Living in Portugal as an Expat: NHR Regime, Tax and Property 2026

Portugal has spent the past decade establishing itself as one of Europe's most desirable locations for internationally mobile professionals, retirees, and entrepreneurs. Its warm Atlantic climate, exceptional food and wine, affordable living costs outside Lisbon, and a series of generous tax regimes have made it a go-to destination for British expats, American remote workers, and HNW individuals from across Europe.

But the landscape has changed. The original Non-Habitual Resident (NHR) tax regime — which offered a flat 20% income tax rate and tax exemptions on most foreign-source income for ten years — was abolished for new applicants from 2024. A replacement regime called IFICI (Incentivo Fiscal à Investigação Científica e Inovação) launched in 2024, with narrower eligibility. Understanding exactly what is available in 2026 — and what is not — is essential planning for anyone considering Portugal.

What Happened to NHR?

The NHR regime, introduced in 2009, attracted tens of thousands of high-net-worth individuals and retirees to Portugal over its 15-year life. The key features that made it popular:

• Foreign-source income (pensions, dividends, rental income from overseas, royalties, capital gains on overseas assets) was generally exempt from Portuguese income tax for ten years
• Employment and self-employment income in qualifying "high value-added" professions (architects, doctors, senior managers, IT professionals, engineers) was taxed at a flat 20% rather than progressive rates reaching 48%
• Foreign pension income was originally exempt for NHR holders, which made Portugal extremely attractive for retirees. This attracted significant controversy, and from 31 March 2020 a flat 10% tax was imposed on foreign pension income for new NHR registrants (those who registered before that date kept the exemption for the remainder of their ten years)

The Portuguese government announced in October 2023 that NHR would close to new applicants from 1 January 2024, citing equity concerns and housing affordability pressures. Existing NHR holders retain their status for the remainder of their 10-year period — this is a critical point. If you registered for NHR before the deadline and your status was confirmed, you keep it.

The IFICI Replacement Regime (2024–)

The IFICI scheme offers a 20% flat income tax rate on Portuguese-source qualifying employment and self-employment income for ten years. However, it is substantially narrower than NHR:

Who qualifies for IFICI?

• Qualified researchers and scientific research professionals
• Qualified professionals in "highly qualified activities" as defined by the government — broadly, STEM, technology, and innovation roles
• Members of the board or management of qualifying entities (including companies investing in Portuguese productive activities)
• Professionals recruited under Portugal's startup and tech ecosystem frameworks
• Certain roles in investment funds and financial services

IFICI does not provide the broad foreign-source income exemption that NHR offered. For retirees and individuals whose primary income is from overseas investments, pensions, or rental income, IFICI is generally irrelevant. It is targeted at working professionals.

What This Means for Retirees Considering Portugal in 2026

The closure of NHR to new applicants removed the primary financial incentive that drew many retirees to Portugal. Under standard Portuguese tax rules, all worldwide income of a Portuguese tax resident is subject to IRS (Portuguese income tax) at progressive rates of up to 48% (plus solidarity surcharges for higher incomes).

However, Portugal retains significant attractions for retirees even without NHR:

1. Cost of living: Outside Lisbon and Porto, Portugal offers one of Europe's most affordable costs of living for a Western European country. The Alentejo, the Silver Coast, the Algarve interior, and the interior Douro Valley are significantly cheaper than coastal hotspots

2. UK-Portugal DTA: The double taxation agreement between the UK and Portugal provides relief against double taxation. In many circumstances, UK pension income (including the State Pension) will be taxable in Portugal but not in the UK, with UK-source taxes already paid credited against Portuguese liability

3. No wealth tax: Portugal does not levy an annual wealth tax on worldwide assets (though there is an AIMI — Additional Municipal Property Tax — on Portuguese real estate above certain thresholds)

4. Inheritance and estate planning: No general inheritance tax applies between close family members (spouses, parents, children) in Portugal. A 10% Stamp Duty applies to inheritances from non-close relatives and gifts. This is broadly favourable compared to UK IHT at 40%

5. The NHR transitional provisions: The Portuguese government introduced a transitional rule allowing individuals who took up residence in Portugal in 2024 under a specific earlier arrangement to access a "last NHR" window in some circumstances. Legal advice should be sought on whether any transitional provision applies to your situation

Portuguese Tax Residency

Ordinary Portuguese tax residency is established by:

• Being physically present in Portugal for more than 183 days in a calendar year
• Having habitual residence in Portugal as of 31 December of the tax year
• Owning or renting a property in Portugal in circumstances suggesting it will be used as a habitual residence

Portuguese tax residents declare worldwide income via an annual IRS return filed by July. Portugal taxes employment income, business income, investment income (capital gains, dividends, interest), rental income, and pensions.

D7 Visa and Golden Visa: Residency Routes

D7 Passive Income Visa (Retirement Visa): The D7 is Portugal's primary route for retirees and those with passive income. Applicants must demonstrate regular passive income (pension, rental income, investment returns) at least equal to Portugal's minimum wage (€920/month as of 2026, around €11,040 a year for a single applicant) and have accommodation in Portugal. The D7 grants a renewable 2-year residence permit. After five years of legal residence, permanent residence or citizenship can be applied for.

Golden Visa (ARI): Portugal's Golden Visa programme was significantly modified in 2023. Direct residential property investment no longer qualifies. Current qualifying routes include:

• Investment fund subscriptions of at least €500,000 in qualifying Portuguese investment funds
• Capital transfer of at least €500,000 into scientific research in Portugal
• Capital transfer of at least €250,000 for arts, culture, or national heritage
• Job creation (minimum 10 jobs)

The Golden Visa requires an average of only 7 days per year in Portugal, making it a lower-commitment option for those seeking Portuguese residency rights without full-time residence.

Property in Portugal

Despite significant price growth in Lisbon, Porto, and the Algarve over the past decade, Portugal remains considerably more affordable than comparable markets in Spain, France, or Italy.

As of 2026:

• Lisbon prime apartments: €4,000–8,000/sqm
• Porto: €2,500–5,000/sqm
• Algarve prime coastal (Golden Triangle): €4,000–10,000/sqm
• Silver Coast, Alentejo, interior: €800–2,500/sqm

Property purchase costs:

• IMT (Transfer Tax): 0–8% on a sliding scale depending on property value and use
• Stamp Duty: 0.8% on the declared value
• Notary and land registry fees: approximately 1–1.5%
• Legal fees: typically 1–2%

Annual property holding costs:

• IMI (Municipal Property Tax): 0.3–0.45% of the tax rateable value (much lower than market value) for urban properties
• AIMI (Additional Municipal Property Tax): applies to properties with a rateable value above €600,000

Rental income from Portuguese property is generally taxed at a flat 28% (the standard autonomous rate) on net income, with deductions for maintenance, insurance, and depreciation; reduced rates apply to longer-term residential lettings.

Banking in Portugal

Opening a bank account as a non-resident is possible but increasingly subject to AML checks. Major banks include Caixa Geral de Depósitos, Banco Santander Totta, BCP Millennium, BPI, and Novobanco. International banks operating in Portugal include HSBC, Barclays (though with reduced retail presence post-Brexit), and Bankinter.

For larger asset management needs, Lisbon has a growing private banking sector, including Caixa Banco de Investimento and international institutions. Many HNW expats retain their offshore investment accounts in Jersey, Guernsey, or the Isle of Man while holding a Portuguese current account for day-to-day expenses.

Estate Planning in Portugal

Portuguese succession law follows EU Succession Regulation 650/2012, which allows EU residents to choose to apply the law of their nationality to their estate. British nationals living in Portugal can elect UK law to govern their estate (relevant for assets in Portugal), giving significant flexibility.

Key planning actions:

• Draft a Portuguese will for Portuguese assets (or a professionally drafted international will that references Portuguese assets)
• Register the will in Portugal's Central Will Registry (Registo Central Testamentos)
• Consider a UK will that explicitly covers worldwide assets and makes a 650/2012 election for UK law
• Review beneficiary nominations on life insurance and pensions

Financial Planning Checklist for Portugal Expats

1. Assess eligibility for IFICI or transitional NHR provisions with a qualified Portuguese tax adviser
2. Apply for the D7 Visa or Golden Visa via the appropriate route
3. Register at the local Finanças office to obtain a NIF (Portuguese tax number)
4. Notify HMRC of UK departure and your Portuguese residency (P85 form or self-assessment)
5. Open a Portuguese bank account
6. Review UK pensions — consider whether QROPS (Malta) is appropriate
7. Ensure international investments are held in appropriate offshore structures
8. Draft a Portuguese will and coordinate with your UK estate plan
9. Review property transaction if buying — appoint a qualified Portuguese lawyer (advogado)
10. Arrange Portuguese health insurance or access the SNS (public health system) appropriately

Compliance Reminder

Portuguese tax law is subject to frequent change. The NHR closure, IFICI introduction, and Golden Visa reforms all occurred within 2023–2024. Further changes are possible. This guide reflects the position as of 2026 but is not a substitute for qualified professional advice. Property values and investments can fall as well as rise.

How Global Investments Can Help

Global Investments has experience advising clients relocating to Portugal, including those seeking to understand the post-NHR landscape and structure their affairs accordingly. We help with pension planning, offshore investment solutions, cross-border estate planning, D7 and Golden Visa support, and coordination with qualified Portuguese professionals. Contact us for a confidential initial consultation.