NHR 2.0 – New Tax Regulations in Portugal

Since its introduction, Portugal’s Non-Habitual Resident (NHR) tax regime has made the country a top destination for expats and international entrepreneurs. For over a decade, the programme allowed new residents to enjoy a flat 20% tax rate on personal income—a massive draw for those earning over €80,000 a year, especially when compared to Portugal’s standard top tax rate of 48%. However, in 2023, the government decided to wind down this attractive scheme, arguing that it no longer served the national interest. In its place came "NHR 2.0"—a refined framework designed to continue offering benefits, but under new, stricter conditions.

Transitional Measures for Ongoing Moves

Despite the official end of the original programme, there is a grandfathering period for those who had already set their move in motion. If you initiated your relocation to Portugal before the end of 2023, you may still qualify for the old NHR rules. To be eligible, you must prove that you had taken specific steps by that deadline, such as signing a promissory contract for property, registering children at a school, or applying for residency.

A Fresh Start with NHR 2.0

For anyone moving to Portugal after 2023, the NHR 2.0 regime (effective from 1 January 2024) is the new standard. This revised scheme aims to preserve many of the previous perks but introduces significant changes, particularly regarding pension income. It represents a major shift in qualification criteria and the specific benefits available.

What About Existing NHR Holders?

If you already hold NHR status, these changes do not affect you. You will continue to enjoy the benefits of the original scheme until your ten-year period expires. That said, it is always worth reviewing your situation to ensure your tax planning remains efficient for the long term.

Key Features of NHR 2.0

The updated programme maintains the attractive 20% flat tax on employment and self-employment income, provided the work falls into specific high-value categories. It also continues to exempt certain foreign-sourced income—such as dividends, interest, and rental income—from Portuguese tax. However, NHR 2.0 narrows the scope significantly, shifting focus away from a broad range of professions to specifically target scientific research, innovation, and startups.

Who Is NHR 2.0 For?

The new rules are much more targeted than before. Eligibility is now largely restricted to academics, scientific researchers, and highly qualified professionals in specific sectors. It also caters to significant investors and individuals working within certified startups or R&D projects.

Securing NHR 2.0 Status

To qualify as a tax resident under this regime, you generally need to spend more than 183 days a year in Portugal or have a habitual residence there (owning or renting). For non-EU citizens, this often involves securing a residency permit first, such as the D7 (passive income), D2 (entrepreneur), or the Golden Visa, which has also seen its investment criteria updated recently.

Summary

With the rollout of NHR 2.0, both prospective movers and current residents need to understand exactly where they stand. While the regime has tightened, it still offers substantial opportunities for the right candidates looking to enjoy life on the mainland, in Madeira, or the Azores.

If you have questions about your eligibility or the new NHR status, we offer an initial consultation free of charge. Please contact us at: https://www.drwerner.com/de/kontakt/