Portugal has launched the Tax Incentive for Scientific Research and Innovation (IFICI), often called NHR 2.0, replacing the former Non-Habitual Resident (NHR) tax system. Starting January 1, 2024, this updated program seeks to draw skilled experts to its scientific research and innovation industries. Here’s what you should know.
Who Can Apply?
To be eligible for the new IFICI/NHR 2.0 program, applicants must meet specific criteria:
- Become a New Tax Resident: You must establish tax residency in Portugal, and must not have been a tax resident for the previous five years.
- Qualified Professionals: You must have a highly qualified position in certified start-ups, technology and innovation centers, or companies benefitting from incentives like Portugal’s Investment Support Tax Regime (RFAI).
- Sector Focus: Your economic activity must be in sectors like extractive industries, manufacturing, information and communication, or research and development in the physical and natural sciences.
Benefits of the Program.
The IFICI/NHR 2.0 regime offers great tax incentives:
- Low Tax Rate: A flat 20% tax rate on income from qualifying work and self-employment for up to 10 years.
- Tax Breaks: Enjoy a break on most foreign income, like dividends, interest, capital gains, and rents. Pension income is not included in this.
Main Differences From Original NHR Scheme
The move from the original NHR to the IFICI/NHR 2.0 regime brings key changes:
- Narrowed Eligibility: The first NHR program offered incentives to a range of people. The newer IFICI/NHR 2.0 is geared toward skilled people in science and innovation.
- Employer Expectations: You must be employed by businesses that are economically active in Portugal, excluding freelancers or those working for non-resident companies that operate outside in the country
- Tax on Foreign Income: The original NHR provided tax breaks on most foreign income, like pensions, the new IFICI/NHR 2.0 excludes these types of payments.
In short, the IFICI/NHR 2.0 program aims to attract top talent in scientific and innovative areas by offering appealing tax incentives. It focuses on sectors aligned with the country’s strategic goals.
