Bye, bye, NHR: Meet the new IFICI (and its perks)
The old NHR (Non-Habitual Resident) status no longer exists. The Portuguese State Budget for 2025 replaced it with a brand-new tax incentive: the Incentive for Scientific Research and Innovation (IFICI)––a new tax incentive, designed to attract highly qualified individuals who engage in scientific research and innovation activities in Portugal.
This measure, implemented under Law no. 21/2023 of June 25 and regulated by Ministerial Order no. 345-A/2023, aims to encourage innovation and knowledge creation while making Portugal an appealing destination for professionals in these fields.
Keep reading for an overview of the IFICI regime, detailing eligibility criteria, the tax benefits it offers, and the steps required to apply.
What You’ll Learn:
The changes introduced by the IFICI: what it is and whom it’s for
Who is eligible for the IFICI Regime?
The mandatory documents
Key benefits of the IFICI regime
How to apply for the IFICI regime
Key deadlines to consider
Additional notes
The changes introduced by the IFICI: what it is and whom it’s for
The Incentive for Scientific Research and Innovation (IFICI) offers a reduced flat income tax rate of 20% for eligible individuals engaged in qualified scientific research and innovation activities in Portugal. This new regime supplements other measures aimed at attracting highly skilled professionals, such as the Non-Habitual Residency (NHR) tax regime, but with a targeted focus on fostering innovation and scientific advancement.
The IFICI regime is part of Portugal's broader strategy to:
Attract top talent in scientific research and innovation fields.
Strengthen Portugal's reputation as an international hub for R&D activities.
Promote sustainable economic development through knowledge creation and dissemination.
Who is eligible for the IFICI Regime?
The IFICI tax incentive is available to individuals who meet the following criteria:
Professionals engaged in scientific research or innovation
The regime applies to individuals who engage in activities recognized as scientific research or innovation. These activities may include:
Basic or applied research aimed at advancing knowledge in a specific field.
Development of new products, processes, or technologies that promote innovation.
Residency requirement
Applicants must become tax residents in Portugal. Tax residency is typically established if an individual spends more than 183 days in Portugal within a tax year or has a permanent home in the country.
Specific professions
The incentive is targeted at highly qualified professionals working in specific areas, such as:
Engineering and technology.
Life sciences and biotechnology.
Information and communication technologies (ICT).
Other fields officially recognized by the relevant Portuguese authorities.
Compliance with tax obligations
Individuals must have no outstanding debts with the Portuguese Tax and Customs Authority (AT) or Social Security at the time of application.
The IFICI regime is a standalone incentive and cannot typically be combined with other tax regimes. Under Portuguese tax law, individuals are generally required to choose one applicable tax regime, as overlapping benefits are not permitted.
The mandatory documents
Applicants will need to submit the following documents to the relevant entities:
Copy of the employment contract (when applicable);
Up-to-date company registration certificate (when applicable);
Copy of the scholarship contract/scientific grant (when applicable);
Proof of the applicable academic qualifications;
Statement from the employer attesting compliance with the requirements relating to the activity carried out;
Other documents may be requested throughout the application process.
Key benefits of the IFICI regime
Reduced flat income tax rate
Eligible individuals benefit from a flat 20% personal income tax (IRS) rate on income derived from qualifying scientific research and innovation activities. This rate is significantly lower than the standard progressive tax rates, which can go up to 48% in Portugal.
Duration of the incentive
The IFICI regime applies for a maximum of 10 years, provided the individual maintains their eligibility during this period.
How to apply for the IFICI regime
To take advantage of the IFICI tax incentive, follow these steps:
Become a tax resident in Portugal
Ensure you meet the criteria for Portuguese tax residency, either by spending at least 183 days in the country during the tax year or by establishing a permanent home in Portugal.
Prepare the required documentation
Gather the necessary documentation to prove eligibility, including:
Proof of residency in Portugal.
Employment contract or documentation proving your professional engagement in qualifying scientific research or innovation activities.
Tax compliance certificates from the Portuguese Tax Authority (AT) and Social Security.
Apply for certification
Submit your request for certification to the relevant Portuguese authority responsible for validating scientific research and innovation activities. This certification is required to confirm that your professional activities meet the criteria under the IFICI regime.
Submit your application to the tax authority
Once certified, submit your application to the Portuguese Tax and Customs Authority (AT) to register for the IFICI regime. Include all supporting documentation, including the certification of your activities.
Annual tax compliance
While benefiting from the IFICI regime, you must file annual tax returns in Portugal and demonstrate continued eligibility for the incentive, including compliance with your professional obligations in scientific research and innovation.
Key deadlines to consider
Certification of activities: Individuals must apply for certification as soon as they begin engaging in scientific research or innovation activities in Portugal. Certification is required before applying for the IFICI tax regime.
Tax registration: Applications for the IFICI regime should be made within the tax year in which the individual becomes a Portuguese resident or begins eligible activities.
Annual tax returns: All beneficiaries must file tax returns by the deadlines set by the Portuguese Tax and Customs Authority (typically in April to June for the previous tax year).
Additional notes
Law no. 21/2023 of June 25 provides the legal framework for the IFICI regime, defining eligibility criteria, applicable tax rates, and procedural requirements.
Ministerial Order no. 345-A/2023 further regulates the certification and application processes, outlining the specific documentation required and the evaluation criteria for eligible activities.
The IFICI is part of Portugal’s strategic plan to boost innovation and attract top talent to the country, complementing other initiatives like the Non-Habitual Residency (NHR) regime and Portugal’s Golden Visa program.
The IFICI regime is a valuable opportunity for highly qualified professionals in scientific research and innovation fields to enjoy significant tax savings while contributing to Portugal’s growing reputation as a center for innovation.
By taking advantage of the flat 20% income tax rate, individuals can optimize their tax obligations while engaging in meaningful, impactful work.
For more details, consult Decreto-Lei n.º 215/89, de 1 de Julho and Portaria n.º 352/2024/1, de 23 de dezembro, or contact the Portuguese Tax and Customs Authority (AT).
