NHR Is Closed: IFICI Is Portugal's Tax Regime for New Arrivals

NHR closed to new applicants at the end of 2023. In the months after, I started hearing the same question repeatedly in expat communities: "I heard NHR ended - is the 20% rate gone too?" It has not. It just got a new name.

The regime that replaced NHR is called IFICI (Incentivo Fiscal à Investigação Científica e Inovação), sometimes referred to as NHR 2.0. If you are arriving in Portugal and planning to open activity as a freelancer, IFICI is what you apply for. The same 20% flat rate applies. The 10-year window is the same. But the eligibility structure and a few key rules changed, and the differences matter.

Who still has NHR and who does not

If you applied for and were granted NHR before December 31, 2023, nothing changes for you. Existing holders keep their status for the full 10-year window. You do not need to re-apply or convert to IFICI. The two regimes run in parallel.

If you became a Portuguese tax resident in 2024 or later, NHR was never available to you. The application window closed before your residency began. What you can apply for is IFICI.

Some people in expat forums conflate the two regimes because they look identical from the outside. Both use Anexo L. Both give a flat rate on qualifying income. Both last 10 years. The legal basis and the eligibility conditions are different, and that matters when you are applying.

What IFICI covers and what it does not

The 20% flat rate under IFICI applies to qualifying Portuguese-source income: employment income (Categoria A) and self-employment income (Categoria B) from your qualifying activity.

Foreign-source income treatment actually improved relative to NHR. The old regime required the source country to have the right to tax the income under a treaty for the exemption to apply. IFICI dropped that condition. Employment, self-employment, dividends, royalties, rental income, and capital gains from foreign sources are exempt outright, without the treaty-taxability condition.

The major exception is pensions. Under old NHR, foreign private pensions were taxed at a flat 10%. Under IFICI, they go through standard progressive IRS rates. If a significant portion of your income is from a foreign pension, run the numbers before committing to Portugal specifically for tax reasons. The IFICI calculation may look different from what you were expecting based on research into the old NHR rules.

Who qualifies as a freelancer

This is where IFICI is more structured than NHR. There are seven qualifying routes defined in Portaria 352/2024, each with its own competent entity. For expat freelancers in tech, consulting, or research, the relevant routes are:

Route c covers highly qualified professions at export-oriented companies. Your profession must appear in Annex I of Portaria 352/2024, which includes ICT specialists, engineers, architects, physicians, researchers, and senior management roles. The minimum qualification is a doctorate, or a bachelor's degree plus 3 years of verifiable professional experience. The entity you work for (employer or, for freelancers, your primary client entity) must have a CAE code in the eligible sectors and at least 50% of turnover from exports. AT is the competent entity for this route: both you and the company confirm eligibility separately.

For freelancers on Recibos Verdes, Route c works when your primary client entity meets those conditions. If you work for multiple smaller clients with no single qualifying employer, Route c becomes harder to establish.

Route e covers R&D personnel whose costs are eligible under SIFIDE II, Portugal's research and development tax credit scheme. The competent entity is ANI (Agência Nacional de Inovação). If your work falls within the SIFIDE scope, your client or employer would typically already know about this route.

Route f covers employees and board members of companies certified under the Portuguese Startup Statute (Lei 21/2023). No degree requirement. No export threshold. If your employer holds the Startup Portugal certification, you qualify through this route. The Startup Portugal website has the public list of certified companies. This is the most accessible route for people joining Portuguese startups.

If your situation is mixed or uncertain, a certified accountant (contabilista certificado) can review whether your specific activity and client structure qualifies before you apply. Route c in particular has conditions that sit with the company entity rather than with you, and those conditions are worth verifying before submission.

The application process and the January 15 deadline

The application cycle for someone who becomes a Portuguese tax resident in year N runs like this:

• January 15, year N+1: Submit your IFICI inscription through Portal das Finanças
• February 15, year N+1: Your employer and the relevant competent entity communicate eligibility to AT
• March 31, year N+1: AT publishes your inscription status

If your portal does not yet show confirmed IFICI status after applying in January, you are waiting for the March 31 publication. This trips people up who assume silence means rejection.

Missing the January 15 deadline does not void your IFICI eligibility permanently. But it costs you one year of the 10-year window for each year of delay. The window is anchored to your first year of Portuguese tax residency, not to the year you apply, so late application forfeits the early years rather than pushing the window back. Someone who becomes a resident in 2025 but does not apply until 2027 forfeits 2025 and 2026: the benefit still runs only through 2034, leaving eight usable years instead of ten.

The 5-year prior non-residency rule

One eligibility condition that catches people who have lived in Portugal before: you must not have been a Portuguese tax resident in any of the 5 years preceding the year of application. If you lived in Portugal from 2018 to 2020, left, and are now returning in 2025, you need to confirm there was no Portuguese tax residency in 2020, 2021, 2022, 2023, or 2024.

Partial-year residency, Portuguese ties that AT might treat as residency, or time spent in Portugal on a long-term stay warrant a careful review. If there is any ambiguity, verify with AT or a certified accountant before submitting the IFICI application.

Annual recertification

This is the most significant operational difference from NHR. Under old NHR, once you were approved, you stayed approved for the 10-year window unless your circumstances changed dramatically. IFICI requires you to actually be exercising a qualifying activity every year you claim the 20% rate.

If you change employers mid-window, move to a company that loses its startup certification or drops below the export threshold, or shift away from the qualifying profession, you lose the flat rate for that year. The 10-year clock keeps running regardless. A gap year does not reset the clock or extend the window.

For freelancers who regularly change clients or work arrangements, this means checking your Route c or Route f eligibility at the start of each year, not just at the time of initial application.

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For the full breakdown of the seven qualifying routes, how foreign-source income is treated by category, the IRS filing walkthrough for both NHR and IFICI holders, and the mutual exclusivity rules with IRS Jovem and Programa Regressar, the complete NHR and IFICI guide covers all of that in detail.

For a broader introduction to how taxes work in Portugal as a freelancer, including IRS, IVA, and Social Security, the freelancer tax guide is the starting point.

If you are setting up invoicing as a new freelancer in Portugal, Descodify handles your Recibos Verdes, VAT reporting, and Social Security calculations automatically. The NHR and IFICI regime affects your IRS filing, not your invoicing obligations, so you can start issuing invoices through certified software immediately regardless of where you are in the IFICI application process.