Tax Residency in Portugal for Israelis: When You Become a Resident, IFICI Instead of NHR, the Tax Treaty with Israel and What Happens in Israel

This guide deals with the question that accompanies every relocation to Portugal: where you will pay tax after the move. It complements our guide on residence routes in Portugal for Israelis, and expands the tax section of the guide to the Golden Visa, IFICI and citizenship in Portugal, mainly on the IFICI conditions, the residency rules and the tax treaty with Israel. The information is correct as of November 2026 and is not tax advice. The move should be planned with an accountant in Portugal and an accountant or tax adviser in Israel.

1When does an Israeli become a tax resident in Portugal?

Under Article 16 of the Portuguese Personal Income Tax Code (CIRS), a person is a tax resident if they stayed in Portugal more than 183 days, consecutive or not, in any 12-month period, or if on any day of that period they held a dwelling in Portugal in conditions indicating an intention to keep it and live in it as a habitual residence. It is enough for one of the tests to be met.

• Counting days: under a commonly accepted professional interpretation, every day that includes an overnight stay in Portugal counts, even if it is a partial day.
• Start of residency: according to PwC, as a rule residency begins on the first day of the stay in Portugal and ends on the last day of the stay, with exceptions.
• Split year of the move: in the year you move, there is a non-resident period, in which only Portuguese-source income is taxed, and a resident period, in which all income is taxed.
• Registration: anyone who obtained a NIF as a non-resident must update their residential address in Portugal with the tax authority (AT), so that the registration matches their actual status.

2What does a tax resident in Portugal pay tax on, and at what rates?

A tax resident in Portugal is taxed on worldwide income. A non-resident is taxed only on Portuguese-source income, and on employment, business or pension income at a flat rate of 25% in 2026. The rates for residents, according to PwC (updated October 2026):

3What is IFICI and who qualifies for it in 2026?

IFICI, the “Tax Incentive for Scientific Research and Innovation”, is the regime that replaced NHR. It is set out in Article 58-A of the Tax Benefits Statute (EBF) and in Portaria 352/2024/1. According to the guidelines of the Portuguese tax authority (Ofício Circulado 20276/2025), an applicant must meet all of the following conditions:

• Become a tax resident in Portugal in the year in which the benefit is to begin.
• Not have been a Portuguese resident in any of the previous five years.
• Carry out an activity or profession listed in Article 58-A(1), and derive income from it every year.
• Be a tax resident in every year of the benefit period.
• Not benefit, and not have benefited in the past, from NHR, IFICI or the returning residents' regime (Programa Regressar).

• Portuguese-source income: a special rate of 20% on employment or business income (categories A and B) from the qualifying activity. Other income is taxed under the ordinary rules.
• Foreign-source income: exempt as a rule, except pensions (category H). Income from countries on Portugal's blacklist is taxed at 35%.
• Duration: ten years, as long as the conditions are met every year.
• Withholding: the employer withholds 20% when you present confirmation that the application was filed. If the application is rejected, the income is taxed retroactively under the ordinary brackets.

4How do you apply for IFICI and what is the timeline?

1. Become a tax resident and update your address with the tax authority.
2. File an application on the tax authority portal by 15 January of the year after the year of the move, with the employment contract, education certificates and the company's declaration as relevant. A late application applies only from the year in which it was filed, for the remaining years.
3. The certifying body (FCT, AICEP, IAPMEI, ANI or Startup Portugal) sends the tax authority, by 15 February, the application and the confirmation that the activity meets the conditions.
4. For highly qualified professions (Article 58-A(1)(c)): the employing company confirms in its personal area on the portal by 15 March.
5. By 31 March the tax authority shows the status of the application, and a certificate can be issued.
6. Every year, by 15 January, you report changes. Moving to a new qualifying activity preserves the benefit if it happens within six months of the end of the previous activity.
7. Keep documents: the taxpayer, the company and the certifying body must keep the documents for ten years.

5What remains of NHR, and what about IRS Jovem for young people?

NHR was abolished from 1 January 2024. According to PwC, it continues to apply to those registered by then, to those who met the conditions by 31 December 2023, and, under certain conditions, to those who became resident by 31 December 2024, for a period of ten years. A newcomer in 2026 cannot join it.

IRS Jovem is a partial exemption on employment and business income for taxpayers up to age 35: 100% in the first year, 75% in years 2 to 4, 50% in years 5 to 7 and 25% in years 8 to 10, up to a cap of 55 times the IAS, i.e. 29,542.15 euros in 2026. According to the tax authority, anyone benefiting from IFICI from 2025 onwards cannot also benefit from IRS Jovem, so a young Israeli has to choose between them. Whether IRS Jovem suits someone who came from abroad is worth checking with a Portuguese accountant.

6How much social security do you pay in Portugal?

According to PwC, an employee pays 11% and an employer 23.75% of gross salary. A self-employed person pays 21.4%, on a base of one third of the relevant income in the previous three months, where the relevant income is 70% of income from services. In our search we found no social security agreement between Israel and Portugal, so anyone who continues to work for an Israeli employer or remains registered with National Insurance (Bituach Leumi) in Israel should check whether they will be liable for contributions in both countries, and what their status with Israeli National Insurance will be after they cease to be resident.

7Do you stop being an Israeli resident when you move to Portugal?

Not necessarily, and this is the most common mistake. Under the Israeli Income Tax Ordinance, an Israeli resident is someone whose centre of life is in Israel, and there are presumptions: a stay of 183 days or more in the tax year, or at least 30 days in the year and at least 425 days in that year and the two preceding years. The presumptions are rebuttable, by the taxpayer or by the assessing officer, and the main test remains the centre of life: home, family, work, business, accounts and social ties.

• Exit tax: when an Israeli resident ceases to be a resident, their assets are deemed to have been sold one day before cessation. You can pay the tax then, or defer it until the actual sale, in which case the Israeli portion is calculated according to the ratio between the holding period up to cessation and the total holding period.
• Israeli-source income: rent from an apartment in Israel, for example, remains taxable in Israel even after cessation.
• Reporting: as long as you are Israeli residents, the duty to report income and assets abroad remains. Details in the Israeli side of activity abroad.
• Returning to Israel: a returning resident after ten years abroad is entitled to an adjustment period of one year, during which they can ask not to be considered a resident for tax purposes, by notice within 90 days of arrival.

We set out the full cessation rules, the declaration to the Israel Tax Authority on ceasing residency and the exit tax in the general guide on ending Israeli tax residency on relocation.

8What does the tax treaty say when a person is resident in both Israel and Portugal?

Israel and Portugal have a double tax treaty, signed in 2006 and applicable from 2008. When a person is considered resident in both countries under the law of each, Article 4(2) of the treaty decides in the following order, moving to the next step only if the previous one did not decide:

1. Permanent home: the person is resident only in the state in which a permanent home is available to them.
2. Centre of vital interests: if they have a permanent home in both states, they are resident in the state with which their personal and economic relations are closer.
3. Habitual abode: if the centre of vital interests cannot be determined, or they have no permanent home in either, they are resident in the state in which they habitually stay.
4. Nationality: if they habitually stay in both or in neither, they are resident in the state of which they are a national.
5. Mutual agreement: if they are a national of both or of neither, the competent authorities decide by agreement.

The practical meaning: a family that moved to Portugal but left its apartment in Israel available for its use may reach the second step, where work, assets and family life are examined. Someone who also holds Portuguese citizenship may get as far as the nationality step. An orderly cessation starts with the question of what to do with the home in Israel.

9How is income from Israel taxed after you become a Portuguese resident?

The table describes the allocation of taxing rights under the treaty, assuming you are Portuguese residents under the treaty. Under Article 23(1), where Israel may tax, Portugal deducts from its tax the tax paid in Israel, up to the amount of Portuguese tax on that income.

10What do you do in the first year? A practical timeline

1. Before the move: check eligibility for IFICI or IRS Jovem, plan the exit tax in Israel, decide on the apartment in Israel and consult accountants in both countries.
2. On arrival: update your address with the AT, register with Portuguese social security, and document the day of arrival as the basis for calculating residency.
3. When starting work in Portugal: present confirmation of the IFICI application to the employer, so that it withholds 20% rather than according to the brackets.
4. By 15 January of the following year: file the IFICI application on the tax authority portal.
5. By 31 March: check the status of the IFICI application on the portal.
6. By 30 June: file the IRS return for the year of the move, usually separating the non-resident period from the resident period. Payment is due by 31 August, if the assessment was issued by 31 July.
7. In Israel, in parallel: an annual return for the year of the move, a declaration of ceasing residency if cessation has occurred, and reporting of income that remains in Israel.

11What are the common tax mistakes when moving to Portugal?

• Assuming IFICI is the “new NHR” for everyone. It is limited to defined professions and entities, and does not exempt pensions.
• Missing 15 January. A late application shortens the benefit period.
• Leaving an available home in Israel. A permanent home in both countries moves the decision to the centre-of-interests test.
• Forgetting the exit tax. Shares, companies and assets that have risen in value may be taxed in Israel on departure or on deferral.
• Continuing to work remotely without checking the employer's position. Social security, withholding and a permanent establishment are the employer's questions no less than yours.
• Holding an Israeli company and managing it from Portugal. The place of management may affect the company's residency. See Corporate tax in Portugal and transferring profits to Israel.

More on relocating to Portugal: Stay and residence routes in Portugal · Ending Israeli tax residency · Moving abroad with an Israeli company or business · The legal checklist for families

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