By Valentina Cruz · Lifestyle & Living
When Portugal announced the abolition of the Non-Habitual Resident tax regime at the end of 2023, the reactions from the international expat community ranged from disappointment to something approaching panic. Message boards were full of people calculating exit timelines. Removal vans were metaphorically booked. The narrative — that Portugal had turned its back on the internationally mobile community that had chosen it — gained real traction.
Two years later, the reality is considerably more nuanced. I have spent the past several weeks talking to people in the Porto, Lisbon and Cascais expat communities — people who came under the NHR, who were weighing their options when it ended, and who have since made decisions about where to go next, or whether to stay. The picture that emerges is not one of mass departure. It is one of pragmatic adaptation.
What actually changed
The original NHR regime offered qualifying foreign income — pensions, dividends, rental income, certain professional fees — at a flat rate of 20% (for qualifying Portuguese-source income) or full exemption (for most foreign-source income) for a period of ten years. It was extraordinarily generous and explicitly designed to attract internationally mobile, high-net-worth individuals.
Its replacement, the IFICI regime (Incentivo Fiscal à Investigação Científica e Inovação), is considerably more targeted. It focuses on qualifying professionals in technology, scientific research, the creative industries, and a defined list of highly qualified activities. The flat rate for qualifying income is 20% — the same headline rate as the original NHR — but the eligibility criteria are far narrower and the regime is designed to attract active workers rather than passive-income recipients.
For retirees and passive-income earners who arrived under the original NHR, the situation is straightforward: those who registered before December 31, 2023 retain the benefit for the remainder of their ten-year period. Those who had not yet registered missed the window.
Who stayed and why
The overwhelming majority of NHR beneficiaries I spoke to are staying in Portugal. The reasons are both practical and emotional.
On the practical side: most NHR holders registered in 2018-2022, meaning they still have several years of the regime remaining. Leaving now would mean paying capital gains tax on Portuguese assets, potentially paying exit tax on unrealised gains in their home countries, and giving up residency rights they have spent years establishing. The maths, for most people, heavily favours staying.
On the emotional side — and this surprised me, or perhaps it shouldn't have — a significant number of people told me some version of the same thing: they had come for the tax regime but they were staying for the life. Lisbon's extraordinary quality of life, its food, its culture, its climate, its social pace, its relative affordability compared to London or New York or Sydney — these things turn out to be sticky in ways that a tax regime change cannot easily dislodge.
"I genuinely thought I was coming for ten years," one British consultant who arrived in 2020 told me. "I'm staying permanently. The NHR ending doesn't change that. Portugal's standard tax rates are not punitive for someone at my income level, and I'm not willing to give up what I have here."
The new arrivals
What has changed is the profile of people choosing Portugal for the first time. The post-NHR arrivals are, in general, younger, more likely to be in qualifying technology or creative roles, and more likely to be arriving as active workers rather than passive-income retirees. The IFICI regime suits them well.
Portugal's D7 passive income visa remains open and viable for retirees and financially independent individuals — but without the NHR advantage, the net tax position requires more careful structuring. Priya Nair-Santos covers the D7 in detail on the following pages; the short version is that it remains an extremely viable route, but the tax planning conversation needs to happen before the application rather than after.
The quality of life case, separate from tax
One of the more interesting conversations I had was with an American couple who arrived in Lisbon in 2024, after the NHR window had closed, specifically because they wanted to be here — not for tax reasons, but because they had read every article about the city and decided it was where they wanted to live.
They pay Portuguese tax at standard rates. They manage their affairs through a local accountant who specialises in international residents. Their total tax position, they told me, compares favourably with what they would have paid in California once state and federal obligations are combined. They are deeply happy. Their children attend an international school in Cascais. They lunch at a restaurant on the river on Saturdays. They plan to become Portuguese citizens in due course.
The lesson, perhaps, is one that Portugal's government intuited when it ended the NHR but didn't close the D7 or the IFICI: the country's underlying proposition for internationally mobile people is strong enough to stand without a preferential tax regime. Not for everyone. But for more people than the departing-expat narrative suggested.
The NHR era is over. The Lisbon story is not.