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Grandfathered statusScope of the ten-year periodPension rules by start dateMaintaining the exemptionsEnd of the regimeCommon questionsGrandfathered status
NHR (the non-habitual resident regime) closed to new applicants, with final transitional entries in 2024, and was replaced for newcomers by IFICI, a different regime with different rules. None of that removed anything from existing holders. If NHR was granted to you, you keep it for your full ten consecutive years counted from the year you became a Portuguese tax resident, under the rules of your era.
Read your own registration record
A record-checking aid for the grandfathered-status discussion. It does not establish eligibility or extend the regime.
- RegistrationFind the decision or status record for your NHR registration.
- DatesIdentify the residency and registration years in that record.
- IncomeReview each income category against the rules applicable to your case.
This guide is for those holders. If you arrived recently and are weighing the new regime, read the IFICI guide instead; the two are often confused and share little beyond a flat rate.
Scope of the ten-year period
| Income | Treatment under grandfathered NHR |
|---|---|
| Portuguese employment or self-employment income from a listed high value-added activity | 20% flat rate instead of progressive rates |
| Foreign dividends, interest, rents, and property gains | Generally exempt where the treaty with the source country allows that country to tax them |
| Foreign employment income | Exempt where taxed in the source country under a treaty |
| Foreign pensions | Exempt or 10% depending on when you registered, see below |
| Foreign capital gains on shares | Usually taxable in Portugal at the flat investment rate, because most treaties reserve these gains for the residence country |
Pension rules by start date
Pension treatment splits by registration date. Holders who registered before the 2020 State Budget change, in effect from 31 March 2020 (the change took effect on 1 April 2020), kept full exemption on foreign pension income for their remaining years. Registrations after that date receive a 10% flat rate on foreign pensions instead. Whichever era you are in, you stay in it; the 2020 change did not reach back to earlier registrants, though pre-2020 holders were given the option to switch to the 10% rate where that interacted better with the source country's rules.
Either way, pensions are declared in full through Anexo J, and the regime's treatment is applied through the return. The 10% era in particular exists because some source countries declined to give treaty relief against a full exemption, which is a reminder that the other country's view of your pension matters as much as Portugal's.
Worked example
Margaret registered for NHR in 2021, after the 2020 change, and draws a foreign pension of 30,000.00 a year, a round figure for illustration.
A holder who registered before 1 April 2020 would pay nothing on the same pension under the exemption era, and either holder moves to progressive rates once the ten years end.
Maintaining the exemptions
Declare everything, every year
NHR exempts through the return, and never from the return. All worldwide income goes into the Modelo 3, with the regime applied via the annex for regime holders alongside Anexo J.
Match each income line to its treaty
The exemption test runs country by country: may the source country tax this income under its treaty with Portugal? Keep the answer documented per income type.
Verify your activity code if you use the 20% rate
The rate depends on the activity actually exercised and its registration. A job change can end eligibility mid-decade, so revisit it when your work changes.
Track your year count
Ten consecutive years from first residency, no pause and no extension. Write down your final year and plan backward from it.
End of the regime
When the ten years finish, you become a standard Portuguese taxpayer overnight: progressive rates on everything, worldwide, with foreign tax credits instead of exemptions. There is no renewal, and moving to IFICI afterward is not available, since that regime requires not having been resident in the prior five years.
The planning window is the last two or three regime years. Common moves people evaluate with advisers include realizing exempt-category income while the exemption still runs, restructuring investment income ahead of progressive taxation, and reassessing whether Portugal remains the right residence at standard rates. What matters is doing the arithmetic before the final year rather than after it.
Common mistakes
- Assuming foreign share gains are exempt. Most treaties reserve those gains for the residence country, so the exemption logic never engages and Portugal taxes them at the flat investment rate; plan sales with this in mind.
- Leaving exempt income off the return. NHR exempts through the return, never from it; all worldwide income still goes into the Modelo 3 with the regime applied via its annex.
- Letting the activity registration lapse. The 20% rate depends on the activity actually exercised and its registration, and a job change can end eligibility mid-decade; revisit it whenever your work changes.
- Miscounting the ten years after time abroad. The clock counts consecutive years from first residency and does not pause while you are away; years spent abroad are spent.
- Planning the regime's end in the final year. The window for realizing exempt income and restructuring is the last two or three regime years, so do the arithmetic before the final year rather than after it.
Common questions
Can my NHR be taken away before the ten years end?
The status runs its course, but each year's benefits depend on that year's facts: residence here, the activity for the 20% rate, the treaty position per income type. Lose the facts and you lose the treatment for that year.
I had NHR, left Portugal, and came back. Does it resume?
The ten-year clock counts consecutive years from the original start and does not pause while you are away. Years spent abroad are spent. Check your remaining balance before building plans on it.
Can I switch from old NHR to IFICI?
No. IFICI requires five prior years of non-residence, which a current NHR holder cannot satisfy. The regimes serve different generations of arrival.
Is US income really exempt for a US citizen under NHR?
Portugal's side may exempt it, but the US taxes its citizens regardless, so the exemption mostly shifts which treasury collects. The dual filing guide covers how the two returns interact.
Sources
- Estatuto dos Benefícios Fiscais and CIRS provisions governing the non-habitual resident regime
- 2020 State Budget amendment introducing the 10% foreign pension rate for later registrations
- Autoridade Tributária e Aduaneira, NHR guidance and Modelo 3 annex instructions
- Fresh Portugal and Madeira Corporate Services NHR transition guides (checked August 2026)
This guide is general information, not personalised tax advice. Rules and rates change, and your facts can move you off the defaults described here. Confirm your position with a qualified professional before acting on it.