Portugal After NHR: What Remains and What Has Changed

The NHR regime was the tax backbone for many international arrivals in Portugal. The exemption of foreign income and the 20% rate on certain Portuguese income made the jurisdiction attractive even for entrepreneurs who did not meet specific industry requirements. With the end of the NHR, this foundation is gone. Anyone moving to Portugal now, without qualifying for IFICI, is subject to regular progressive income tax up to 48%.

The IFICI (Incentivo Fiscal à Investigação Científica e Inovação) is the successor to the NHR, but with a significantly narrower scope. It is tied to specific roles and types of entity, such as research, certified startups, companies recognised as relevant by AICEP or IAPMEI, and a list of highly qualified professions. The 20% flat tax remains, but the pool of eligible individuals has shrunk drastically. Independent entrepreneurs, consultants, e-commerce operators, or digital independents generally do not qualify, unless, for example, they serve as board members of a certified startup.

On the corporate side, the standard corporate tax rate has been 19% since 2026 (2027: 18%, from 2028: 17%). With the Municipal Surcharge and the tiered State Surcharge on the portion of profits above EUR 1.5 million, the marginal rate reaches up to 29.5%. This is significantly higher than Malta's effective 5% rate under the refund system. While Portugal offers a participation exemption for holding companies, this alone does not make it an attractive base for active trading companies.

One point often overlooked in comparisons: bureaucracy in Portugal remains challenging despite recent improvements. Administrative processes are predominantly in Portuguese, and waiting times for NIF numbers and residency permits can stretch to several months. Malta offers a practical advantage here with English-speaking authorities and predictable timeframes.

Portugal remains an attractive destination if tax planning is not your primary motive. Those choosing Portugal for its quality of life, climate, and culture - and who are prepared to pay regular Portuguese taxes - will find it an excellent place to live. It also remains appealing for long-term crypto investors thanks to the tax exemption after a 365-day holding period. Furthermore, qualified scientists or tech professionals who meet the IFICI criteria still benefit from the 20% rate.

Malta is the more stable choice for entrepreneurs seeking a predictable tax structure that does not depend on narrow professional qualifications. The refund system, offering an effective 5% corporate tax rate, is open to all industries. The Global Residence Programme, with its 15% rate on foreign income remitted to Malta, is not restricted to specific professions. Additionally, the active Double Tax Treaty with the UK provides legal certainty when relocating.

For UK entrepreneurs with ongoing business in the UK or across Europe, both jurisdictions offer EU access. However, Malta combines this EU access with a significantly lower effective corporate tax burden and broader access to special tax programmes for individuals. If you want to set up an active company and build genuine substance, Malta offers the better combination of tax efficiency, administrative ease, and English-speaking infrastructure.

We regularly advise clients who already live in Portugal or whose NHR status has expired, and who are now considering whether Malta is the better long-term option. Relocating from Portugal to Malta is relatively straightforward within the EU, but it requires careful tax planning.

Key questions include: When does your unlimited tax liability in Portugal end? Are there exit tax rules that apply upon departure? How will your corporate structure be transitioned? Under certain conditions, Portugal levies a tax on unrealised capital gains when you leave. The exact implications depend on your individual asset portfolio and length of stay.

The relocation process follows a clear pattern: analysing your tax position in Portugal, planning the Maltese structure (company formation, refund setup, residency permits), coordinating the move with tax support in both jurisdictions, and establishing ongoing compliance in Malta. In a free initial consultation, we can assess whether a move makes commercial sense for your situation.