Life after NHR: what applies to a foreign pension in Portugal now
Updated: Aug 22
Last reviewed 21 August 2026. This article is information, not advice. It explains rules that were in force on the date above, with the source and date for each one. It does not take account of anyone's personal circumstances, and nothing in it is a recommendation to take or not take any course of action. Paratus Wealth does not offer services to UK residents.
Key takeaways
The non-habitual resident regime (NHR) was revoked with effect from 1 January 2024 by the Portuguese State Budget Law for 2024. There is no route into it for a British person arriving now. People already registered keep it for the remainder of their own ten-year period.
IFICI, widely called "NHR 2.0", is not a replacement for a retiree. It is a research and innovation incentive, and even for someone who qualifies, foreign pension income is expressly excluded from its exemption.
A new UK-Portugal Double Taxation Convention entered into force on 29 December 2025. Under Article 17, a private, occupational or state pension paid to a Portuguese resident is taxable only in Portugal.
Under Article 18, a UK government service pension stays taxable only in the UK. Moving to Portugal does not change that.
Once NHR ends, or if it never applied, pension income is taxed at ordinary Portuguese IRS rates. On our own calculation from the published 2026 bands, a taxable income of 25,000 euros produces an effective rate of about 21.7 per cent before the category H deduction and the mínimo de existência, both of which reduce it further. That is an illustration, not anyone's liability, and it is neither the 48 per cent headline nor the 13 per cent floor.
Access to the Portuguese state health service turns on legal residence, not on pension status. Holding a patient number is not the same as the state assuming the cost.
What changed, and when
Four dates do most of the work on this topic. Each one is the reason a page written before it is now wrong.
1 January 2024. NHR revoked. The regime was revoked with effect from that date by the State Budget Law for 2024, with transitional provisions for existing registrants sitting in artigo 236.º n.os 3 to 5 of Lei n.º 82/2023, de 29 de dezembro. Confirmed on the Autoridade Tributária's own FAQ, read 21 August 2026.
29 December 2025. The treaty changed. The UK-Portugal Double Taxation Convention signed in London on 15 September 2025 entered into force on 29 December 2025. It has effect in Portugal from 1 January 2026, and in the UK from 6 April 2026 for Income Tax and Capital Gains Tax. The 1968 Convention, which almost every article on this subject still describes, ceases to have effect from those dates. Source: HMRC and FCDO, Portugal: tax treaties, page last updated 8 January 2026, read 21 August 2026.
1 January 2026. New Portuguese IRS bands. The 2026 bands were set by artigo 68.º n.º 1 of the Código do IRS in the wording given by Lei n.º 73-A/2025, de 30 de dezembro. The first band now runs to 8,342 euros at 12.5 per cent.
6 April 2027. UK pensions come into the estate. On the legislation as it stands on the date of this review, from that date most unused pension funds and pension death benefits are brought within the value of a person's estate for UK Inheritance Tax, with personal representatives liable for reporting and payment. Announced at Autumn Budget 2024 and set out in HMRC's published guidance, read 21 August 2026. A commencement date set in advance can be changed before it arrives. This applies to a British person living in Portugal in the same way it applies to one living in Surrey, because UK Inheritance Tax follows long-term UK residence, not where you happen to be sitting. It is the reason UK inheritance tax planning and a will that works across both countries are part of the same conversation as the pension itself.
Where Paratus Wealth comes into this. Four dates in three years is why this page carries a review date at the top. Paratus Wealth's Senior Partners work with households in Portugal on exactly this: keeping the pension, the tax position and the estate lined up as each of those rules moves. Retirement planning is the service that sits across all four.
Where NHR stands now
NHR is closed. It was revoked rather than suspended, and no reopening has been announced.
The transitional route in artigo 236.º keyed to becoming Portuguese resident by the end of 2023, or to specified commitments made before that, and it required an application by 31 March of the year following the change of residence. Both gates have shut for anyone arriving now. The Autoridade Tributária's own FAQ describes registrations from 2024 onward as available only under those transitional rules, and notes that the ten-year period runs from the year of registration, not the year of residence.
If you are already registered, nothing above changes your position. You keep the regime for the remainder of your own ten-year period, counted from your registration year. What matters for you is the date that period ends, because the year after it ends is the first year you are taxed as an ordinary Portuguese resident, and that is a change in cash flow rather than a change in status. You do not have to leave Portugal. Your residence permit and your tax treatment are two different things governed by two different bodies of law.
Where Paratus Wealth comes into this. The year an NHR period ends is a known date, usually years ahead, and a change in net income that can be modelled rather than discovered. That modelling is part of a pension review, and where the drop in net income is material it is also where savings and investments outside the pension start to matter.
IFICI is not NHR for retirees
This is the part most commonly got wrong, including by AI-generated answers currently circulating that describe a 10 per cent flat rate on foreign pension income under IFICI. There is no such rate. Neither the statute nor the Autoridade Tributária's own material contains it.
Note the two article numbers, because they are routinely mixed up. Artigo 236.º of Lei n.º 82/2023 is the NHR transitional provision. Artigo 263.º of the same law is the article that created IFICI, the Incentivo Fiscal à Investigação Científica e Inovação, inserting artigo 58.º-A into the Estatuto dos Benefícios Fiscais. It is regulated by Portaria n.º 352/2024/1, de 23 de dezembro.
Two independent reasons put a retiree outside it, and both come from the Portuguese tax authority.
First, the gateway. IFICI applies a special 20 per cent rate to income of categories A and B arising from scientific research and innovation activities and from qualified posts. The conditions of access require the person to carry on one of the listed activities and to earn income from it in each year of application. Pension income is category H. It is neither category A nor category B, and drawing a pension is not one of the listed activities. There is no pension route in.
Second, and this is the limb that matters even if someone in your household does qualify. For a person who is inside IFICI, the foreign-income exemption expressly carves pensions out. The Autoridade Tributária's IFICI FAQ puts it in four words: "isenção de IRS, exceto no caso de rendimentos da categoria H". Exemption from IRS, except in the case of category H income. The AT's own March 2025 information leaflet lists the exempt categories positively, and H does not appear among them.
So a spouse who qualifies as a researcher does not bring your pension inside the shelter. Both sources were read on 21 August 2026.
Where Paratus Wealth comes into this. A household where one person is inside IFICI and the other is drawing a pension is taxed under two different sets of rules in the same country, and its Portuguese tax return has to reflect both. That is a normal case for us rather than an unusual one.
We have put the detail of what replaces NHR, what the treaty does to each kind of pension, and what the arithmetic actually produces, into a guide you can read away from the screen.
How a UK pension is taxed in Portugal now
The treaty is the instrument that decides this, and it is a different treaty from the one most published guidance still describes.
Private and occupational pensions, and drawdown: Portugal only. Article 17 of the 2025 Convention reads: "Subject to the provisions of paragraph 1 of Article 18, pensions and other similar remuneration paid to a resident of a Contracting State, shall be taxable only in that State." For a Portuguese-resident retiree, that means a UK personal pension, a SIPP, drawdown income and an occupational scheme pension are taxable only in Portugal. In practice the UK payer will keep deducting PAYE until HMRC issues a no-tax code following a treaty claim, so there is usually an overlap period to manage.
The UK State Pension: also Portugal only. The 2025 Convention contains no separate social security article and no lump-sum carve-out. The Pensions article is one sentence with a single exception, the Article 18(1) government service exception. The State Pension therefore falls under Article 17 and is taxable in Portugal alone. It is paid gross by DWP in any event. Portugal is on the DWP's published list of countries where the annual increase is paid, which Canada, Australia and New Zealand are not. That list is DWP's current position and not a guarantee of future policy.
A UK government service pension: the UK only. Article 18(1) gives the taxing right over salaries, wages and pensions paid by a Contracting State or its local authorities, for services rendered to it, exclusively to the paying State. The proviso that allows both States to tax bites only where the individual is not a national of the paying State but is a national of the other. A British citizen who has not naturalised in Portugal is a national of the paying State, so the proviso does not apply. Article 17 opens with "Subject to the provisions of paragraph 1 of Article 18", so where Article 18(1) applies, it wins.
In plain terms: a former civil servant, a police officer, a firefighter, a local-authority teacher or an armed forces veteran does not move their pension into Portuguese taxation by moving to Portugal. It stays UK-taxed, and it keeps its exposure to the UK personal allowance position. Whether a particular NHS pension falls inside Article 18 turns on the employing body and on Article 18(2), and that is a question to settle on the facts rather than assume.
Where Paratus Wealth comes into this. Three things follow from the picture above, and each of them is work rather than reading. Establishing which article catches which of your pensions is part of a pension review. Getting the UK payer onto a no-tax code, and reclaiming the PAYE deducted in the meantime, runs through the tax return service. And checking your UK State Pension record and how the payment reaches you is a separate exercise again, because DWP pays it gross and Portugal taxes it.
One more thing follows that is easy to miss. A pension taxed in Portugal is spent in euros while it is usually paid in sterling, so the exchange rate becomes part of your income rather than a detail. Currency exchange is the part of this most people leave until last and then find has cost them the most.
What the Portuguese rate actually is
Published guidance on this topic almost always gives a range, usually something like 13 to 48 per cent. A range spans the whole band table, so on its own it tells a reader very little about where a retirement income actually sits within it.
Here is the arithmetic. The 2026 bands at artigo 68.º n.º 1 of the CIRS run from 12.5 per cent on the first 8,342 euros to 48 per cent above 86,634 euros. The mechanism at artigo 68.º n.º 2 splits taxable income in two: the part equal to the top of the largest band that fits is taxed at that band's average rate, and the excess at the next band's normal rate.
Applying that, and this calculation is ours, derived from the sourced table:
Taxable income (rendimento coletável) | Tax produced | Effective rate |
|---|---|---|
18,000 euros | about 2,862 euros | about 15.9% |
25,000 euros | about 5,418 euros | about 21.7% |
Illustration only, calculated by Paratus Wealth from the published 2026 IRS bands. Not a quotation of any individual's liability.
These are illustrations, not a promise and not a quotation of your liability. They are calculated on taxable income (rendimento coletável) after any deductions have already been taken, so they are not what you would pay on gross pension income. Two features of Portuguese law that would move the figure are deliberately left out of them, because we could not verify the 2026 euro amounts from a primary source: the specific deduction for category H income at artigo 53.º of the CIRS, and the mínimo de existência at artigo 70.º, whose reference value is the greater of 12,880 euros or 1.5 x 14 x IAS and which expressly protects taxpayers whose income comes predominantly from pensions. Both work in the taxpayer's favour, so for most retirement incomes the effective rate would be lower than the table rather than higher, though by how much depends on the individual's own figures.
What the arithmetic shows is that the 48 per cent headline is the rate on the top slice of a large income, not the rate on a retirement income, and that the effective rate on the figures above is materially lower than it. Where any individual's own figure falls depends on their own income and deductions, which this article cannot know.
Where Paratus Wealth comes into this. The figures above are the arithmetic of the band table and nothing more. The number that actually matters to a household is the one calculated on its own income, its own deductions and its own drawdown pattern, and that is what a pension review produces. Where the pension is only part of the picture, retirement planning takes in the rest of it.
Lump sums, and why we are not printing a number
The UK's 25 per cent tax-free pension commencement lump sum does not travel. Two rules explain why.
The treaty removes the UK's taxing right over pensions paid to a Portuguese resident, and it contains no lump-sum carve-out. And Portuguese law does not recognise the UK's tax-free character: artigo 11.º n.º 2 of the CIRS states that "a remição ou qualquer outra forma de antecipação de disponibilidade dos rendimentos previstos no número anterior não lhes modifica a natureza de pensões". Commutation, or any other form of early availability, does not change the nature of the income as a pension. So in Portuguese law a UK lump sum taken while Portuguese resident is category H income.
How much of it is actually taxed turns on artigo 54.º of the CIRS, which distinguishes capital from income and which contains exclusions that may or may not apply to a UK employer-funded, tax-relieved scheme. We could not obtain a binding ruling from the Autoridade Tributária on that point, so we are not publishing a percentage, an effective rate or a worked example. Where you see one published, it is worth asking what source it rests on.
What can be said without guessing is which rules apply and when. The date a lump sum is paid, relative to the date Portuguese residence begins, determines which country's rules govern it, and residence in Portugal begins on the first day of the period of stay under artigo 16.º n.º 3 of the CIRS, not at the start of a tax year. This section describes how those rules operate. It is not a suggestion to take, delay or bring forward any payment, and Paratus Wealth cannot say what any of it means for an individual without knowing their full circumstances.
Where Paratus Wealth comes into this. This is the point at which a general article stops being useful and a look at your own scheme paperwork starts. What a pension review can establish is what your particular scheme permits, which dates are actually in play, and what the Portuguese treatment turns on in your case. What it will not do is hand you a percentage that this article has just explained nobody can source.
Healthcare, briefly, because it is the next question
Access to the Serviço Nacional de Saúde turns on legal residence, not on age or pension status. Artigo 4.º of the Estatuto do SNS (Decreto-Lei n.º 52/2022) points to Base 21 of the Lei de Bases da Saúde, which covers third-country nationals with residence in Portugal. There is no contributory condition, and being retired and economically inactive does not change your position.
The trap worth knowing about is the difference between having a patient number and having the state pay. Getting a número de utente creates a record. Whether the SNS assumes the cost depends on the type of that record. The health regulator ERS states that financial responsibility is assumed by the SNS for foreign citizens whose record carries the status "registo atualizado", and that status requires a valid residence permit and a Portuguese tax number (NIF). Below that, the record is "registo em curso" or "registo incompleto", enrolment in primary care is not possible, and the cost of care can fall on you. ERS FAQ on access by foreign citizens to the SNS, dated 12 August 2026, read 21 August 2026.
Under Decreto-Lei n.º 37/2022, de 27 de maio, user charges in the state system apply only to attending a hospital emergency department without prior referral. Being a pensioner is not an exemption category, and since that reform there is very little left to be exempt from.
Where Paratus Wealth comes into this. Most of the households we work with in Portugal hold private health insurance alongside the SNS rather than instead of it, for waiting times and for language rather than for the cost of emergency care. The two other covers that usually come up in the same conversation are protection and life cover, because a move abroad often leaves an old UK policy sitting on terms that no longer match where the family lives.
In the western Algarve
Earlier this year Paratus Wealth sponsored the Luz Padel Masters at Ocean Padel Club in Praia da Luz, with Dean Arden, Senior Partner & Financial Adviser, Paratus Wealth, presenting the awards on the Paratus-sponsored courts. It was a well-run event and it drew residents from across the western Algarve.
Much of what is written about Portuguese tax for British retirees is written a long way from Portugal. A good deal of the conversation about what the end of NHR actually means for a household happens at a padel club, over coffee in Lagos, or at somebody's kitchen table in Burgau, and it tends to be more specific and more anxious than anything on the internet. Being present for those conversations is part of how a firm learns which questions matter.
Where Paratus Wealth comes into this. Being in the same time zone, and often the same town, is the practical difference between a firm that can read your Portuguese paperwork with you and one that cannot. Our Senior Partners cover retirement planning, pension reviews, Portuguese tax returns, UK State Pension queries, currency, health cover and estate planning from here rather than from London.
Frequently asked questions
Is NHR still available in Portugal in 2026?
No. The non-habitual resident regime was revoked with effect from 1 January 2024 by the Portuguese State Budget Law for 2024, and the transitional route in artigo 236.º of Lei n.º 82/2023 closed to new arrivals with the passing of its registration deadline. A British person moving to Portugal in 2026 cannot register for it.
Does the end of NHR affect people already registered?
No. Anyone registered as a non-habitual resident before 1 January 2024 keeps the regime for the remainder of their own ten-year period, counted from the year of registration, under the transitional provisions at artigo 236.º n.os 3 to 5 of Lei n.º 82/2023. What changes for them is the year the ten-year period ends, from which point ordinary IRS rates apply.
Is IFICI the same as NHR for retirees?
No. IFICI, created by artigo 263.º of Lei n.º 82/2023, is a 20 per cent incentive on category A and B income from scientific research, innovation and qualified employment, and the Autoridade Tributária's FAQ states that its foreign-income exemption applies "exceto no caso de rendimentos da categoria H". Pension income is category H, so it is excluded even for someone who otherwise qualifies.
How is my UK pension taxed if I live in Portugal?
A private, occupational or state pension paid to a Portuguese resident is taxable only in Portugal under Article 17 of the UK-Portugal Double Taxation Convention, in force since 29 December 2025 and applying to UK Income Tax from 6 April 2026. It is then taxed at ordinary Portuguese IRS rates under artigo 68.º of the CIRS. Establishing which of your own pensions each article catches is part of a pension review.
Do I still pay UK tax on my pension if I move to Portugal?
Not on a private, occupational or state pension, because Article 17 gives Portugal the exclusive taxing right over pensions paid to a Portuguese resident. You do continue to pay UK tax on a government service pension, which Article 18(1) makes taxable only in the UK, and in practice UK PAYE continues on any pension until HMRC issues a no-tax code after a treaty claim. Making that claim and reclaiming the PAYE deducted in the meantime is part of the tax return service.
Which pensions count as government service pensions?
A pension paid by, or out of funds created by, the UK or a UK local authority in respect of services rendered to it falls within Article 18(1) and is taxable only in the UK. That typically covers civil service, police, fire service, armed forces and local-authority teaching pensions; whether a particular NHS pension is caught turns on the employing body and on Article 18(2), and is worth checking on the facts rather than assuming.
Does my UK State Pension still increase each year in Portugal?
Yes, on DWP's current published position. The UK pays the State Pension worldwide but applies the annual increase only where the recipient lives in the EEA or Switzerland, or in a country with a social security agreement that provides for it, and Portugal appears on the DWP's published list of countries where an increase is paid. If DWP converts the payment for you, note its published conversion charge of 0.39 per cent on each payment, which is one reason people look at how the money actually gets to them as well as at what it is worth. Record and forecast queries sit with the UK State Pension service. DWP's country list is its current published position and is not a guarantee of future policy.
Can I use the Portuguese state health service as a British retiree?
Yes, if you are legally resident, because SNS beneficiary status follows legal residence rather than age or pension status under artigo 4.º of the Estatuto do SNS and Base 21 of the Lei de Bases da Saúde. Your patient record has to reach "registo atualizado" status, which requires a valid residence permit and a Portuguese tax number, before the SNS assumes the cost of care. Many residents hold private cover alongside it.
Do I have to leave Portugal when my NHR period ends?
No. NHR is a tax regime, not an immigration status, and its expiry has no effect on your residence permit. What changes is that from the following year your income is assessed under ordinary Portuguese IRS rules.
Which dates in this article matter most?
Several of the rules described here turn on dates rather than on amounts: the year an NHR ten-year period ends, and the date Portuguese residence begins, which under artigo 16.º n.º 3 of the CIRS is the first day of the period of stay rather than the start of a tax year. A taxpayer who becomes resident must also update their registration with the tax authority within 60 days. This article does not say when any individual should review their arrangements.
What does Paratus Wealth actually do for someone in this position?
Paratus Wealth is a cross-border financial planning firm whose Senior Partners work with international families living in Portugal, including across the Algarve. On the subjects covered above that means retirement planning and pension reviews, Portuguese tax return work including treaty claims, UK State Pension queries, currency exchange, savings and investments, health and life cover, and UK inheritance tax and will planning ahead of April 2027. A first conversation is to establish the facts of your position, not to sell you a product.
If you would like to talk to someone
Paratus Wealth's Senior Partners work with British and international families living in Portugal, including in the western Algarve. If you would like to discuss cross-border pension and retirement planning, you can contact the team at /contact-us. Nothing in this article is a recommendation, and any decision remains yours.
Related reading
Sources
All sources below were read on 21 August 2026.
UK-Portugal Double Taxation Convention 2025, signed 15 September 2025, in force 29 December 2025, Articles 17, 18 and 28. HMRC and FCDO, Portugal: tax treaties. https://www.gov.uk/government/publications/portugal-tax-treaties/2025-uk-portugal-double-taxation-convention-not-in-force (the URL slug reads "not in force"; the document is the in-force 2025 Convention).
HMRC and FCDO, Portugal: tax treaties, page last updated 8 January 2026, for entry-into-force and effective dates. https://www.gov.uk/government/publications/portugal-tax-treaties
Lei n.º 82/2023, de 29 de dezembro (State Budget for 2024), artigo 236.º (NHR transitional) and artigo 263.º (creating IFICI), as recorded by the Autoridade Tributária e Aduaneira, Portal das Finanças FAQ. https://info.portaldasfinancas.gov.pt/pt/apoio_contribuinte/questoes_frequentes/Pages/faqs-00309.aspx
Autoridade Tributária e Aduaneira, IFICI FAQ, for the category H exclusion. https://info.portaldasfinancas.gov.pt/pt/apoio_contribuinte/questoes_frequentes/pages/faqs-01018.aspx
Autoridade Tributária e Aduaneira, information leaflet "IFICI", March 2025, for conditions of access and exempt categories. https://info.portaldasfinancas.gov.pt/pt/apoio_contribuinte/Folhetos_informativos/Documents/incentivos_investigacao.pdf
Portaria n.º 352/2024/1, de 23 de dezembro, Diário da República 1.ª série n.º 248. https://files.diariodarepublica.pt/1s/2024/12/24800/0004000045.pdf
Código do IRS, artigo 68.º (2026 bands, wording given by Lei n.º 73-A/2025, de 30 de dezembro). https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs68.aspx
Código do IRS, artigo 11.º (nature of pension income on commutation) and artigo 54.º (capital and income). https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs11.aspx
Código do IRS, artigo 16.º (tax residence, including n.º 3) and artigo 70.º (mínimo de existência). https://info.portaldasfinancas.gov.pt/pt/informacao_fiscal/codigos_tributarios/cirs_rep/Pages/irs16.aspx
Decreto-Lei n.º 52/2022, Estatuto do SNS, artigo 4.º, Diário da República 1.ª série n.º 150. https://files.dre.pt/1s/2022/08/15000/0000500052.pdf
Entidade Reguladora da Saúde, FAQ on access by foreign citizens to the SNS, page dated 12 August 2026. https://www.ers.pt/pt/utentes/perguntas-frequentes/faq/acesso-de-cidadaos-estrangeiros-a-prestacao-de-cuidados-de-saude-no-servico-nacional-de-saude/
Entidade Reguladora da Saúde, FAQ on taxas moderadoras do SNS, page dated 18 February 2026, citing Decreto-Lei n.º 37/2022, de 27 de maio. https://www.ers.pt/pt/utentes/perguntas-frequentes/faq/taxas-moderadoras-do-sns/
DWP, State Pensions annual increases if you live abroad, and the accompanying country list. https://www.gov.uk/government/publications/state-pensions-annual-increases-if-you-live-abroad
DWP, State Pension if you retire abroad, for the 0.39 per cent conversion charge. https://www.gov.uk/state-pension-if-you-retire-abroad
HMRC, Inheritance Tax: unused pension funds and death benefits, for the 6 April 2027 commencement. https://www.gov.uk/government/publications/inheritance-tax-unused-pension-funds-and-death-benefits
HMRC, Inheritance Tax if you're a long-term UK resident, published 6 April 2025, and Inheritance Tax Manual IHTM47020 (IHTA 1984 section 6A). https://www.gov.uk/guidance/inheritance-tax-if-youre-a-long-term-uk-resident
Important information
Paratus Wealth does not offer services to UK residents.
This article is provided for information and education only. It is not financial, tax, legal or accounting advice, and it is not a recommendation to take or refrain from taking any action. It does not take account of your personal circumstances, objectives or needs. Cross-border tax and pension rules change, and their application depends on individual facts; you should take advice from a suitably regulated professional in each relevant jurisdiction before acting.
The effective rates shown in the table and in the accompanying figure are illustrations calculated by Paratus Wealth from the published 2026 Portuguese IRS bands. They are not a quotation of any individual's liability and they do not include the category H specific deduction or the mínimo de existência, whose 2026 euro values we could not verify from a primary source.
The value of investments can fall as well as rise and past performance is not a guide to future performance. Paratus Wealth does not provide tax or legal advice.
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