PORTUGAL: An Introduction to Private Wealth Law

Evolving Incentives for High Net Worth Individuals Amid Legal Reforms in Portugal

Despite recent changes to its legal and tax framework, Portugal continues to attract high net worth individuals (HNWIs) seeking a compelling combination of a good lifestyle, safety, investment opportunities and tax advantages.

In recent years, the Portuguese government has introduced measures to cool the overheated property market. Most notably, it excluded real estate from the investments eligible under the Golden Visa programme and phased out the non-habitual resident (NHR) regime as of 1 January 2024. Nevertheless, the Golden Visa remains active via alternative investment routes and continues to be in strong demand.

To replace the NHR regime, Portugal introduced a new tax regime – the Incentive for Scientific Research and Innovation (Incentivo Fiscal à Investigação Científica e Inovação, or IFICI) – aimed at attracting international talent. Initially enacted in 2024, its implementing regulations were published in February 2025.

Like its predecessor, IFICI offers a ten-year tax benefit period and is available to individuals who have not been Portuguese tax residents in the preceding five years. However, unlike the NHR regime, eligibility is linked to active Portuguese-sourced income – typically employment or director income from an eligible Portuguese entity.

Key features of the IFICI regime include the following:

• a flat 20% tax rate on qualifying Portuguese-source active income – other Portuguese-source income is taxed under the general progressive rates applicable to residents;
• exemption of foreign-sourced income including business profits, employment income, royalties, dividends, interest, rental income and capital gains, under the exemption method, provided the income is not from a blacklisted jurisdiction;
• foreign pensions and income from blacklisted jurisdictions are excluded from the exemption and remain taxable under ordinary rules; and
• a ten-year benefit period, with allowance for temporary gaps of up to six months between qualifying activities.

Access routes to the IFICI regime include:

• the qualified start-up route – for entrepreneurs and employees involved in innovative start-ups recognised in Portugal;
• the qualified investment route – for investors and professionals engaged in eligible sectors;
• the industrial services export route – for professionals contributing to high-value industrial exports; and
• the recognised activity route – for professionals and executives in pre-approved strategic sectors.

In practice, the most widely adopted options in 2025 have been the start-up route and the recognised activity route. The start-up route allows entrepreneurs and key personnel of eligible start-ups (either new entities or existing ones via a Portuguese subsidiary) to benefit from the regime, including full exemption on qualifying foreign income. This option may be considered by entrepreneurs developing new businesses, which can start in Portugal or be run in parallel with an existing start-up via a Portuguese subsidiary.

The recognised activity route is open to highly qualified professionals and directors in hospitality, strategic holding entities, fund and headquarters services and administrative support, as well as to larger national interest projects (projetos de potencial interesse nacional; PINs) and interior investment projects (projetos de investimento para o interior; PIIs). These pathways are currently shaping the relocation patterns of HNWIs moving to Portugal and seeking to benefit from a modernised tax regime.

To navigate the IFICI framework effectively, applicants are advised to follow a structured plan, as follows:

• identify the most suitable eligibility route;
• evaluate personal and business structuring options;
• assess tax residency criteria;
• consider visa or immigration requirements, if applicable; and
• plan pre-residency asset structuring and wealth planning.

When viewed alongside Portugal’s other advantages, such as tax exemptions on long-term crypto gains, favourable rules on life insurance policies and trust terminations by beneficiaries, as well as the absence of wealth, gift, inheritance and exit taxes, the IFICI regime confirms Portugal’s enduring appeal as a relocation destination for globally mobile individuals.