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THE SHIFT: FROM TAX HAVEN TO RESIDENCY PLAY
For over a decade, Portugal's NHR regime (non-habitual resident tax regime) was a very popular option for investors who wanted to relocate to Portugal. That era ended on January 1st, 2024 when Law no. 82/2023 of December 29th entered into force and ended the NHR regime for new applicants.
However, with minimum stay requirements, that allows investors to have legal residency in Portugal without the need to physically relocate to the country or establish tax residence in the country, the Portuguese Golden Visa remains a highly attractive investment residence program: it offers EU residence, visa-free Schengen access, a plan “B” against economical and political instability, as well as investment diversification.
It is a fact of life that laws, in Portugal or anywhere in the world, are subject to change and evolution, depending on political climate, societal’ s expectations and public discourse.
So, after the end of the NHR regime and substantial changes to the rules for obtaining Portuguese citizenship, when it comes to the question of “Does Portugal still merit consideration for high-net-worth investors?” the reply depends entirely on investors goals and expectations. Below we will explore a bit further both the NHR regime, what currently is in place when it comes to taxes in Portugal, as well as the current scenario for Golden Visa applicants.
THE NHR REGIME: WHAT ENDED AND WHY
With the goal of attracting foreign talent and high net worth individuals to establish their fiscal residence in Portugal, the Portuguese Government created in 2009 the NHR regime, a special tax regime that granted a 10-year right to anyone who, as individuals, (1) established their fiscal residence in Portugal and (2) had not been taxed as a fiscal resident for the previous 5 years to the date the regime would be claimed.
Outside of the NHR regime, if a person were to become a tax resident1 in Portugal, their income, including foreign-sourced income, could be subject to progressive tax rates of up to 48%, as well as additional solidarity taxes depending on the earned amounts.
The NHR regime, in summary, meant that all Portuguese sourced income from dependent employment or self-employment earned through high value-added activities of a scientific, artistic, or technical nature could be taxed at a special rate of 20%. Furthermore, if a few conditions were met, except for capital gains, foreign sourced income could be excluded from any taxation in Portugal or reduced to a 10% rate if related to foreign pensions.
While highly advantageous to foreign nationals, this regime was heavily criticized for being too broad, thus allowing a wide range of applicants to benefit from it, such as retirees, and not only highly qualified professionals or HNWI. Further sparked by Portugal’s housing crisis, this became a highly politically sensitive topic that ultimately led to its termination.
The result is that any new HNW foreigners, be it Golden Visa applicants or others, can no longer benefit from this regime, although a transitional regime was implemented until the end of 2024, and those who were already registered as NHRs were not affected by these changes.
THE REPLACEMENT: IFICI REGIME AND ITS NARROW SCOPE
With the same law that ended the NHR regime, Law no. 82/2023 of December 29th, the Portuguese Government also introduced a new “replacement” regime, specifically targeted at highly qualified individuals.
Although popularly called “NHR 2.0” the more technical term is IFICI tax regime, or Innovative Fiscal Incentive for Scientific Research and Innovation. The name itself draws attention to the fact that its scope is much narrower than the original NHR regime and, as such, cannot be considered a direct replacement.
The IFICI can only be applied to a select group of people, such as scientists and researchers in accredited research institutions, tech and innovation professionals, and other highly qualified professionals. It does not apply broadly to investors, entrepreneurs, or retirees.
When it comes to the taxation itself, the IFICI determines that income earned from the exercise of one of those highly qualified or innovative activities in accredited institutions can be taxed at a flat rate of 20% for the duration of 10 years, not applying to passive income, investment income or rental income, for example.
In other words, a Golden Visa investor who establishes tax residence in Portugal will not necessarily be able to benefit from the IFICI, depending on their professional activity. A retired investor living on stock dividends, for example, will likely not be eligible for this tax benefit, while a tech founder building a software company might.
It is important to emphasize that even though the NHR doors are closed for new applicants, Golden Visa holders are not automatically deemed tax residents in Portugal. In principle, an investor who holds a Golden Visa but maintains their primary business and residence elsewhere, should not fall under the Portuguese resident taxation rules.
THE CITIZENSHIP TIMELINE SHOCK: MAY 19, 2026 REFORM
On May 19th, 2026, a new package of amendments to the Portuguese Law no. 37/81 of October 03rd, known as Portuguese Nationality Law, entered into force after a long legislative process. Two of these amendments have been highly discussed by investors, as the ones that could impact their personal situations the most:
The first is the increase on the timeline for citizenship: while foreign residents had to hold their legal residence (such as the Golden Visa) for a period of 5 years before applying for citizenship, now, EU and CPLP nationals must do so for 7 years, and all other nationalities for 10 years.
The second one is the fact that the Government removed a clause that, as a reaction against AIMA’s (Portuguese Immigration Authority) delays, considered the period investors had to wait before receiving the final approval of their Golden Visa as part of the timeline for said citizenship. So, in other words, this means that, based on the information we have so far, the clock for citizenship only starts ticking once final approval has been granted.
It is important to note that, as Portuguese Nationality law does not differentiate between the type of legal residents when it comes to the rules to acquire citizenship by naturalization, these changes apply to all legal residents in Portugal, such as work-permit holders, passive income residents, digital nomads, etc., not only Golden Visa holders.
It is also worth mentioning that the Golden Visa program itself, as a residence program, has not suffered any changes at all in the last couple of years and, although the path to citizenship has become longer, it has not been withdrawn. The rules to obtain and renew the Golden Visa, including minimum stay requirements and investment requirements, remain unchanged.
As a last note, these amendments, although final, must still be implemented by regulations that will clarify their practical effects. For the time being, no drafts have been shared with the public yet, and we expect further developments in the coming months.
INVESTMENT ROUTES: WHAT CLOSED, WHAT'S AVAILABLE
When it comes to the Golden Visa itself, it is no news that in 2023 the Portuguese Government closed the real estate investment route, directly or indirectly, for new applicants, while allowing old applicants to continue with their procedures. Currently, there are several investment options available to investors who seek to qualify for a Portuguese Golden Visa:
Investment funds have been the primary open route for investors, due to the diversification option and no management hassle involved.
To qualify, the investor must place EUR 500,000.00 into a Portuguese investment fund that places a minimum of 60% of the funds into commercial companies headquartered in Portugal, as well as maintain it for a minimum of 5 years after receiving final approval from the immigration procedure.
The second most popular option is the so-called EUR 250,000.00 “donation” applied in investment or support to artistic production, recovery, or maintenance of the national cultural heritage, through qualified public entities or private foundations with public utility status. If the investment takes place in low-density areas, the amount can be reduced to EUR 200,000.00.
Two less popular options are the so-called Business Investment or Job creation paths. If choosing the first, investors must either:
- spend at least EUR 500,000.00 to incorporate a new commercial company headquartered in Portugal, as well as guarantee the creation of five full-time permanent jobs, that must be maintained for a minimum of 3 consecutive years.
- spend at least EUR 500,000.00 to increase the share capital of an existing business headquartered in Portugal, as well as guarantee the creation of at least five permanent jobs or the maintenance of at least ten jobs, of which a minimum of five must be permanent, that must be maintained for a minimum of 3 consecutive years.
If choosing the second, investors must create a minimum of 10 full-time jobs in Portugal, either on a new or existing business incorporated an operating in Portugal.
All of the investment types must be maintained for a minimum of 5 years after receiving final approval from the immigration procedure.
PORTUGAL POST-2024: WHO DOES IT SERVE NOW?
Please find below a few practical examples, based on general information, on client’s profiles and their potential fit for the Portuguese Golden Visa program:
Client profile 1 (Good fit): Chinese national seeking Schengen visa-free access and low physical residency requirements, as well as long term EU citizenship.
This hypothetical client does not intend to establish physical or fiscal residence in Portugal but conducts businesses in many EU countries from time-to-time. In this case, the NHR or IFICI regime is not relevant, and the investor will gain better mobility in all EU, as well as a direct path for citizenship, with minimum stay requirements in Portugal.
Client profile 2 (Possible fit): CPLP nationals (Brazilian, Angolan, etc.) pursuing EU residency and 7-year citizenship pathway.
If willing to relocate to Portugal with no rush, the IFICI regime might be available depending on their professional backgrounds and activities conducted.
Client profile 3 (Questionable fit): USA HNWI, whose income is based on stock dividends, and whose main goal is tax optimization, but is also looking for EU citizenship.
It is likely that the IFICI doesn't apply, as it does not cover passive income, so if tax optimization is their main goal, this hypothetical investor might choose other investment-residency or citizenship programs instead. However, with the Portugal Golden Visa, investors are not obliged to become tax residents in Portugal.
Although the timeline for citizenship is 10 years, most EU programs somewhat related to investment migration require extended periods of physical residency, while Portugal still have minimum stay requirements.
Client profile 4 (Not recommended): Retirees seeking tax-advantaged passive income and quick EU relocation.
Similarly to client 3, the IFICI likely doesn't apply. If becoming a tax resident in Portugal, it would be sensible to verify any bilateral agreements in force to avoid double taxation.
Given that the timelines for granting the Golden Visa can be extended, other immigration programs either in Portugal (such as the passive income visa) or in other countries might be a better fit.
PORTUGAL'S PLACE IN THE 2026 MARKET
Almost 15 years have passed since Law no. 29/2012, on August 09th , amended the Portuguese Immigration Law and implemented the Golden Visa program.
During this time, the program has fundamentally shifted a few times – tax incentives are no longer a viable option for most applicants, real estate investments are not accepted as part of the Golden Visa application, and the timeline for citizenship has increased. In other words, the program might not be suitable for every HNWI, particularly those looking for tax optimization or quick solutions.
Still, Portugal Golden Visa still serves specific niches and purposes and is still one of the only programs in the world that offers a direct path for citizenship without long physical presence requirements.
Depending on investor’s interests, short and long-time goals and timeline expectations, the program can still be a valuable option, particularly for those who face Visa requirements to access the Schengen space or those who are looking for a long-term plan B in Europe, but do not have any European ancestry, for example.
Practitioners should evaluate client’s full background, expectations and goals and adapt to these needs, as well as to maintain updated knowledge of program changes and future updates.
Footnote
1. An individual can be considered a tax resident if they spend over 183 days in Portugal counted over any period of 12 months, or if, during any 12 month period, they have a dwelling available to them under conditions that indicate an intention to maintain and occupy it as their habitual residence.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
