The End of the NHR: What Has Actually Changed?
The 2024 State Budget determined the end of the Non-Habitual Resident (NHR) regime in Portugal. Created in 2009, this special tax regime was, for more than a decade, one of the main instruments used to attract foreign investment and highly qualified professionals.
For more than a decade, the NHR regime allowed:
- 20% taxation on qualifying employment income
- Exemption or reduced taxation on certain foreign-source income
- A regime with a 10-year duration
However, its revocation reflected political and social concerns related to tax fairness and its impact on the housing market.
It is important, however, to clarify the following:
Taxpayers who were already registered under the NHR regime retain the right to apply the regime until the end of the originally granted 10-year period.
Is There a New Regime in Portugal? The IFICI (NHR 2.0)
With the end of the NHR regime, Portugal introduced the Tax Incentive for Scientific Research and Innovation (IFICI), often referred to as “NHR 2.0.”
This regime:
- Applies to highly qualified professionals in scientific, technological and innovation sectors
- Requires employment or activity within certified entities or strategic sectors
- Provides for a special 20% tax rate on employment and self-employment income
- Has a duration of 10 years
However, unlike the former NHR regime, IFICI is considerably more restrictive regarding the types of eligible activities.
It is not a general regime designed to attract residents with high levels of passive income, but rather a targeted instrument aimed at highly qualified talent in specific sectors.
Therefore, for investors, pensioners or individuals with significant capital income, the new Portuguese regime may not represent an equivalent alternative.
Spain’s Beckham Law: A Viable Alternative?
In Spain, a special regime for inbound workers, commonly known as the Beckham Law, remains in force.
This regime was significantly amended by the Startup Law (2023), making it once again a competitive option.
Main Features of the Beckham Law (2026)
- Duration: 6 years
- Flat 24% tax rate up to €600,000
- 47% on income exceeding this threshold (current rate)
- Taxation generally limited to Spanish-source income
- No Wealth Tax liability on assets located outside Spain
Who Can Benefit?
- Following recent amendments, the regime may apply to:
- Employees
- Directors (provided they do not hold a significant shareholding)
- Entrepreneurs
- Remote workers (digital nomads)
- Highly qualified professionals
Main Requirements
- Not having been tax resident in Spain during the previous 5 years (reduced from the previous 10 years)
- Effective relocation of tax residence to Spain
- Application submitted within the legal deadline after the start of the activity
Comparison: NHR (Former), IFICI and Beckham Law
| Feature | NHR (repealed) | IFICI | Beckham Law |
| Duration | 10 years | 10 years | 6 years |
| Tax rate on employment income | 20% | 20% | 24% up to €600k |
| Foreign income | Favourable regime | More limited | Generally excluded |
| Focus | Broad attraction | Scientific talent | Inbound workers |
Could Spain Be More Advantageous Than Portugal?
It depends on the taxpayer’s profile.
- The Beckham Law may be particularly attractive for:
- Executives with high levels of income
- Technology entrepreneurs
- Remote workers
- Relocated directors
The Portuguese IFICI regime, on the other hand, may be more suitable for:
- Researchers
- Engineers
- Professionals linked to certified innovation centres
A comparative analysis should always take into account:
- Double Taxation Treaties
- Social Security regimes
- Taxation of dividends and capital gains
- Wealth taxation
- Estate and succession planning
Conclusion: A Foreseen End or a Strategic Transition?
The end of the NHR regime did not represent the end of Iberian tax competitiveness, but rather a reconfiguration of the model used to attract talent and investment.
Portugal maintains selective instruments such as IFICI, while Spain has strengthened the Beckham Law with broader scope.
Choosing the appropriate country of tax residence now requires a thorough, personalised and integrated technical analysis, considering not only nominal tax rates but also the overall tax framework applicable to the individual taxpayer.
How We Can Help
The Tax Law Department of Belzuz Abogados, S.L.P. – Branch in Portugal regularly assists clients with tax residence relocation processes between Portugal and Spain, as well as with the application of the IFICI regime and the Beckham Law.
Decisions of this nature require prior planning, analysis of the applicable international tax treaties and comparative modelling of tax scenarios.
We remain fully available to provide specialised technical advice in this area.