Legal Alert | NHR 2.0 - Tax incentive for scientific research and innovation

The regime – brief overview

The IFICI (NHR 2.0) is a special tax regime aimed at granting tax benefits to highly qualified professionals that are tax residents¹ in Portugal, for a 10 consecutive years period, starting from the year of registration as a tax resident in Portugal, with no possibility of extension.

The NHR 2.0 stipulates that income derived by qualified professionals (either from employment (category A) or self-employment (category B)) shall be taxed at a fixed rate of 20%, instead of the general progressive rates (up to 53%). All other income derived from Portuguese source is taxed at the standard general tax rates.

If the taxpayer receives foreign-source income it will be generically exempt from tax in Portugal. Nevertheless this exemption, all worldwide income shall be reported to the Portuguese Tax Authorities and its amount contributes for the determination of the applicable tax rate on the remain taxable income that may be subject to progressive rates (i.e. other than the income exempted or that is taxed at a flat rate).

Differently from the previous NHR 1.0, foreign-sourced pensions received by an individual benefiting from the NHR 2.0 regime will be taxed under standard progressive rates. Similarly to the previous regime, investment income and capital gains derived from blacklisted jurisdictions are taxed herein at a flat tax of 35%.

Entry into force

The NHR 2.0 was approved by the State Budget Law for 2024 and regulated by Ordinance no. 352/2024/1, of December 23 (Ordinance), with retroactive application to 1^st January, 2024.

Application requests

The Ordinance stipulates that individuals resident in Portugal must submit their application for the IFICI by 15^th January of the year following the one in which they become residents herein. Exceptionally, for those that became resident during 2024 it is possible to submit the application by the 15^th March 2025 (as stipulated in the transitional regime).

Accordingly, the application must be submitted, depending on the activity performed, and as better shown below, to one of the following competent entities: the Foundation for Science and Technology (Fundação para a Ciência e Tecnologia, I.P.); the Portuguese Agency for Investment and External Trade (Agência para o Investimento e Comércio Externo de Portugal, AICEP, E.P.E.); the Tax Authorities (Autoridade Tributária e Aduaneira); IAPMEI – Agency for Competitiveness and Innovation (Agência para a Competitividade e Inovação, I.P.); the National Innovation Agency (Agência Nacional de Inovação, S.A.); and the Startup Portugal – the Portuguese Association for the Promotion of Entrepreneurship.

Verification of the requirements

The application for the NHR 2.0 regime depends on the verification of the requirements regarding the type of activity carried out by the individual, whose validation is of the responsibility of the entities to which the applications are submitted; whereas the other legal requirements’ verification is of the responsibility of the Tax Authorities.

The following criteria must be cumulatively met to benefit from the regime:

• The individual has to perform an eligible professional activity (including the highly qualified professions chosen by the Portuguese Government, as stated below);
• The individual has to become a Portuguese tax resident from 2024 onwards and must not have been resident in Portugal in any of the five previous years;
• The individual may not have benefited from the NHR Regime or opted for the special tax regime for former residents;
• The company in which the activity is carried out cannot deduct salary expenses under the tax incentive regime for investment (RFAI).

Eligible business activities and jobs

1. Teaching in higher education and scientific research;

- Competent authority for application review: Foundation for Science and Technology (FCT).

 2. Qualified jobs and members of corporate bodies within the scope of contractual benefits for productive investment (Chapter II of the Tax Code of Investment (CFI));

- Competent authority for application review: Portuguese Agency for Investment and External Trade (AICEP, E.P.E.).

 3. Highly qualified activities that fall under the following codes of the Portuguese Classification of Occupations, annexed to Deliberation no. 967/210, of the Statistical Council, of June 1:

• 112 – CEO and executive manager of companies;
• 12 – Directors of administrative and commercial services;
• 13 – Directors of production and specialised services;
• 21 – Specialists in the physical sciences, mathematics, engineering and related techniques;
• 2163.1 – Industrial product or equipment designer;
• 221 – Doctors;
• 231 – Professor at university and higher education;
• 25 – Specialists in information and communication technologies (ICT).

These highly qualified activities must be developed in:

1. Companies with relevant applications during the tax year in which they began their functions or in any of the previous five financial years, benefiting from the tax support regime for investment (RFAI); or
2. Industrial and services companies whose main activity correspond to one of the economic codes of activity (CAE code) listed below and which export at least 50% of their turnover, in the fiscal year in which they began their functions or in any of the two previous exercises. For this purpose, the codes that identify industrial and service companies are the following:

• Extractive industries – divisions 05 to 09;
• Transformative industries – divisions 10 to 33;
• Information and communication activities – divisions 58 to 63;
• Research and development of physical and natural sciences – group 721;
• Higher education – subclass 85 420;
• Human health activities – subclasses 86 100 to 86 904.

- Competent authority for application review: Portuguese Tax Authorities (AT)

4. Other qualified jobs and members of corporate bodies in entities carrying out economic activities recognized by AICEP, E.P.E or IAPMEI, I.P., as relevant to the national economy, particularly in terms of attracting productive investment and reducing regional asymmetries.

- Competent authority for application review: Portuguese Agency for Investment and External Trade (AICEP, E.P.E) or Agency for Competitiveness and Innovation (IAPMEI, I.P.), which respective notices have been published on 13^th February 2025 determining that for projects with yearly consolidated turnover below EUR 75 million IAPMEI is the competent authority, while AICEP is the competent authority for projects higher than EUR 75 million.

- Other qualified jobs (individuals shall have a minimum education level of five in the EU Qualifications Framework and evidence to comply with the remaining requirements on licensed professions):

• 112 – CEO and executive manager of companies;
• 12 – Directors of administrative and commercial services;
• 13 – Directors of production and specialized services;
• 14 – Hotel, restaurant, retail and other services’ managers;
• 21 – Specialists in the physical sciences, mathematics, engineering and related techniques;
• 221 – Doctors;
• 231 – Professor at university as well as higher education;
• 241 – Finance and accounting specialists (except, 2411);
• 25 – Specialists in information and communication technologies (ICT);
• 2654 – Film, theater, television and radio directors, producers and stage managers.

- For this purpose, the codes that identify the economic activities relevant to the national economy are the following:

• Extractive industries – divisions 05 to 09;
• Manufacturing/transformative industries – divisions 10 to 33;
• Electricity, gas, steam, hot and cold water and cold air – division 35;
• Construction – division 42;
• Accommodation, food service and similar activities – classes 5511 and 5512;
• Information and communication activities – divisions 58 to 63;
• Financial and insurance activities – classes 6420 and 6630;
• For the purpose of fund manager activity (6630) the company developing the activity in Portugal shall be duly licensed before CMVM (Securities Commission) or be a direct or indirect subsidiary of an entity that holds a valid license for the management of funds issued by the competent regulatory authority in any Member State of the EU or of the EEA.
• Consulting, scientific, technical and similar activities – class 7010 and divisions 71 to 72;
• Administrative and support services’ activities – class 8211;
• Education – class 8542;
• Human health and social support activities – division 86 (except subclasses 86905 and 86906).

5. R&D personnel whose costs are eligible under the tax incentive system in corporate R&D (i.e., expenses for personnel with a minimum education level of four in the National Qualifications Framework, directly involved in R&D tasks).

- Competent authority for application review: National Innovation Agency.

6. Any job or member of corporate bodies in entities certified as startups, which must follow these requirements:

• Have less than 10 years of activity;
• Have less than 250 employees;
• Have turnover equal to or below EUR 50 million;
• Do not result from a transformation or split of a large company and are not controlled (directly or indirectly) by a large company;
• Are established in Portugal (or have at least 25 employees in Portugal);
• Demonstrate high growth potential or have received venture capital funding;
• Meet at least one of the three specific conditions regarding innovation, venture capital and external investment.

- Competent authority for application review: Startup Portugal – the Portuguese Association for the Promotion of Entrepreneurship.

7. Jobs or other activities carried out in Azores or Madeira, under the terms to be defined by a regional legislative decree.

Procedure

Individuals must submit to the entities referred above, as the case may be:

• Copy of the individual employment contract, when the activity carried out is a job;
• Up-to-date permanent commercial certificate, when the activity carried out is that of a member of a corporate body;
• Copy of the scholarship contract, when the activity carried out is a scientific research;
• Proof of applicable academic qualifications;
• The document referred to in Article 10, no. 2, of Ordinance for the situations there provided;
• Other documents that may be requested.

The company where the activity is carried out shall confirm the fulfillment of the requirements listed in the law, namely the conditions set out in 3. i) and ii) above, as well as evidencing that the taxable person exercises a highly qualified profession.

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