Ei! migrant consulting

February 2025

With the implementation of the new Tax Incentive for Scientific Research and Innovation – IFICI – Portugal has introduced a measure that promises to boost national competitiveness in strategic sectors. Numerous questions have arisen with the introduction of this incentive, colloquially dubbed NHR 2.0 due to its extensive nomenclature. This article analyses the implications of this scheme, comparing it to the Non-Habitual Resident (NHR) Scheme and exploring the consequences of this transition.

From Resident to Innovator: The Transformation of Tax Incentives in Portugal

For many years, the NHR was a key factor in attracting highly skilled professionals and foreign pensioners to Portugal, offering significant tax advantages. However, this scheme faced both domestic and international criticism, particularly for creating inequalities in tax treatment and being perceived as a form of ‘tax avoidance.’

The IFICI, on the other hand, focuses primarily on investment in research and innovation, two fundamental pillars for sustainable economic development. This scheme provides tax incentives to professionals who come to Portugal to engage in high-added-value activities within companies operating in strategic sectors. It thus serves as an indirect economic incentive for companies by improving the net salaries paid to their human capital. Unlike the NHR, the IFICI is not solely centred on individual benefits but rather on collective outcomes that drive technological and scientific progress.

At What Cost?

The discontinuation of the NHR represents a loss in Portugal’s ability to attract certain profiles of foreign residents, such as high-net-worth retirees and highly skilled professionals across a broader range of skills and activities. This decision could result in the loss of human capital and investment across various sectors. 

In summary, the end of the NHR may impact Portugal’s perception as a welcoming country for investors and expatriates, diminishing its competitiveness in the European market for attracting global talent.

The Potential of IFICI in Portugal

The introduction of the IFICI once again puts Portugal on the radar of investors, prioritising sustainability and modernisation. Among its advantages are:

• Promoting key sectors: The IFICI encourages concentration in areas such as green technologies, biotechnology, and artificial intelligence.
• Strengthening collaboration: It stimulates partnerships between companies and academic institutions, fostering knowledge transfer.
• Attracting long-term investment: The focus on R&D enhances Portugal’s appeal as a destination for innovative companies and startups.

While the full results of this scheme can only be assessed in the medium- to long-term, it reflects a more balanced approach aligned with the European Union’s sustainable development goals.

Transcending Borders – A European Perspective

The IFICI bears significant similarities to the tax scheme implemented in Italy to foster innovation. In both cases, governments aim to attract companies that invest in technological development by offering generous tax incentives. The Italian experience has shown that such an approach can lead to:

• Significant increases in productivity: Companies investing in R&D often lead their markets.
• Internationalisation: Locally developed products and services gain greater competitiveness in global markets.

Portugal now has the opportunity to replicate this success, learning from the practices observed in neighbouring countries and tailoring the IFICI to the specificities of the national market.

A New Era!

Portugal has reinvented itself in this challenging era of technology and innovation, driving a metamorphosis in its fiscal strategy. While the end of the NHR has sparked controversy, the IFICI emerges as an opportunity to reposition the country on the global innovation map. The success of this scheme will depend on its effective implementation and its ability to attract investments that promote sustainable and inclusive growth.