Portugal’s New Tax Regime Targets Innovation Jobs, and Expats

When Portugal officially phased out its popular Non-Habitual Resident (NHR) tax regime in 2024, many expats were left wondering what incentives, if any, would replace it. The answer came in the form of a new tax incentive for scientific research and innovation professionals, now embedded in Article 58.º- A of the Estatuto dos Benefícios Fiscais (EBF).

For skilled workers who are considering relocating to Portugal, this regime may offer significant tax advantages. Although slightly smaller in scope than the previous system, this new regime still offers a flat tax rate of 20% for 10 years on qualifying income and can significantly reduce the tax burden for qualifying individuals.

Who Can Apply?

The new regime is aimed at attracting qualified professionals who are new to Portugal. To be eligible, you must become a fiscal resident and not have been a tax resident in Portugal at any point in the previous five years. This rule is strict and applies to all applicants, regardless of nationality.

But tax residency alone is not enough. To be eligible, your income must come from certain types of work, namely activities considered strategic for Portugal's development in science, technology, and innovation.

What Kind of Work Qualifies?

The law provides a clear (but technical) list of eligible activities. In practice, this includes people working in:

• Higher education and scientific research, including roles in universities, R&D labs, and innovation hubs.
• Investment-backed projects, especially those supported by tax incentives under the Código Fiscal do Investimento (Investment Tax Code).
• Highly qualified roles in companies that export a large share of their revenue or receive investment support.
• Startups, provided they are officially certified under Portugal’s Startup Law;
• Roles certified by bodies like AICEP, IAPMEI, or regional governments in Madeira and the Azores.

You may also qualify if you take up a position in Madeira or the Azores, provided the regional government includes your role in its list of eligible activities.

What Are the Tax Benefits?

If you qualify, your salary or self-employment income (as long as it comes from an eligible activity) will be taxed at a flat rate of 20% for a period of 10 consecutive years. That’s significantly lower than Portugal’s regular progressive IRS rates, which can go up to 48%.

Let’s say Peter, a biotech researcher living in Berlin, is offered a position at a university in Lisbon. If he moves to Portugal and meets the conditions, his Portuguese salary from that job would be taxed at 20%—regardless of whether he earns €50,000 or €150,000.

Importantly, this flat rate applies only to income from within Portugal. Foreign income is treated differently, which brings us to the next point.

What Happens to Foreign-Earned Income?

If you also earn money from outside Portugal—like dividends, royalties, or a salary from a foreign employer—those earnings may qualify for a tax exemption, as long as:

• They’re effectively taxed in the country of origin (just being “taxable” isn’t enough; it needs to be actually taxed).
• They aren’t paid from a blacklisted tax haven—in which case they get hit with a 35% tax rate.

Take Anna, a software engineer from Denmark working remotely for a Copenhagen-based company. If she moves to Portugal and qualifies under Portugal’s new tax regime, her foreign salary could be exempt, but only if it has been effectively taxed in Denmark and recognised by the Portuguese tax authority as foreign-sourced income. This becomes particularly complex in remote work scenarios, where determining the actual source of ‘economic activity’ can be hard to determine. And, if Anna’s employer is based in a country with a very favorable tax regime (e.g., the Cayman Islands), Portugal will not grant the exemption and will apply a steep 35% tax rate instead.

How to Sign Up?

Here’s where it gets a bit bureaucratic: Enrollment in Portugal’s new tax regime requires formal validation of the professional activity. The certifying body depends on the sector. For example:

• If you’re in academic or scientific research, you’ll apply through the Fundação para a Ciência e a Tecnologia (FCT).
• If you’re working in a startup, the authority might be Startup Portugal or ANI.
• If you’re joining a strategic sector, you might need certification from IAPMEI or AICEP.

Each organisation sets its own process, and there is no centralised application. Deadlines are strict, retroactive approval isn't available, and applications must be submitted shortly after acquiring Portuguese residency.

Limitations to Watch Out For

There are a few important catches:

• You can’t have used the NHR regime before: If you’ve already benefited from that program, you’re not eligible for this one.
• You can’t combine it with the “Programa Regressar”: The regime cannot be combined with the aforementioned program which offers tax benefits to individuals returning to Portugal after having lived abroad for an extended period.
• You can only use this regime once in your life: It can be used once, so if you move abroad and come back again later, you won't be eligible anymore.

Conclusion

While a bit narrower in scope than the NHR tax regime Portugal previously offered, this new structure remains attractive, especially for professionals in research, tech, and innovation who plan to work in Portugal long-term.

If you're moving to Portugal for a job at a university, lab, startup, or export-oriented business, the 20% flat rate can save you thousands of euros each year. Just make sure your activity is eligible and start your application early.

Not sure how to start? Our team at Tytle includes highly qualified experts who are ready to assist.  

At Tytle, we provide tailor-made services including:

• Obtaining a NIF number hassle-free​
• Accounting/bookkeeping
• Accurate tax filing​
• Estate planning​
• Cross-border advice​
• Immigration services​
• And much more!​

For more expert tax filing advice, feel free to explore “Freelancing in Portugal: Tax Filing Rules for Digital Nomads” and “Americans Lead Digital Nomad Visa Applications in Portugal”.