Comparison
Cyprus or Portugal After NHR
Cyprus or Portugal After NHR: short answer
Last reviewed
Portugal closed the non-habitual resident regime to new entrants at the end of 2023 and replaced it with IFICI, which is limited to approved research and innovation activities and runs for ten years. Cyprus non-domiciled status is not gated on occupation and runs for seventeen, so the first question is whether you qualify in Portugal at all.
| Portuguese regime for new arrivals | IFICI, in force from 1 January 2024, replacing NHR |
|---|---|
| IFICI eligibility | An approved scientific research or innovation activity |
| IFICI duration | Up to ten years |
| IFICI rate on Portuguese employment income | 20 percent flat |
| Foreign pensions under IFICI | Outside the exemption, taxed at progressive rates |
| Cyprus equivalent duration | 17 of the previous 20 years, then two further five year periods at 250,000 each |
| Corporate rates | Cyprus 15 percent, Portugal 19 percent in 2026 on a path to 17 percent by 2028 |
Most people comparing the two are doing it because the regime they were originally moving to Portugal for no longer accepts new applicants.
What replaced NHR
The non-habitual resident regime closed to new entrants at the end of 2023. Its replacement, the tax incentive for scientific research and innovation, known as IFICI and widely called NHR 2.0, was introduced by Ordinance 352/2024/1 and took effect from 1 January 2024.
IFICI applies a 20 percent flat rate to eligible Portuguese employment and self-employment income for up to ten years, and exempts most foreign source investment income, including dividends, interest, rents and capital gains, other than income arising in blacklisted jurisdictions.
Two differences from the old regime matter more than the rate. Eligibility now depends on the individual carrying on an approved scientific research or innovation activity, so it is gated on what you do rather than on where you came from. And foreign pension income no longer falls within the exemption. It is taxed at ordinary progressive rates.
The gate comes before the rate
| Dimension | Cyprus | Portugal, IFICI |
|---|---|---|
| Who may claim | Anyone whose domicile of origin is outside Cyprus | Only an approved research or innovation activity |
| Duration | 17 of the previous 20 years, then two five year extensions at 250,000 each | Up to ten years |
| Foreign dividends and interest | Outside Special Defence Contribution while non-domiciled | Exempt, other than from blacklisted jurisdictions |
| Foreign pensions | Exempt band of 5,000 euro, then taxed | Outside the exemption, progressive rates |
| Local employment income | Ordinary rates, with the arrival exemptions | 20 percent flat where eligible |
| Deadline to claim | With the residency and domicile filings | 15 January of the year after becoming resident |
| Corporate rate | 15 percent | 19 percent in 2026, 18 in 2027, 17 in 2028 |
For most people comparing the two, the first row settles it before any of the others are reached. A founder whose income is dividends from their own company, a consultant, a fund manager or a retiree is not carrying on an approved research or innovation activity, and IFICI is not available to them at all.
Where Portugal is the better answer
Where the gate is passed, IFICI is a strong regime and the comparison is genuinely close.
A researcher or a qualified professional inside an approved activity gets a 20 percent flat rate on Portuguese employment income, which is well below the Portuguese progressive scale, alongside an exemption on most foreign investment income. Cyprus has no equivalent flat rate on local employment income, and taxes it at ordinary rates.
Portugal is also on a declining corporate path, from 19 percent in 2026 to 17 percent by 2028, so the corporate gap narrows over the period a structure is likely to run.
Where the divergence is sharpest
Pensions. Under the old Portuguese regime foreign pension income was within the favourable treatment. Under IFICI it is not, and it is taxed at ordinary progressive rates. Cyprus applies an exempt band of 5,000 euro to foreign pension income and taxes the rest. For anyone who chose Portugal for a pension, that is the change that removed the reason.
Duration is the second. Ten years against seventeen, with two further five year extensions available in Cyprus from 2026 at 250,000 euro each, is a different planning horizon for someone building something they intend to hold.
And eligibility is the third, which is really the first. Cyprus non-domiciled status attaches to the individual, not to their occupation. It asks for a domicile of origin outside Cyprus and Cyprus tax residency, which is established either by more than 183 days or by the 60 day route on its four conditions.
What both require
Both are residence regimes, so both are measured over a full tax year and neither can be created retrospectively. A move begun in the autumn lands in the following year in either country.
Where a company moves as well, both jurisdictions ask where it is genuinely directed from. In Cyprus that is the management and control test, and every Cyprus relief depends on it.
How Portugal treats a particular departure or arrival, and whether a specific activity is an approved one for IFICI, is a question for an adviser qualified there. We state the Cyprus position on our own authority and set out what to ask them.
Common questions
Can I still get Portuguese NHR?
Not as a new applicant. The regime closed to new entrants at the end of 2023. What is available to new arrivals is IFICI, which is a different regime with an eligibility test based on carrying on an approved scientific research or innovation activity.
Is IFICI just NHR under another name?
No. It is narrower in who may claim it, it runs for up to ten years, and foreign pension income falls outside the exemption and is taxed at progressive rates. The foreign investment income exemption is broad, which is the part that most resembles the old regime.
I take dividends from my own company. Which suits me?
IFICI is unlikely to be available, because eligibility turns on carrying on an approved research or innovation activity rather than on the shape of your income. Cyprus non-domiciled status is not gated that way, and it removes Special Defence Contribution on dividends and interest entirely.
What happens to a foreign pension in each?
Portugal taxes it at ordinary progressive rates under IFICI, which is a change from the previous regime. Cyprus applies an exempt band of 5,000 euro to foreign pension income and taxes the balance.
Which has the lower corporate tax?
Cyprus at 15 percent from 1 January 2026, against Portugal at 19 percent in 2026. Portugal is on a legislated reduction path to 18 percent in 2027 and 17 percent in 2028, so the gap narrows rather than holds.
Technical definition
IFICI, introduced by Ordinance 352/2024/1 with effect from 1 January 2024, applies a 20 percent flat rate to eligible Portuguese employment and self-employment income for up to ten years and exempts most foreign source investment income. Eligibility depends on the individual carrying on an approved scientific research or innovation activity. Cyprus non-domiciled status attaches to the individual rather than to their occupation.
Practical implications
The Portuguese regime has to be applied for by 15 January of the year following the year of becoming resident, and eligibility rests on the activity being an approved one. Cyprus asks a day count and a domicile of origin outside Cyprus, with no equivalent occupational gate, which is why the comparison often resolves before the rates are reached.
Common misconceptions
That IFICI is NHR under a new name. It is narrower in who may claim it, shorter at ten years against the old regime, and it no longer exempts foreign pension income, which is the single change that affects most of the people who chose Portugal under the previous rules.