For someone who has never experienced a January in Toronto, there is a certain type of dawn in Lisbon that is difficult to explain. The Tagus River provides warm, low light. Depending on the time of day, the Alfama district’s buildings’ tiles capture it in different ways. A Canadian wearing a thick coat might refer to the temperature at nine in the morning as spring. It may not be the main cause of the increasing number of rich Canadians choosing Portugal as their primary tax domicile, but it is still a significant factor.
Arithmetic is the more verifiable explanation. For wealthy earners in Ontario and British Columbia, the combined federal and provincial marginal tax rates frequently surpass 53%. Launched in 2009, Portugal’s initial Non-Habitual Resident program provided newcomers with a flat 20 percent tax rate on eligible Portuguese-sourced income as well as extensive exemptions on foreign-sourced profits, capital gains, and interest for a ten-year, non-renewable period.
The early wave of high-earner relocations from Canada was caused by the difference between the two figures. Before Canadians started coming in large numbers, the NHR, as it became known in the tax planning community, had garnered a lot of attention in affluent circles in the UK, France, and Scandinavia for years.
Important Information
| Field | Details |
|---|---|
| Portugal Millionaire Inflows (2025) | 1,400 new millionaire migrants in 2025, according to Henley & Partners’ Private Wealth Migration Report — placing Portugal in the global top ten destinations |
| Canada’s Top Marginal Tax Rate | Combined federal and provincial income tax in high-earning provinces (Ontario, B.C.) can exceed 53%; combined rates on investment income routinely exceed 50% |
| Canada Capital Gains Controversy | 2024 federal budget proposed raising capital gains inclusion rate from 50% to 66.7% on gains over $250,000; the proposal generated significant backlash and was ultimately cancelled by Prime Minister Carney in March 2025, but not before prompting many wealthy Canadians to accelerate exit planning |
| Portugal’s Original NHR Program | Non-Habitual Resident regime — launched 2009; offered 20% flat income tax rate and wide exemptions on foreign-sourced income for 10 years; attracted thousands of high-net-worth residents; formally closed to new applicants January 2024 |
| Portugal’s New Tax Regime (2026) | IFICI (Incentivo Fiscal à Investigação Científica e Inovação) — NHR 2.0; 20% flat rate on qualifying employment income; foreign-sourced income (dividends, capital gains, interest) broadly exempt; targeted at skilled professionals in innovation, science, and technology |
| Portugal’s Golden Visa | Residency-by-investment program offering EU access; modified in 2023 to exclude direct real estate purchases in most urban areas; investment fund routes remain available |
| No Wealth Tax | Portugal does not impose a general wealth tax on global assets — a significant differentiation from other European alternatives |
| Portugal Safety Ranking | Consistently ranked among the world’s top five safest countries in the Global Peace Index |
| Global Millionaire Migration Scale | Approximately 142,000 millionaires relocated globally in 2025, a record level; total expected to reach 165,000 by 2026 (Henley & Partners) |
The calculation was expedited by the plan in Canada’s 2024 federal budget to increase the capital gains inclusion rate on gains over $250,000 from 50 to 66.7 percent. When then-Finance Minister Chrystia Freeland unveiled the plan in April 2024, the business and investment community in Canada responded quickly and mostly negatively. An open letter urging the government to revoke it was signed by over a thousand members of Canada’s innovation sector.
The Council of Canadian Innovators president referred to it as “the sun” that “all innovators can see.” In the months that followed, tax experts and immigration consultants in Portugal noted a discernible increase in questions from Canadian clients. Prime Minister Mark Carney eventually canceled the proposed increase in March 2025, but the incident intensified a perception among affluent Canadians that the tax environment was moving in one direction while Portugal was moving in the opposite direction, at least temporarily.
For anyone considering a transfer based on information from a few years ago, it is important to be honest about the present situation of Portugal’s tax incentives because things have changed significantly. In January 2024, the initial NHR program formally closed to new applications. Applications under certain criteria were accepted during a transition window that ended in March 2025. The IFICI, also known as NHR 2.0, is a replacement system that Portugal implemented.
It restricts eligibility to highly qualified professionals in innovation, scientific research, and strategic economic sectors while maintaining a 20 percent flat rate on qualifying income and broad exemptions on income from foreign sources. It is no longer intended for passive investors or retirees who arrive with a real estate portfolio and pension income. Before making any judgments, anyone thinking about Portugal based solely on what they read about the NHR five years ago should speak with an expert.
Portugal’s basic positioning—no general wealth tax on worldwide assets, comparatively low estate taxes, a strong network of tax treaties, including a particular Canada-Portugal treaty, EU residency access through both the Golden Visa investment route and standard residency registration for EU-adjacent activities, and a cost of living significantly lower than Zurich, London, or any major Canadian city—remains unchanged and is preserved for eligible individuals by the IFICI regime.
According to the Henley Private Wealth Migration Report, 1,400 millionaires relocated to Portugal in 2025, ranking it in the top ten worldwide together with many larger and more well-known countries. Portugal has never had the advantage of being the most competitive tax jurisdiction in Europe; Monaco and other Swiss cantons have that title. Its benefit is that it provides a genuinely appealing standard of living at a reasonable cost, with a tax structure that makes sense for affluent people without necessitating the drastic measures that countries with no taxes require.
It’s difficult to ignore the fact that Canada appears on both sides of this migration narrative at the same time: as a place that brought in 1,000 new billionaires in 2025, and as a nation whose own wealthy are actively pricing alternative locations. This paradox reveals something about Canada’s place in the global capital competition: it is both pricey enough to encourage its own prosperous citizens to at least think about escaping the morning frost for a glimpse of the Tagus and appealing enough to draw substantial inflows from the rest of the world.