Portugal has introduced the Fiscal Incentive for Scientific Research and Innovation (IFICI) program, a new tax regime aimed at attracting highly qualified professionals to relocate for both residence and employment purposes. This regime offers a special 20% Personal Income Tax rate on income from dependent or independent work for a consecutive, non-renewable period of 10 years.
Key Tax Benefits:
Reduced Personal Income Tax Rate: A flat 20% rate applies to employment income, which is notably lower than the standard progressive rates ranging from 14.5% to 53%.
Exemption on Foreign Income: Most foreign income sources are exempt from taxation, including:
- Employment income
- Self-employment income
- Capital investment income (interest/dividends)
- Royalties
- Capital gains
- Real estate income/gains
However, it’s important to note that foreign pensions are excluded from this exemption and will be taxed at the normal progressive rates in Portugal.
Please note that income obtained in black-listed jurisdictions will not be covered by the new NHR tax regime: IFICI – exemptions and may be subject to aggravated tax rates.
Eligibility Criteria:
To qualify for the IFICI program, individuals must:
Establish Tax Residency: Become a tax resident in Portugal starting in 2024, ensuring they have not been a resident in the country during any of the previous five years.
No Prior NHR Benefits: Not have previously benefited from the Non-Habitual Resident (NHR) regime and must not opt to be taxed under the “ex-residents” regime.
Engage in Eligible Activities: Annually participate in one of the specified scientific research and innovation activities without any breaks exceeding six months.
Eligible Activities Include:
Higher Education Teaching and Scientific Research: Positions in entities dedicated to knowledge production and dissemination within Portugal’s national scientific and technological system.
Roles in Technology and Innovation Centers: Employment with entities recognized as technology and innovation hubs operating in Portugal.
Highly Qualified Professions: Positions in companies that have benefited from investment support tax regimes or are significant exporters in eligible industrial and service sectors.
Positions in Economically Relevant Activities: Jobs in entities recognized by AICEP, E.P.E., or IAPMEI, I.P., as contributing significantly to the national economy.
Research and Development Personnel: Individuals involved in R&D activities eligible under the Research and Development Tax Incentive System (SIFIDE).
Roles in Certified Startups: Employment in startups that meet specific criteria, including having less than 10 years of activity, fewer than 250 employees, and annual revenue not exceeding €50 million.
Positions in the Azores and Madeira Autonomous Regions: Jobs or activities as defined by regional legislative decrees.
Given the complexity of the IFICI program, it’s advisable to seek professional tax analysis to determine eligibility and understand the specific benefits applicable to individual circumstances.