The new special tax regime, commonly referred as to “IFICI” or “NHR 2.0”, is officially fully in force. The Portuguese Government has recently published the applicable procedures, deadlines, and an updated list of eligible highly qualified professions and activities.
Under the regime, qualifying professionals employed by eligible entities benefit from a 20% flat tax rate on employment and self-employment income, as well as a tax exemption on most foreign-sourced income (excluding pensions).
This regime can enhance the international competitiveness of eligible entities in attracting global talent, as it enables them to offer more competitive net salaries at a lower cost.
Employers and individuals seeking to benefit from the regime should ensure compliance with the new requirements and confirm whether their roles fall under the revised list of qualifying activities.
Who can benefit?
The tax Incentive for Scientific Research and Innovation (IFICI), commonly referred as to “IFICI” or “NHR 2.0”, was approved by the State Budget Law for 2024 but only recently was regulated with retroactive effects to 1 January 2024.
The regime applies to those who, qualifying as tax residents in Portugal and not having been considered as tax residents in the previous five years preceding the year of arrival, carry out activities that fall within the following categories:
Depending on the applicable category, individuals may be required to hold specific educational qualifications, and their job positions may need to fall within one of the recognized classifications of the Portuguese Professions listed above.
112 – General Director and Executive Managers;
12 – Directors of administrative and commercial services;
13 – Directors of production and specialized services;
14 – Directors of hotels, restaurants, commercial activities and other services;
21 – Specialists in physical sciences, mathematics, engineering, and related technical fields;
221 – Medical Doctors;
231 – University and higher education professors;
241 – Finance and accounting specialists (except 2411);
25 – Information and communication technology (ICT) specialists;
2654 – Filmmakers, stage directors, film producers and related directors of cinema, theater, television and radio;
31 – Science and engineering technicians and professionals (intermediate level);
What is the applicable taxation?
Individuals eligible for the new regime may benefit from taxation of their employment and self-employment income at a flat tax rate of 20% within the scope of the eligible activities.
Additionally, they may benefit from an exemption from taxation (with progression) on their foreign sourced income, except for pension income, which remains subject to taxation in Portugal under the terms applicable to the ordinary resident taxpayers in national territory.
The regime is valid for a period of 10 years, starting from the year in which the individual registers for the purpose of applying the regime. The right to be taxed under the terms described above depends on the individual being considered a tax resident in Portuguese territory in each of the 10 years, and on continuing to earn, each year, income that falls within the scope of one of the categories above mentioned.
What is the process for registration under this incentive?
Registration requests must be submitted by 15 January of the year following the year the one in which the taxpayer becomes a Portuguese tax resident.
Applications must be submitted via the taxpayer`s personal area on the Portuguese Tax Authorities website. Depending on the specifics of the case, the request may be reviewed either by the Portuguese Tax Authorities or by other competent public institutions such as FCT, IAPMEI, AICEP.
These institutions are required to notify the PTA by 15 February of each year regarding taxpayers’ registration requests and provide confirmation of compliance with the requirements for the activities performed.
The Portuguese tax authorities will make information available to taxpayers regarding the status of their registration by 31 March of each year. The official confirmation of registration will be available through the taxpayer’s personal area on the taxpayer’s personal area of the Tax Authorities website.
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Ana Duarte
Partner
Ana Rita Dias
Senior Manager
Mariana Maciel
Manager
Pedro Niza
Director
Cristina Reis
Senior Manager
Sara Infante
Manager
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