What Is IFICI?
IFICI (Incentivo Fiscal à Internacionalização) is Portugal's replacement for the former Residente Não Habitual (NHR) tax regime, introduced through the 2024 State Budget (OE 2024). While NHR was abolished for new applicants from 1 January 2024, IFICI provides a similar — though more targeted — incentive for qualifying individuals who become Portuguese tax residents.
Under IFICI, eligible taxpayers benefit from a flat 20% IRS rate on Portuguese-source employment and self-employment income for a 10-year period. The regime is non-renewable. Foreign-source income that would have been exempt under NHR is generally no longer automatically exempt, though some double-taxation treaty benefits remain available.
IFICI vs Old NHR: Key Differences
| Feature | Old NHR (pre-2024) | IFICI (from 2024) |
|---|---|---|
| PT-source employment rate | 20% flat | 20% flat |
| Foreign-source income | Generally exempt (earned abroad) | No blanket exemption; treaty-dependent |
| Activity requirement | High-value-added activity list (broad) | Specific qualifying activities (narrower) |
| Duration | 10 years, non-renewable | 10 years, non-renewable |
| 5-year prior non-residency requirement | Yes | Yes |
| Application deadline | Year of registration or following year | Year of registration or following year |
Who Qualifies for IFICI?
To be eligible for IFICI, you must satisfy all three core requirements:
- 5-year non-residency: you were not a Portuguese tax resident in any of the five calendar years immediately prior to the year you intend to register. If you lived in Portugal for any part of those years (even briefly), you will fail this test. AT verifies this through IRS records.
- Register PT tax residency: you must actually move your habitual residence to Portugal and register your address with AT. A property purchase alone does not constitute tax residency — you must also be physically present for the requisite days (183+ per year, or have your habitual home in Portugal by 31 December).
- Qualifying activity: your employment or self-employment must relate to one of the approved IFICI categories.
IFICI Qualifying Activities
The 2024 legislation specifies the following categories as eligible:
- Research and development / scientific investigation
- Employees of certified technology companies (via IAPMEI / ANI certification)
- University and higher education teaching
- Highly qualified technical or industrial professionals in priority sectors
- Investment in Portugal via qualified investment funds or entities (€500k+ threshold)
- Job creation: bringing at least 5 local employees within 3 years of registration
- Startup founders and investors through IAPMEI-certified startup accelerators
Notably, the category of "high value-added activities" that existed under NHR — covering doctors, architects, accountants, engineers, and other professionals — is not carried over into IFICI for new applicants. If you worked in healthcare or a regulated profession and hoped to use IFICI, you will likely need to verify your specific situation with a tax advisor.
Grandfathered NHR
If you registered as an NHR taxpayer before 1 January 2024 — or were a Portuguese tax resident on that date and had applied for NHR status — your NHR regime continues until your 10-year period expires. You do not need to apply for IFICI. Nothing changes for grandfathered NHR holders except the sunset of the regime at the end of the 10-year window.
There was also a transitional provision (OE 2024 Article 236) allowing individuals who registered as Portuguese tax residents in 2023 and had not yet applied for NHR to apply for the old NHR by 31 March 2024. This deadline has now passed.
The 20% Flat Rate: What It Covers
Under IFICI, the 20% flat rate applies to:
- Portuguese-source employment income (Category A)
- Portuguese-source self-employment income from qualifying activities (Category B)
Foreign-source income (pensions, dividends, capital gains earned abroad, rental income from abroad) is not covered by the flat rate. It is taxed under the standard progressive IRS scale or via applicable double-taxation treaties. This is the most significant practical difference from old NHR, under which foreign pensions were often exempt.
Practical Steps to Apply
- Obtain a Portuguese NIF at Finanças (can be done remotely via a fiscal representative).
- Register your Portuguese address with AT and confirm your habitual residence.
- In the year of registration (or the following year), submit the IFICI application via Portal das Finanças > IRS > Sujeito Passivo > NHR/IFICI application form.
- Attach documentation evidencing your qualifying activity (employment contract, IAPMEI certification, investment statement, etc.).
- AT will issue an approval or request additional documents. If approved, the 20% rate applies from the first tax year of registration.
How Casa Helps Foreign Buyers Understand Their Tax Position
Tax planning is integral to the cost of buying in Portugal. Whether you qualify for IFICI, hold grandfathered NHR, or fall under the standard IRS regime affects your net cost of living in Portugal by tens of thousands of euros per year. Casa's property tracker flags tax-relevant information alongside listings and connects you with vetted advisors through the platform.