The Non-Habitual Resident (NHR) tax regime was introduced in 2009 with the aim of attracting qualified professionals, individuals carrying out certain high-value-added activities, and beneficiaries of pensions from abroad to Portugal.

For several years, this regime became one of the main tax incentives designed to encourage people to establish their residence in Portugal.

However, the Non-Habitual Resident regime was abolished as of 1 January 2024. It is therefore no longer possible to register under the NHR regime under the conditions that previously applied.

Nevertheless, transitional rules allow certain taxpayers to continue benefiting from the regime for the period provided for under the legislation.

In this article, we explain how the NHR regime works, who may still benefit from it, and the main rules you should be aware of.

Understanding How the Non-Habitual Resident Tax Regime Works

The Non-Habitual Resident tax regime allowed certain taxpayers who transferred their tax residence to Portugal to benefit from specific tax treatment for a period of 10 consecutive years.

One of the main requirements for benefiting from the regime was that the taxpayer had not been a tax resident in Portugal during the five years preceding registration.

The NHR regime covered certain income derived from activities considered to be of high added value, as well as certain situations involving income earned abroad.

The regime could also apply to Portuguese citizens who had lived abroad and wished to return to Portugal, provided they met the legal requirements.

However, since 2024, the regime has no longer been available for new registrations and now mainly applies to taxpayers who were already covered by it or who meet the conditions established under the transitional rules.

Who Can Still Benefit from the NHR Regime?

Despite the abolition of the regime, certain taxpayers may still benefit from NHR status.

In particular, individuals who were already registered as Non-Habitual Residents before the new legislation came into force may continue to benefit from the regime for the 10-year period, provided they remain tax residents in Portugal and continue to meet the applicable requirements.

Certain situations are also covered by the transitional provisions introduced when the legislation was amended.

These rules cover, in particular, certain taxpayers who became tax residents in Portugal in 2023 or 2024 and who met the specific conditions established by law.

Therefore, if you transferred your tax residence to Portugal during this period, it is important to check whether you meet the requirements to benefit from the transitional NHR rules.

What Were the Main Benefits of the NHR Regime?

The NHR regime provided several significant tax benefits.

The main benefits included:

1. Special IRS Rate for Certain Activities

Income derived from certain activities considered to be of high added value could benefit from a special IRS rate, provided that all the requirements established by law were met.

This could include certain technical, scientific or artistic activities, as well as other activities classified as eligible under the tax legislation.

However, the application of the special rate depended on the nature of the activity carried out and compliance with the relevant legal requirements.

2. Taxation of Foreign-Sourced Income

The NHR regime also provided specific rules for certain income earned abroad.

In some situations, certain foreign-source income could benefit from an exemption from tax in Portugal, provided that the conditions established under Portuguese legislation and applicable international tax treaties were met.

The tax treatment depended on the type of income, the country of origin and the rules applicable to the elimination of double taxation.

Therefore, it should not be assumed that all foreign-source income was automatically exempt from IRS in Portugal.

3. Taxation of Foreign Pensions

Foreign pensions were also covered by the NHR regime, although the applicable rules changed over the years.

Since 2020, certain foreign pensions have been subject to a special 10% tax rate, whereas previously they could, in certain circumstances, benefit from an exemption.

This change did not affect all taxpayers in the same way, particularly those who were already covered by the regime before the new rules came into force.

The tax treatment of foreign pensions should therefore be assessed based on the date of NHR registration and the taxpayer’s individual circumstances.

How Long Does the NHR Regime Last?

One of the main features of the NHR regime was its duration.

The status could be applied for 10 consecutive years, provided that the taxpayer remained tax resident in Portugal and continued to meet the relevant requirements.

The 10-year period was not renewable.

Therefore, individuals who currently benefit from the regime may, in principle, continue to benefit from the applicable rules until the end of their 10-year period.

Is It Still Possible to Apply for Non-Habitual Resident Status?

For new tax residents in Portugal, it is no longer possible to apply for registration under the former NHR regime, as the regime was abolished as of 1 January 2024.

However, certain exceptional situations are covered by the transitional rules.

Individuals who became tax residents in Portugal in 2023 or 2024 should therefore carefully check whether they meet the requirements established under these provisions.

How Was the NHR Application Process Carried Out?

When the regime was still open to new registrations, taxpayers first had to obtain tax residency in Portugal.

They would then apply for registration as a Non-Habitual Resident with the Portuguese Tax and Customs Authority through the Portal das Finanças.

One of the main requirements was that the taxpayer had not been a tax resident in Portugal during the previous five years.

Once the status had been approved, the taxpayer could benefit from the tax rules applicable to NHR status for the period established by law.

Today, this procedure is only relevant to situations covered by the transitional rules or to taxpayers whose status has already been recognised.

How Should Income Be Declared as an NHR?

Taxpayers benefiting from the NHR regime are still required to submit their annual IRS tax return.

Depending on the nature of the income received, different annexes may be required.

For certain income derived from high-value-added activities, taxpayers should use Annex L, which is intended for declaring income received by taxpayers covered by the Non-Habitual Resident regime.

The tax return must accurately reflect the nature of the income and the applicable tax treatment.

What Happens If You Stop Being a Tax Resident in Portugal?

The NHR regime is directly linked to tax residence in Portugal.

Therefore, if a taxpayer ceases to be tax resident in Portugal, they may no longer meet the conditions required to benefit from the regime.

For this reason, any decision to change tax residence should be carefully assessed, particularly when the taxpayer still has several years remaining under the NHR regime.

Conclusion

The Non-Habitual Resident regime underwent significant changes from 2024 onwards.

In 2026, NHR status is no longer generally available for new registrations. However, taxpayers who were already benefiting from the regime, as well as certain individuals covered by the transitional provisions, may continue to benefit from the applicable tax advantages for the legally established period.

If you already have NHR status or became a tax resident in Portugal during the period covered by the transitional rules, it is important to review your situation before making any tax-related decisions.

The application of the regime always depends on the taxpayer’s individual circumstances, including the date on which they became tax resident, the type of income received and the professional activity carried out.