NHR and IFICI for Americans: what the old regime gave, what the new one gives

NHR: closed, with a long tail

The non-habitual resident regime taxed Portuguese employment and business income in listed professions at 20 % and exempted most foreign income (10 % on foreign pensions from 2020) for ten years. It closed to new registrations on 1 January 2024. Two groups still hold it:

• people registered by 31 December 2023, for the remainder of their ten years;
• people who became resident during 2024 and could show a 2023 employment contract, lease, property reservation, school enrolment or visa application — the transitional list of article 236.º of the 2024 budget law — and registered by 31 March 2025.

Nobody arriving in 2026 can obtain NHR. Adverts still promising it are selling a closed door.

• 1 January 2024 NHR closed; holders keep their ten years
• 20 % for 10 years IFICI rate on Portuguese income from listed activities
• Foreign income exempt in Portugal under IFICI (salaries, business, dividends, rents, gains) — pensions are not
• The IRS still applies: the saving clause means an American pays at least the US rate

IFICI: who qualifies

The Incentivo Fiscal à Investigação Científica e Inovação (EBF, art. 58.º-A) is for people who become resident without having been resident in the previous five years and who earn income from one of the listed activities:

• teaching in higher education and scientific research, including posts in recognised technology and innovation centres;
• qualified jobs and board positions under contractual investment incentives;
• highly qualified professions (the old NHR list of Portaria n.º 12/2010 applies until a new one is issued) in companies with relevant investment under the RFAI regime, or in industrial and service companies whose CAE code is listed and which export at least 50 % of turnover;
• other qualified jobs in companies recognised by AICEP or IAPMEI as relevant to the economy;
• R&D staff whose costs qualify for the SIFIDE incentive;
• jobs and board positions in certified start-ups (Lei n.º 21/2023);
• activities in the Azores and Madeira under regional rules.

Anyone who ever benefited from NHR is excluded, and the regime can be used once. Registration is made with the body responsible for the category (FCT, AICEP, IAPMEI, ANI, Startup Portugal, or the tax authority for the highly qualified professions) by 15 January of the year after becoming resident; late registration shortens the period.

What IFICI does for a Portuguese return

• Employment and self-employment income from the qualifying activity: 20 % flat instead of 12,5–48 % (you can still opt for the general table if lower).
• Foreign-source income of categories A (salaries), B (business), E (dividends, interest), F (rents) and G (gains): exempt in Portugal, counted only to set the rate on other income (IRS Code, art. 81.º n.º 4).
• Foreign pensions — 401(k), IRA, Social Security: not exempt; taxed at the progressive rates like any resident’s. Retirees gain nothing from IFICI.
• Income from tax havens on the Portuguese blacklist: taxed at 35 %.

What the IRS takes back

The treaty’s saving clause lets the United States tax its citizens as if the treaty did not exist. So:

The pattern: on Portuguese salary, IFICI produces a real saving because the US credit only refunds tax actually paid, so a lower Portuguese rate means lower total tax down to the US level. On US-source investment income IFICI merely moves the tax from Finanças to the IRS; the American pays the same as before moving. A non-American colleague on the same IFICI contract pays nothing on that income.

Worked comparison

A software engineer hired by a certified Lisbon start-up on 90 000 € (single, no other income):

Add 100 000 $ of US dividends: Portugal charges 28 000 € without IFICI and 0 with it; the US charges 15 % qualified-dividend tax (plus 3,8 % NIIT) either way — 18 800 $ with credit for Portuguese tax in the first case, 18 800 $ with nothing to credit in the second. The IFICI saving on the dividends is the Portuguese tax minus the US tax, not the whole 28 %.

Steps

Questions