Overview of the tax regimes of Portugal and Spain for individuals

21.04.2025

• Portugal
• Spain
• Contact our lawyer for more details

In this article, we will introduce you to the special tax regimes of Portugal and Spain, which are aimed at stimulating scientific research, innovation and attracting highly qualified specialists. 

Portugal

Tax Incentive for Scientific Research and Innovation (TISRI)

Until 2024, Portugal had a Non-Habitual Resident Regime (NHR), the purpose of which was to attract highly qualified professionals, entrepreneurs and pensioners, offering them favorable tax conditions. From 2024, the NHR has been replaced by a new regime that allows individuals to also benefit from tax benefits, and this transitional regime is called TISRI. 

The regime can be applied by individuals: 

1. Who become residents of Portugal in 2024 on one of the following grounds:  
   • a stay of more than 183 days, consecutively or interpolated, in any 12-month period beginning or ending in a given year;
   • the stay is less than the number of days referred to in paragraph a, but the natural person has accommodation in conditions which imply a current intention to maintain and occupy it as his habitual residence;
   • as at 31 December, natural persons are members of the crews of ships or aircraft, provided that they are employed by organizations having a domicile, registered office or effective management in that territory;
   • perform public functions or assignments abroad in the service of the Portuguese State.
2. Activities fall into one of the following categories:  
   • teaching in institutions of higher education and scientific research, including scientific work in organizations, structures and networks engaged in the production, dissemination and transfer of knowledge integrated into the national scientific and technological system, as well as work and membership in the governing bodies of organizations recognized as technological and innovation centers;
   • jobs and members of governing bodies in organizations certified as start-ups;
   • jobs or other activities carried out by residents in the autonomous regions: the Azores and Madeira;
   • highly qualified specialists (architects, engineers, doctors, programmers, designers, investors, etc.).;
   • other categories. 
3. Have not been resident in Portugal in any of the previous 5 years. 

TISRI allows personal income to be taxed at a rate of 20%, while the tax rate in Portugal can be as high as 53%. Tax benefits can be applied for 10 years. 

However, TISRI does not provide benefits for retirees, as provided by NHR. Also, at the moment, there are no official clarifications on the taxation of personal income received from foreign sources. 

The application of the TISRI regime is directly related to Portuguese tax residency. To use tax benefits, the key factor is the status of a tax resident. 

Spain

Special Expatriate Tax Regime (SETR) 

This regime is also called the Beckham Law regime and is aimed at attracting qualified specialists and investors. Foreign individuals who acquire the status of resident in Spain, subject to certain legal requirements, can apply this preferential tax regime. 

Individuals can apply the regime if the following conditions are met: 

1. have not been resident in Spain during the 5 tax periods preceding the one in which the move to Spanish territory took place.
2. the move to Spain occurred either in the first year of application of the system or in the previous year as a result of one of the following circumstances:
   • conclusion of an employment contract, with the exception of special labor relations of professional athletes;
   • acquiring the status of the head / director of the organization;
   • carrying out business activities that are innovative and/or of particular economic interest to Spain, as well as a positive opinion from ENISA (National Institute of Entrepreneurship of Spain). For example, startups in the field of artificial intelligence and robotics, technology startups (blockchain technologies), etc. 
   • the economic activity in Spain by a highly qualified professional who provides services to start-up companies in accordance with the Start-up Development Law, or who carries out training, research, development and innovation activities, receiving remuneration totalling more than 40% of the total entrepreneurial, professional and personal income of the workforce.  
3. do not receive income that is classified as having been received through a permanent establishment located in Spain. 

The SETR allows foreign individuals to tax income at a rate of 24% if the amount does not exceed EUR 600,000 during the tax period, in case of excess (i.e. the amount of income of EUR 600,000.01 or more) – 47%. This regimen can be used for up to 6 years. 

Income from foreign sources is not subject to taxation under this regime. As an additional bonus , children (under 25 years old), spouse of the taxpayer, can also apply the regime, subject to the requirements of the law. 

The application of the SETR regime depends on the status of a tax resident. If you reside in Spain (acquire the status of a tax resident) and do not apply in the first year, then, based on the law, it will be impossible to apply the SETR. The same requirements apply to holders of a residence permit by investment, i.e. without the status of a tax resident, it is not possible to apply the regime. 

Authors: Yaroslavna Zadesenskaya

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