Portugal tax benefits: what expats & retirees need to know in 2025

There’s more to Lisbon than its delicious pastries, traditional cuisine, and the famous ginjinha that captivates foreign visitors. The sunny weather, beautiful beaches, and laid-back lifestyle are certainly strong incentives to move to Portugal. But let’s be honest — nothing is more appealing than tax benefits, right?

Portugal’s Non-Habitual Resident (NHR) tax regime has long been a major draw for expats, particularly retirees. However, as of 2024, the Portuguese government ended the NHR program for new applicants, significantly changing the landscape for those considering a move. While some transitional rules apply, many of the previous tax advantages no longer exist.

Despite this, Portugal still offers favorable tax conditions for certain expats, and new incentives may emerge.

The Non-Habitual Resident (NHR) tax regime was introduced by the Portuguese government in 2009 to attract highly skilled professionals in high-value industries such as technology, scientific research, and intellectual property, as well as foreign pensioners receiving income from abroad.

For over a decade, this tax regime served as a key incentive for expats looking for a safe, welcoming, and tax-friendly destination to live and retire. As a result, Portugal became one of the most sought-after retirement spots in Europe.

However, as of 2024, the NHR regime was officially discontinued for new applicants. While those already benefiting from the scheme can continue under its rules for a limited period, newcomers will no longer have access to the same tax advantages. The Portuguese government has hinted at alternative tax incentives, but details remain unclear.

If you're considering moving to Portugal, it's crucial to stay updated on new tax policies that may replace the NHR program.

Let’s be honest — who doesn’t love a good tax break?

One of the most attractive features of Portugal’s Non-Habitual Resident (NHR) tax regime was its generous tax benefits, particularly for foreign pensioners. Under this regime, retirees enjoyed a reduced tax rate (or even full exemption) on their foreign pension income for 10 years, making Portugal a prime destination for expats looking to maximize their retirement savings.

As a result, the number of foreigners relocating to Portugal under this scheme steadily increased over the years.

However, as of 2024, the NHR program was officially discontinued for new applicants. While those who obtained NHR status before the cutoff date can continue to benefit for the remainder of their 10-year period, newcomers will no longer have access to the same tax advantages. The government has hinted at alternative incentives, but details remain uncertain.

Who was eligible for the NHR regime?

To qualify for NHR status before its termination, applicants had to meet the following conditions:

• Become a legal resident in Portugal
• Live in the country for at least 183 days per year
• Not have been a tax resident in Portugal in the previous 5 years

The number of foreign buyers in Portugal has been steadily increasing, but some real estate tax benefits remain under the radar. One of these is the municipal property tax (IMI) exemption for urban rehabilitation projects.

To encourage real estate investment in urban renewal, the Portuguese government grants an IMI exemption for up to 3 years, with the possibility of extending it to 5 years if the property undergoes renovation and meets specific criteria.

If you're considering buying property in Portugal, opting for a rehabilitation project could help you benefit from this tax relief while contributing to the revitalization of historic areas.

Cost of living in Portugal in 2025

Portugal is often considered an affordable place to live, but your lifestyle choices will ultimately determine your monthly expenses. Below are some average costs based on 2025 data. Prices may vary depending on location, lifestyle, and individual spending habits.