As we previously knew, the Non-Habitual Resident (NHR) status was announced to end in 2024, giving way to a renewed and adapted status to meet the economic and fiscal demands of 2025. The new Version 2.0 maintains attractive tax benefits, such as a reduced rate of 20% for income tax (IRS) for qualified professionals in areas deemed strategic for the national economy. It continues to be intended for those who become residents in Portugal, provided they have not been residents here in the last five years.

Despite the significant delay in regulating the new regime – discussed and created in the 2024 State Budget – uncertainty now comes to an end with two key documents: the registration form and the list of qualified job positions, meaning one can now apply for the NHR status.

On February 20th, 2025, by Order No. 2416-A/2025 published by the Ministry of Finance, the model for registration in the tax incentive regime for scientific research and innovation and its respective instructions was approved. This registration model will be available at the Tax Authority, allowing new residents in qualified positions to benefit from a special 20% tax rate on IRS for 10 consecutive years starting from the year of their registration as a resident in Portugal (whether Portuguese returning after 5 years abroad or foreigners wishing to live in Portugal).

Thus, NHR 2.0 reaffirms itself as a strategic opportunity to attract talent and investment to Portugal. Despite the changes, the status remains a powerful tool for qualified residents who can benefit from competitive taxation and support for professional development.

The recently published Notice No. 4812/2025/2 clarifies and establishes which qualified job positions and economic activities are recognized as relevant by IAPMEI for the application of the tax incentive regime for scientific research and innovation. To obtain NHR 2.0, the applicant must register as a beneficiary of this status with the following entities, depending on the relevant activities they carry out: a) Foundation for Science and Technology, I.P. (FCT); b) Agency for the Development and Foreign Trade of Portugal (AICEP); c) Tax and Customs Authority (AT); d) Agency for Competitiveness and Innovation, I.P. (IAPMEI); e) National Innovation Agency S.A. of Startup Portugal and the Autonomous Regions of the Azores and Madeira.

In practice, candidates have until March 15 to submit their registration requests, and the Tax Authority will inform them of its acceptance or rejection. If accepted, new residents can enjoy the special tax rate on IRS for 2024, and it can last for 10 years.

This period is counted from the date the candidate became a resident in Portuguese territory, and those who, as of January 1 of this year, are already registered as NHR in the Tax Authority's taxpayer registry will continue to be eligible for the 10-year period if it has not expired.

It also applies to taxpayers who, as of December 31, 2024, met the conditions set forth in Article 16 of the IRS Code to qualify as tax residents in Portugal and submit their registration request as NHR with effects for the year 2023 through the existing functionality on the Tax Authority Portal by March 31, 2024.

Finally, it covers those who became tax residents by December 31, 2024, and later submit their registration request as NHR with effects for the year 2024 through the respective functionality on the Tax Authority Portal by March 31, 2025.

To maintain the benefit for the full 10 years, the taxpayer must be considered a tax resident in Portuguese territory at any point during that year and must continue to earn income from relevant activities. For this purpose, it is considered that the taxpayer continues to earn income from relevant activities as long as they start the new activity within 6 months after finishing the previous one.

It is important to note that this new version is not cumulative with the previous one or with the "Programa Regressar" (Return Program).

Finally, if the taxpayer fails to meet any of the requirements to maintain the RNH 2.0 status in any of the years, they will not lose the right to benefit from the status in the following years and may resume enjoying the benefits in any remaining years, starting from the year in which they are again considered a tax resident in Portugal and begin earning income from relevant activities.

In Summary:

• Change of Name and Focus: It is now called the "Fiscal Incentive Status" (ITS) or "Fiscal Incentive for Scientific Research and Innovation" (IFICI), focusing on attracting professionals in high-demand sectors such as innovation and scientific research.
• Change in Eligibility Criteria: The applicant must not have been a tax resident in Portugal in the 5 years prior to their application. The application deadline is generally set until January 15 of the year following the tax residency. For tax residents of 2024, a transitional deadline applies until March 15, 2025.
• Change in Taxation: Eligible professionals can benefit from a fixed 20% rate on income earned in Portugal, with the possibility of exemption for professional income earned abroad, subject to specific conditions.