Portugal 2025–29 Government Plan Hints at New NHR-Style Tax Breaks

The abolition of Portugal’s flagship Non-Habitual Resident (NHR) regime on December 31, 2023, was a landmark event in European tax policy. It signaled the end of a 14-year strategy that had successfully positioned Portugal as a premier destination for international talent, investors, and retirees. Its replacement, the surgically narrow "Incentive for Scientific Research and Innovation" (IFICI), was met with a critical reception from tax advisors and the global mobility industry, who noted its highly restrictive scope as a pivot away from broad-based economic attraction.

However, a new government took office in June 2025 following May's legislative elections, and its official program signals a profound strategic realignment. While the 250-page text is silent on the NHR by name, a forensic, clause-by-clause comparison with the 2005-09 and 2009-13 programs—the very documents that birthed and entrenched the original NHR—reveals striking lexical and structural parallels.

This analysis argues that these parallels are more than mere coincidence. They provide a strong official signal that Lisbon is preparing a successor regime: a new, NHR-style incentive likely tailored to active income and shorn of the politically contentious pension exemption.

The Original NHR: A Policy Born of Necessity

The NHR was not a singular idea but the culmination of a multi-year strategy forged in a period of deep economic challenge. Its origins can be traced across two government mandates.

1. The Strategic Blueprint (XVII Government, 2005-09)

Facing low growth and the looming global financial crisis, the XVII Government's program was the first to officially articulate a strategy based on attracting foreign human capital through targeted benefits. Its program called for:

“A criação de mecanismos e programas de integração e de incentivo a quadros qualificados nas áreas em que o País mostra maiores carências…” (Programa XVII Governo, Page 90, Chapter II, Section VII)

(Translation: "The creation of mechanisms and programs for integration and for incentivizing qualified professionals in the areas where the country shows the greatest needs.”)

This strategic choice was further reinforced by the call on page 154 for the "criação de um conjunto de regras claras, estáveis e simples (fiscais, institucionais...)" (translation: "creation of a set of clear, stable, and simple (fiscal, institutional...) rules") to attract foreign investment. This initial phase demonstrates a clear pattern: the government first established a broad strategic need for fiscal incentives before moving to specific legislation, a sequence that appears to be repeating now.

2. The Legislative Execution (XVIII Government, 2009-13)

The NHR was officially created by Decree-Law 249/2009, passed in the final days of the XVII Government's term. The succeeding XVIII Government did not merely inherit this law; it embraced it as a core policy pillar. Its program elevated the language from strategic intent to a concrete commitment, promising to:

“criaremos regimes especiais favoráveis à atracção de… actividades de elevado valor acrescentado”. (Programa XVIII Governo, Page 44)

(Translation: "we will create special favorable regimes for the attraction of… high-value-added activities.”)

This history demonstrates that the NHR was a deliberate, long-term state policy designed to use fiscal mechanisms for broad talent attraction. Its design was a powerful tool of broad-spectrum economic attraction, defined by a 20% flat IRS rate, a broad exemption for most foreign-source income, and a fixed 10-year duration. While highly effective, its generous treatment of foreign pensions eventually drew political fire, with the government at the time citing its perceived impact on housing inflation as a key justification for its abolition.

The IFICI: A Labyrinth of Bureaucracy

The IFICI regime, the current law, represents a complete philosophical pivot. It functions less as an economic magnet and more as a surgical scalpel, confining the 20% flat rate to a small, highly specific group. A close look at its implementing regulation, Portaria n.º 352/2024, and the official application form reveals a system of daunting complexity.

An applicant must first determine which of six different public bodies is responsible for their application—from the FCT for scientific research to Startup Portugal for certified startups, or AICEP for productive investment projects. Each path has its own unique and demanding documentary requirements. For example, a "highly qualified professional" under section 2(c) of the Portaria must work for a company that either benefits from specific investment tax credits or exports at least 50% of its turnover. This shifts the burden of eligibility from the individual's qualifications to the specific fiscal and commercial profile of their employer.

The result is a regime that is not only narrow in scope but also bureaucratically intensive. The professions listed in Annex I of the Portaria—such as directors, doctors, and TIC specialists—are far fewer than those covered by the original NHR, and their eligibility is often conditional on the employer's status, effectively excluding a vast number of senior executives, financial specialists, and independent digital-economy contractors.

The XXV Government Programme: Compelling Indicators of a New Direction

The new government's program appears to resurrect the foundational doctrine of the NHR with notable precision.

1. The Foundational Philosophy is Re-established

The program’s introduction immediately sets a new tone, directly linking tax policy to talent and investment:

“Só com uma estrutura fiscal mais leve… se criam as condições para reter talento, atrair investimento…” (Programa XXV Governo, Page 7)

(Translation: “Only with a lighter tax structure… can the conditions be created to retain talent, attract investment…”)

2. The Linguistic Mandate for a Preferential Regime

Page 25 of the program contains the pivotal pledge to:

“Adotar mecanismos e procedimentos que promovam e privilegiem a atração e fixação de talento altamente qualificado vindo do estrangeiro…” (Programa XXV Governo, Page 25)

(Translation: “Adopt mechanisms and procedures that promote and privilege the attraction and fixation of highly qualified talent from abroad…”)

To “privilege” (privilegiar) a group is, in legislative Portuguese, to grant that group an advantage unavailable to others—precisely what a flat-tax regime does. The textual parallel to the 2009 program is significant.

3. The Ten-Year Certainty Precedent

Perhaps the most concrete signal is on page 77, where the program commits to:

“Criar um regime de “Validação prévia de Investimento”… a vigorar por 10 anos;” (Programa XXV Governo, Page 77)

(Translation: “Create a ‘Prior Validation of Investment’ regime… to be in force for 10 years;”)

This is a critical piece of evidence. The government is explicitly creating a precedent for a 10-year fiscal incentive package. While aimed at corporate investment, it establishes the 10-year horizon as a core part of its policy toolkit, mirroring the exact duration of the NHR.

4. Supporting Policies Reinforce the Strategy

The program reinforces this direction with other measures, including a "Programa 'Voltar'" (translation: "'Return' Program") (Page 49) to provide "incentive measures for all Portuguese... to return to Portugal," a key NHR demographic.

From Evidence to Design: Plausible Contours of a Successor Regime

It is reasonable to infer that the new government is not signaling a simple revival but the creation of a successor regime that has learned from the past. Based on the evidence, two primary pathways for its implementation appear plausible.

Option 1: A New, Standalone Regime

The government could introduce entirely new legislation creating a regime focused on:

• Active-Income Focus: The 20% rate would likely apply only to salary and self-employment income.

• Dynamic Profession List: Eligibility could hinge on an updated list of shortage occupations, validated by economic agencies like AICEP or IAPMEI.

• Enhanced Substance Requirements: Clearer rules on minimum physical presence or primary residence could be expected.

• A Ten-Year Cap with Claw-back: Borrowing from the new FDI template, benefits would lock in for a decade but could be revoked if conditions are not met.

Option 2: A Strategic Expansion of the IFICI

A politically more straightforward path could be to radically expand the scope of the existing IFICI regime. This would allow the government to achieve its goals without the political baggage of creating a "new" NHR from scratch. Such an expansion could include:

• Broadening the Definition of "Innovation": Extending eligibility beyond certified R&D staff to include a broader range of professionals in the digital, tech, and creative industries.

• Including Key Service Exporters: Specifically adding freelancers and independent contractors who provide high-value services to foreign companies from Portugal.

• Covering Strategic Investors: Extending the regime to investors and directors of companies that make significant, qualifying investments in Portugal.

Conclusion

While the XXV Government has not explicitly promised to revive the NHR, its official program repeats the very phrases, timeframes, and policy logics that launched the original regime. The textual parallels—privilegiar talento altamente qualificado, a ten-year incentive promise, and a diaspora-targeted Programa Voltar—form a coherent roadmap toward an NHR-style successor.

The current IFICI, by its own legislative design, appears unfit to fulfill these broad strategic goals. The creation of a new, broader mechanism would therefore seem to be a logical step to align policy with the government's stated objectives. For tax advisers, investors, and mobile professionals, the practical reading is straightforward: operate under the current rules today, but monitor the 2026 State Budget cycle closely. The question appears to be no longer if Portugal will re-enter the fiscal competition for talent, but how soon and on what terms.