Portuguese tax for UK movers

The original Non-Habitual Residency (NHR) scheme closed to new applicants in 2024. The replacement, IFICI (Tax Incentive for Scientific Research and Innovation), is narrower. It targets specific high-skill activities that Portugal wants to attract: not retired pensioners, not generic remote workers, but professionals working in research, technology, qualifying engineering, and higher education.

The benefit is meaningful: a 20% flat rate on qualifying Portuguese-source employment or self-employment income, applied for 10 years from Portuguese tax residency. Most foreign-source income is exempt from Portuguese taxation during the 10-year window, though it counts for rate determination on Portuguese-source income.

Eligibility gates: you must not have been Portuguese tax resident in the previous 5 years; you must never have used the original NHR or another Portuguese tax incentive programme; you must have established Portuguese tax residency after 1 January 2024; and you must provide documentation proving academic qualifications relevant to the activity or at least 3 years of professional experience.

The qualifying activity list is narrow and worth checking carefully. Software developers, data scientists, AI and ML engineers, cybersecurity specialists, research scientists, biotechnology and pharmaceutical R&D, academic researchers, university lecturers, and a small set of strategic-sector engineers qualify. Lawyers, accountants, generic financial services workers, retirees, and most creative professionals do not.

If you do not qualify for IFICI — which is the case for most retirees, non-tech remote workers, and people moving for lifestyle rather than work — Portuguese IRS applies on a standard progressive scale. The 9 bands for 2026 approximately track:

• 13% on income up to €8,059
• 16.5% on income €8,059 to €12,160
• 22% on income €12,160 to €17,233
• 25% on income €17,233 to €22,306
• 32% on income €22,306 to €28,400
• 35.5% on income €28,400 to €41,629
• 43.5% on income €41,629 to €44,987
• 45% on income €44,987 to €83,696
• 48% on income above €83,696

Additional solidarity rates apply at very high income levels (above €80,000). There are personal and spouse allowances, dependent allowances, deductions for health, education, mortgage interest and approved pension contributions. The exact rate landscape is fluid — Portal das Finanças publishes the annual update in late January each year.

UK government pensions — Civil Service, NHS, teachers, armed forces, police — are taxed only in the UK under Article 17 of the UK-Portugal DTA, even after you become Portuguese tax resident. They are excluded from Portuguese assessment entirely.

The UK State Pension and private/occupational pensions including SIPP drawdowns are taxed only in Portugal once you are Portuguese tax resident. The UK no longer taxes them. You can apply for HMRC to stop withholding on private pensions via the DT-Individual form once Portuguese residency is established.

Under the original NHR these pension income streams enjoyed a favourable rate for 10 years. Under IFICI, that exemption is gone for new arrivals. Pensioners now face standard Portuguese IRS on the same income, which can be materially higher than the old NHR rate. This is the single biggest reason pre-2024 arrivals are sometimes still NHR-grandfathered while new arrivals face IFICI + IRS exposure.