 otherwise.
This is where the difference between the regimes is sharpest in cash terms. A retired couple whose income is a foreign pension had a proposition under the old regime. Under the new one they have none, because they do not carry on a qualifying activity and because pension income is carved out of the exemption in any event.
The population the new regime is designed for is therefore narrow and specific. It is a researcher, a founder, a senior technical employee of a certified company, someone whose Portuguese income is earned by working. It is not a wealth relocation regime, and it should not be sold as one.
The calendar is part of the design
Registration for the new incentive must be requested by 15 January of the year following the year in which the applicant became resident for tax purposes. That is a considerably tighter deadline than the old 31 March, and it falls two weeks after a year end in which most arriving families are not yet thinking about Portuguese filings. Missing it costs the year, not the regime.
Because the certifying body sits outside the tax authority, the underlying registration usually has to be in place before the tax request can be made coherently. The sequence runs from employment or corporate registration, to the certifying body, to the tax authority, and the whole chain has to complete inside a window that opens on the day residence is established.
In practice the decision to qualify has to be taken before the move, not after it. A family that arrives in September and starts asking questions in February has already lost the year, and in a ten-year regime a lost year is ten per cent of the benefit.
Reading an offer that mentions the old regime
Advisers still receive proposals, and clients still receive marketing, describing Portuguese residence in terms of the repealed regime. Some of it is careless, some of it is a genuine transitional case being described loosely, and the two are difficult to distinguish from the outside.
The test is short. Ask which of the two regimes is being claimed. If it is the old one, ask on what date the client became resident, under which limb of article 236 the acquired right arises, and whether the registration has already been accepted. If it is the new one, ask which activity qualifies, which body registers it, and whether that registration exists today.
Any proposal that cannot answer those questions in a paragraph is describing a benefit that does not exist for the client in front of you. That is a different problem from an aggressive structure, and a more embarrassing one, because it is settled by reading a public page rather than by argument.
What Portugal now competes on
Removing the regime did not remove the reasons people moved. The treaty network, the participation regime for corporate shareholdings, the cost base and the position of Lisbon and Porto as places from which a European business can be run are all unchanged. What has gone is the assumption that a foreign income stream can be brought into a Portuguese residence at a low effective rate simply by arriving.
For a family whose income is portfolio and pension, Portugal is now a lifestyle decision with an ordinary tax outcome, and the comparison runs against the ordinary rates rather than against a benefit that has closed. For a founder or a researcher whose income is earned in Portugal from a qualifying activity, the new incentive is real, and at 20 per cent on employment and business income it is worth the administrative work.
The mistake to avoid is treating the successor regime as a discounted version of the predecessor. They reward different things. One rewarded arriving; the other rewards working in a defined field inside a certified structure. A file built on the first premise will not survive contact with the second.
This article is informational and does not constitute tax advice. Each engagement is subject to scope and applicable regulation.