The Non-Habitual Resident (NHR) regime has long been a game-changer for expats moving to Portugal. But with the introduction of NHR 2.0, things have shifted significantly. If you’re considering Portugal as your home, understanding this new framework is essential.

What is NHR 2.0?

Portugal’s government introduced NHR 2.0 to replace the original NHR regime, which was in place from 2009 to 2023. The new scheme maintains some key benefits while introducing stricter eligibility requirements and limitations. The primary advantage remains the same: significant tax exemptions on specific types of income for up to 10 years.

Who Can Apply for NHR 2.0?

Not everyone qualifies for NHR 2.0. You’ll need to meet these criteria:

• You weren’t a Portuguese tax resident in the five years before applying.
• You must establish tax residency in Portugal during your first tax year.
• Your income qualifies under the NHR categories (employment, investments, pensions, professional services).

Key Changes from Original NHR

The new scheme has important differences. Passive income—like rental income and investment returns—is no longer fully exempt. Instead, you’ll pay Portuguese tax on these amounts. Active income from employment and professional services remains largely exempt, but with limitations on certain categories.

The duration has also changed. While you still get a 10-year window, the benefits are now split into two 5-year periods, with different rules applying to each.

Why Apply Now?

Even with stricter requirements, NHR 2.0 can save you significant money. If you earn substantial income from employment abroad or have professional income, the tax savings can be considerable. The sooner you apply after becoming a Portuguese tax resident, the sooner these benefits begin.

Contact us to discuss whether NHR 2.0 is right for your situation. Our team can help you navigate the application process and maximise your tax position.

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