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IFICI: the new tax regime designed to attract talent and innovation to Portugal

ByTiago

The Tax Incentive Scheme for Scientific Research and Innovation, known in Portuguese as IFICI, is one of Portugal’s main new tax measures, designed to strengthen the country’s competitiveness in attracting qualified talent and investment in strategic sectors.

Approved under the 2024 State Budget, this regime represents an alternative to the former Non-Habitual Resident status, focusing especially on highly qualified professionals and activities linked to science, technology, and innovation.

What is IFICI?

IFICI is a tax regime that allows for more favourable taxation for individuals who become tax residents in Portugal and carry out relevant activities in the areas of scientific research, technological development, or business innovation.

The main objective is clear: to attract and retain qualified talent, encouraging the relocation of professionals and companies that contribute to the country’s economic and technological growth.

Who can benefit?

This regime is aimed at individuals who:

Become tax residents in Portugal;

Have not been tax residents in Portugal in the previous five years;

Carry out activities considered relevant, such as scientific research, higher education teaching, highly qualified professions, or roles in innovative companies.

What are the tax benefits?

The main highlight of IFICI is its treatment under personal income tax:

A fixed 20% tax rate on employment and self-employment income, categories A and B, earned in Portugal;

Personal income tax exemption for foreign-sourced income in most cases, with progressive taxation rules.

This framework can represent a significant reduction in the tax burden for qualified professionals.

Duration of the regime

The benefit is granted for a period of up to 10 consecutive years and may, in certain situations, be interrupted and resumed later.

Who is excluded?

Not everyone can apply for IFICI. The following are excluded, for example:

Individuals who have already benefited from the Non-Habitual Resident regime;

Individuals who opted for the tax regime for former residents;

Beneficiaries of the Youth Personal Income Tax regime, as it cannot be combined with IFICI.

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How to register

Registration for IFICI is completed through the Portuguese Tax Authority Portal, with a deadline of 15 January of the year following the year in which tax residence in Portugal is obtained.

The process involves:

Submitting the application;

Validation by the competent entities, such as FCT, AICEP, or the Portuguese Tax Authority;

Confirmation of the requirements by the employer;

Checking the application status by the taxpayer.

A new tax positioning for Portugal

IFICI reflects a strategic shift in Portuguese tax policy, with a focus on the knowledge economy and the attraction of highly qualified professionals.

In an increasingly competitive global context, this regime may make Portugal even more attractive to researchers, engineers, technology specialists, and innovative entrepreneurs.