Summary
Portugal has become a popular destination for Israelis, historically because of its Non-Habitual Resident (NHR) regime. NHR was closed to new applicants in January 2024 and replaced with a more focused Incentivised Tax Status (ITS) programme. The Israel–Portugal tax treaty coordinates taxing rights and avoids double taxation.
Key facts and rules
- Portuguese tax residency: You typically become resident if you spend more than 183 days in Portugal during any 12-month period, or maintain a home there under circumstances indicating habitual residence. Residency starts from the first night spent in Portugal when these conditions are met.
- End of NHR: Portugal's NHR regime, which granted favorable treatment for certain foreign-source income for 10 years, was closed to new applicants in January 2024 (final applications accepted until 31 March 2024).
- New ITS regime (from 2024): NHR was replaced by the Incentivised Tax Status (ITS) programme (also called Tax Incentive for Scientific Research and Innovation). It grants a non-renewable 10-year favorable tax status to qualifying individuals in specified sectors, provided they were not Portuguese tax-resident in the prior 5 years.
- Israel–Portugal treaty: Prevents double taxation by allowing residents of each country to credit tax paid in the other. It also contains residency tie-breaker rules and provisions for pensions.
Common pitfalls
- Assuming NHR is still available to new arrivals in 2025–2026; only ITS or standard domestic rules now apply for most people.
- Not aligning the start of Portuguese residency with cessation of Israeli residency, leading to dual-residency and complex filings.
- Misunderstanding which income is considered Portuguese-source versus foreign-source under ITS and under the treaty.
Action checklist
- Confirm whether you qualify under the ITS regime or any other Portuguese incentive, and get professional guidance.
- Plan arrival dates and property rentals or purchases to control when you become Portuguese tax-resident.
- Review the Israel–Portugal treaty with advisors to plan for creditable taxes and pension/investment income.
- Coordinate Israeli exit tax and timing with the start of Portuguese residence.
Important: Portugal's expat regimes have changed quickly. Only current local legal and tax advice can confirm eligibility and benefits.