The regime introduces a 20% flat tax rate on income from listed activities and a tax exemption for non-Portuguese income (excluding pensions) to draw global talent and enhance Portugal's economic competitiveness.

IFICI tax status is suited for entrepreneurs or investors looking to launch or invest in a new innovative start-up business in Portugal or high-end professionals looking to take up senior positions at an established Portuguese entity, criteria permitting.

"This is a significant step in Portugal's strategy to remain competitive on the global stage," says Rogério Fernandes Ferreira, the Managing Partner at RFF Lawyers. "The regime targets skilled professionals who can contribute to the country's scientific and economic advancement while benefiting from favourable tax conditions."

A major highlight of IFICI, introduced to replace the NHR (Non-habitual-residency) tax regime incentives, is its capital gains exemption on non-Portuguese assets, making it especially attractive to international investors.

The exemption on non-Portuguese income, which applies to nearly all income types (excluding pensions and certain blacklisted sources), significantly enhances the appeal of the regime.

"The capital gains exemptions make this regime highly attractive for those holding global investments, particularly those relocating from higher-tax jurisdictions," says Rogério. "This aligns with Portugal's tradition of offering favourable tax conditions to expats and investors."

Paul Stannard, Chairman and Founder of Portugal Pathways and the Portugal Investment Owners Club to support expats with investment and lifestyle in Portugal, is in support of IFICI:

"The introduction of the IFICI tax regime marks a transformative advancement for Portugal, strategically positioning it as a top destination for global talent and investors."

Credits: Supplied Image; Author: Client; Long-term expats can escape being hit by inheritance tax

"By offering a 20% flat tax rate and significant exemptions on foreign income and capital gains, Portugal not only enhances its economic competitiveness but also reaffirms its commitment to fostering innovation and scientific research."

"This is hugely influential for professionals and entrepreneurs seeking to leverage Portugal's robust ecosystem while enjoying favourable tax conditions."

Portugal Pathways' upcoming webinar,' Navigating UK Inheritance Tax Changes for Expats,' will explore how the new IFICI tax regime will affect expats in Portugal. It will take place on Tuesday, January 28th, 2025, at 10:30 AM Lisbon Time. Register here.

The IFICI tax regime also offers international investors a distinctive opportunity to enhance their tax efficiency while supporting the growth of Portugal's innovation-driven economy.

However, legal and business experts advise that strategic planning is essential to fully leverage the benefits and navigate the complexities of the new rules.

"Investors must ensure they meet the specific criteria from the outset to avoid complications.", explains Rogério Fernandes Ferreira.

A notable aspect of the IFICI tax status is the potential for Madeira and the Azores regional governments to implement additional criteria for businesses and residents in these areas, potentially offering greater flexibility and expanded scope under the regime. However, the corresponding regional legislative decrees have yet to be finalised.

"This is where the regime could become more attractive," says Nuno Santos, Tax Partner at CMS Law. "The regional legislative decrees from Madeira and the Azores could expand the scope of qualifying businesses, potentially including service sectors, tourism, and real estate, which are key drivers of their economies."

Credits: Supplied Image; Author: Client; British expats in Portugal set for major tax savings

Nuno highlights that regional flexibility could be transformative in attracting both individuals and businesses to the islands, especially with their advantage of lower corporate tax rates.

"Regional governments are well-positioned to address gaps in the national framework, especially in sectors that may be excluded from the mainland criteria," he says. "This could result in a more inclusive regime reflecting Portugal's economic diversity."

The IFICI tax regime arrives at a pivotal moment as Portugal aims to sustain its attractiveness to high-net-worth individuals and international professionals, especially in light of the phase-out of the Non-Habitual Residency (NHR) tax regime.

To learn more about how the new IHT inheritance tax could affect you and other expats in Portugal, register to attend Portugal Pathways' webinar, 'Navigating UK Inheritance Tax Changes for Expats'.

This webinar will also discuss how UK expatriates in Portugal have a unique opportunity to safeguard their wealth and ensure a lasting legacy for generations to come. This event will take place on Tuesday, January 28th, 2025, at 10:30 AM Lisbon Time.

About Portugal Pathways


Portugal Pathways has supported hundreds of Golden Visa residency-by-investment applications and aims to continue to do this through its Portugal Investment Owners Club and associated Portugal's Future Fund. These organisations also provide expert guidance on luxury property, wealth management, business setup, tax optimisation, private healthcare, and bespoke relocation solutions to enhance life, along with money-can't-buy experiences and investments in Portugal.

Enquiries

For further information about the potential future effect of the IHT Inheritance tax regime on expats in Portugal or other enquiries related to relocating to or investing in Portugal, please contact Steve Philp at steve.philp@portugalpathways.io.