What replaced NHR in Portugal?

IFICI, often called NHR 2.0. It gives a 20% flat rate on qualifying Portuguese professional income for 10 years and exempts most foreign income, but only for eligible professions, and it excludes pensions.

Is it cheaper to retire in Cyprus or Portugal?

Day-to-day, Portugal is about 20% cheaper on Numbeo's 2026 data. After tax, Cyprus is often cheaper for retirees with private pensions because of the 5% flat option.

Which is easier for UK citizens, the D7 or Cyprus Category F?

The D7 has the lower published income bar: €920 a month (€11,040 a year) in 2026. Cyprus Category F's official minimum is €9,568 a year, but Category F is a longer, paper-heavy process, so get a lawyer's view on what the Migration Department expects in practice.

Do I pay tax on my UK pension in Cyprus?

Yes, if you are Cyprus tax resident. You can choose 5% on foreign pension income above €5,000, or normal rates if that is cheaper. UK government service pensions are usually taxed only in the UK.

Is Cyprus in Schengen?

No. Cyprus is an EU member but outside the Schengen area. Portugal is in Schengen.

Do I still pay UK inheritance tax if I move to Cyprus or Portugal?

Possibly, for up to 10 years. Since April 2025 anyone UK resident for 10 of the previous 20 tax years stays in UK inheritance tax for a 'tail' of up to 10 tax years after leaving, whichever country they move to.

Does Portugal tax capital gains on shares for expats?

Yes, usually at a flat 28% for Portuguese tax residents. A Cyprus tax resident pays 0% on gains from selling shares and funds, which is why investors selling a portfolio often prefer Cyprus.

Cyprus vs Portugal 2026: Tax, Visas and Costs for Brits

Q: Can I still get NHR in Portugal in 2026?

No. New applications closed at the end of 2023, and the final transitional registrations ended on 31 March 2025. People already in NHR keep it for the rest of their 10 years.

Cyprus vs Portugal for British Expats in 2026: Tax, Visas and Living Costs

Since Portugal closed its NHR regime, Cyprus is the better tax home for most British pensioners and dividend earners. Portugal still wins on flight times, day-to-day prices and its cheap D7 visa, and its new IFICI regime suits qualifying tech and research professionals.

JJason 13 min read Last verified 27 September 2026

Check my tax route Get my relocation plan

The short version

NHR is gone. Portugal closed its Non-Habitual Resident regime to new applicants; the last transitional registrations ended on 31 March 2025.

IFICI ("NHR 2.0") offers a 20% flat rate for 10 years, but only for qualifying professions such as research, tech and start-up roles. Pensions don't benefit.

Investment income: Portugal taxes dividends, interest and share gains at 28%. Cyprus non-doms pay 0% defence tax on dividends and interest, plus 2.65% GeSY.

Pensions: Cyprus lets you pay 5% on foreign pensions over €5,000. Portugal taxes new arrivals' pensions at normal rates up to 48%.

Visas: Portugal's D7 needs only €920 a month of passive income in 2026, far below Cyprus's options. Portugal is also cheaper day to day, per Numbeo.

Cyprus vs Portugal at a glance

Rates and thresholds for 2026. Winner ticks show which country is better for a typical British mover on that row.

Cyprus

Non-dom, 5% pensions, 60-day rule

Wins 9 of 13

Portugal

Mainland Europe, cheaper, IFICI for specialists

Wins 3 of 13

Income tax range

0% to 35%

12.5% to 48%, plus up to 5% surcharge

Tax-free band

First €22,000

None (12.5% from the first euro)

Dividends and interest

0% defence tax for non-doms, 2.65% GeSY

28% flat

Capital gains on shares

28%

Foreign pensions

5% over €5,000 (optional)

Progressive rates

Special regime

Non-dom, 17 years, anyone

IFICI, 10 years, qualifying jobs only

Tax residency

183 days or 60-day rule

183 days or a home you intend to live in

Passive-income visa

Category F: €9,568/yr minimum

D7: €920/month (€11,040/yr)

Digital nomad visa

€3,500/month net

D8: €3,680/month

Single person, a month before rent

€857

€677

Flight from London

About 4–5 hours

About 2.5–3 hours

Driving side

Left, like the UK

Right

Schengen area

Yes

The verdict

Choose Cyprus for pension income, dividends, investment gains or a Cyprus company run under the 60-day rule. Choose Portugal if you qualify for IFICI, want a cheap passive-income visa, or value short flights and mainland Europe on your doorstep.

What happened to Portugal's NHR?

Portugal's Non-Habitual Resident regime closed to new applicants at the end of 2023, with a transitional window for people who had already started their move that ran until 31 March 2025. For a decade NHR offered a flat 20% on Portuguese professional income and, until 2020, tax-free foreign pensions. It made the Algarve a magnet for British retirees.

Olive grove near Paphos in spring with wildflowers under the trees — Spring wildflowers under the olive trees near Paphos.

Its replacement is IFICI, the tax incentive for scientific research and innovation, often called "NHR 2.0". Portuguese tax advisers summarise it like this:

A 20% flat rate on Portuguese income from qualifying professional activities
Most foreign dividends, interest and rent exempt in Portugal
Foreign pensions are not covered and are taxed at normal rates
Lasts 10 years, with no renewal
Only for people who were not Portuguese tax resident in the previous 5 years
Only for qualifying roles: university teaching and research, certified start-ups, R&D staff, and highly qualified jobs in exporting companies

If you're a retiree, landlord, general business owner or investor, IFICI almost certainly doesn't apply. That's the main reason Cyprus now comes out ahead for most British movers.

Myth

Myth: "IFICI is just NHR with a new name"

Reality

It isn't. NHR was open to almost anyone who hadn't been Portuguese tax resident for 5 years, including retirees. IFICI only covers qualifying professions, such as research, certified start-ups and highly qualified roles in exporting companies, and it doesn't cover foreign pensions. A British retiree who planned an NHR move to the Algarve gets no special regime in Portugal in 2026. In Cyprus, non-dom status is open to anyone not born or domiciled in Cyprus, for up to 17 years.

Cyprus vs Portugal: tax compared

Cyprus taxes less at almost every income level. Its 2026 bands start with €22,000 at 0%, then 20%, 25% and 30%, reaching 35% above €72,000. Portugal's 2026 bands start at 12.5% and climb through nine steps to 48% above €86,634, with a solidarity surcharge of 2.5% above €80,000 and 5% above €250,000, according to PwC.

Couple with a bottle of wine on a winery terrace overlooking vineyards near Kathikas — A winery terrace in the Kathikas hills.

The gap is widest on investment income:

Income type	Cyprus (non-dom resident)	Portugal (standard resident)
Dividends	0% defence tax + 2.65% GeSY	28%
Bank and bond interest	0% defence tax + 2.65% GeSY	28%
Gains on shares and funds	0%	28%
Foreign pension	5% above €5,000, or normal rates	Normal rates, 12.5%–48%
UK government service pension	Usually taxed only in the UK	Usually taxed only in the UK

Take £20,000 of UK dividends. A Cyprus non-dom pays about 2.65% GeSY, around £530. A standard Portuguese resident pays 28%, or £5,600.

Cyprus also scores on inheritance. It has no inheritance, gift or wealth tax. Portugal charges no inheritance tax between spouses and direct family but applies 10% stamp duty on assets passing to others.

Our non-dom guide explains who qualifies, and UK pensions in Cyprus covers the 5% option.

Visas and residence for UK citizens

UK citizens are non-EU nationals in both countries, so both need a visa or permit for long stays. Portugal is easier on income; Cyprus is cheaper for permanent residence by investment.

Portugal

D7 (passive income): at least €920 a month in 2026 (the Portuguese minimum wage), plus 50% for a spouse and 30% per child. Pensions, rent and dividends count.
D8 (digital nomad): at least €3,680 a month, four times the minimum wage, from remote work for clients or an employer abroad.
Golden Visa: property no longer qualifies. The main route now is a €500,000 investment in qualifying funds.

Cyprus

Digital nomad visa: €3,500 a month net; 1 year plus up to 2 more.
Category F: for people living on foreign income; official minimum €9,568 a year, plus €4,613 per dependant.
Permanent residence by investment: €300,000 in a new home or other qualifying investment plus €50,000 a year of income; €500 fee; around 2 months to decide.

Older couple walking through the narrow old streets of Ktima in the morning — Morning in the old streets of Ktima, Paphos.

The bottom line: on a small pension, Portugal's D7 is easier to qualify for. On a comfortable pension with savings, Cyprus is cheaper to live in tax-wise and gives you permanent residence without the fund investment.

Free introduction

Moving from NHR plans to Cyprus?

Tell us about your pension, dividends and timing. We introduce you to a vetted Cyprus tax adviser who can model your Cyprus tax bill against your Portugal plan. The introduction is free.

Free introduction, no obligation
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Fees quoted up front

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Cost of living: Cyprus vs Portugal

Country averages from Numbeo, updated September 2026, with Paphos for reference.

Item	Cyprus	Paphos	Portugal
Single person, a month before rent	€857	€818	€677
Family of four, a month before rent	€3,067	€2,932	€2,445
One-bed flat, city centre	€884	€981	€919
One-bed flat, outside centre	€738	€875	€723
Three-bed flat, city centre	€1,627	€1,863	€1,553
Basic utilities, 85 m² flat	€187	€171	€121
Cheap restaurant meal	€15	€15	€12
Dinner for two, mid-range	€60	€50	€45

Numbeo is crowd-sourced. Portugal's averages mix Lisbon and Porto with cheaper inland towns; Lisbon rents run well above the average. Checked September 2026.

Is Portugal cheaper than Cyprus?

Yes, on day-to-day costs. Numbeo's September 2026 figures put a single person's monthly spending before rent at €677 in Portugal against €857 in Cyprus, about 20% less. Eating out and utilities are cheaper in Portugal too.

Rents are closer. Portugal's national one-bed averages (€723–€919) sit near Cyprus's (€738–€884), but Lisbon and the popular Algarve towns cost more than the average. Paphos sits a little above the Cyprus average because of demand from British movers.

Here's the catch: for a pensioner or investor, tax usually outweighs the price of groceries. A single retiree with €40,000 of UK private pension pays about €2,810 a year in Cyprus and about €8,150 in Portugal (worked through in the table below). That €5,340 gap is more than a year's difference in grocery bills for most people. Run your numbers before you choose the cheaper supermarket.

Worked examples: what three British movers pay

2026 rules for a standard tax resident in each country. Cyprus figures assume non-dom status. Illustrations only; your adviser will refine them.

Scenario	Cyprus	Portugal
€40,000 UK private pension a year, single	€1,750 tax (5% over €5,000) + €1,060 GeSY = €2,810	€35,413 taxable after the €4,587 pension deduction, 34.9% band less €4,209.94 = about €8,150
€100,000 gain on selling shares or funds	€0	28% = €28,000
€500,000 left to a niece or nephew (not direct family)	€0 (no inheritance tax)	10% stamp duty = €50,000

Portugal bands and deductible amounts: PwC Worldwide Tax Summaries (2026). The €4,587 pension deduction is the figure cross-border wealth advisers cite. UK inheritance tax may still apply in both countries; see below.

UK inheritance tax follows you to both countries

Moving to Cyprus or Portugal doesn't take you out of UK inheritance tax straight away. Since 6 April 2025, UK inheritance tax depends on residence, not domicile. You're a long-term UK resident if you were UK tax resident for 10 or more of the previous 20 tax years.

Rock-cut Doric columns at the Tombs of the Kings near Paphos in morning light — The Tombs of the Kings, on the edge of Kato Paphos.

After you leave, that status lasts for up to 10 tax years, and less if you lived in the UK for a shorter time. HMRC's own example: someone who lived in the UK for 14 years stops being a long-term resident 4 years after leaving. Until then, your worldwide estate stays inside UK inheritance tax, whether you live in Paphos or the Algarve.

Wealth advisers also flag that unused pension funds are due to count towards UK inheritance tax from 6 April 2027. What this means for you: Cyprus's zero inheritance tax only fully helps once the UK tail runs out, so plan your will and pensions with a UK–Cyprus tax adviser before you move. Our UK to Cyprus tax planning hub covers the exit steps.

Lifestyle and practical differences

Climate. Cyprus is hotter and drier, with Paphos averaging 30°C highs in August and almost no summer rain. Portugal's Atlantic coast has milder summers, greener winters and a colder sea.

Language. English is spoken by about 75% of people in Cyprus, according to Invest Cyprus, and most admin in Paphos can be done in English. In Portugal you'll need Portuguese sooner, especially outside Lisbon, Porto and the Algarve.

Legal system. Cyprus law is based on English common law, so contracts and company structures feel familiar. Portugal uses a civil law system.

Driving. Cyprus drives on the left with UK-style plugs. Portugal drives on the right.

Travel. Lisbon and Faro are about 2.5–3 hours from London; Paphos is about 4–5. Portugal is in Schengen, so you can drive to Spain. Cyprus is an island outside Schengen, and time there doesn't count towards your Schengen 90 days.

Tala village square in the evening with café tables and the lit church — Tala's village square on a summer evening.

Community. Both have large British communities: the Algarve in Portugal, and Paphos, Peyia and Tala in Cyprus.

Which wins for your situation?

Cyprus usually wins. The 5% option on foreign pensions above €5,000 beats Portugal's progressive rates for anyone with a decent private pension. Category F or the investment route gives you residence.

Portugal is the better fit only if your income is small enough that the D7's €920 a month bar matters more than the tax.

Cyprus vs Portugal: the honest trade-offs

Where Cyprus wins

0% defence tax on dividends and interest for non-doms

5% option on foreign pension income

€22,000 tax-free band

Common-law legal system and English-language admin

Drives on the left

Where Portugal wins

Cheaper day-to-day living, per Numbeo

D7 visa needs only €920 a month

Shorter flights to the UK

Schengen membership and road links to Spain and France

IFICI's 20% flat rate for qualifying professionals

Limestone sea caves near Peyia at sunset with waves washing into the arches — The sea caves near Peyia at sunset.

Cyprus vs Portugal: your questions

For tax, usually yes. Since NHR closed, Cyprus offers 0% defence tax on dividends and interest for non-doms and a 5% option on foreign pensions. Portugal wins on living costs, flight times and its low D7 visa income bar. If Malta is also on your shortlist, see our Cyprus vs Malta comparison.

Next step

See what Cyprus would mean for your tax

Answer a few questions about your income and time abroad. The tax route finder shows which Cyprus rules apply and what to ask an adviser.

Check my tax route Compare Cyprus vs Malta

Sources checked for this page

1.PwC Worldwide Tax Summaries: Portugal taxes on personal income (reviewed 24 Jul 2026)Professional
2.PwC Worldwide Tax Summaries: Portugal income determination (28% flat rates)Professional
3.PwC Worldwide Tax Summaries: Cyprus taxes on personal incomeProfessional
4.KPMG Cyprus: Tax residency and non-dom rules (April 2026)Professional
5.The Golden Portugal: NHR 2.0 (IFICI) guide 2026Professional
6.Skybound Wealth: Cyprus vs Portugal for British expatsProfessional
7.Global Citizen Solutions: Portugal D7 visa (September 2026 update)Professional
8.Global Law Experts: Portugal D8 visa requirements 2026Professional
9.Migration Department (Cyprus): Digital nomads and family membersGovernment
10.Migration Department (Cyprus): Immigration permits (Category F and investors)Government
11.Numbeo: Cost of living in Portugal (Sept 2026)Professional
12.Numbeo: Cost of living in Cyprus (Sept 2026)Professional
13.Invest Cyprus: Living in CyprusProfessional
14.GOV.UK: Inheritance Tax if you're a long-term UK residentGovernment

Written by

Jason

Founder, Paphos Advisor

British founder who moved his family from the UK to Paphos in 2025. I write down what I learned doing it properly — the tax, the residency and the living-here detail — and introduce people to the specialists I’d use myself.

How I research and fact-check

Cyprus vs Portugal for British Expats in 2026: Tax, Visas and Living Costs

Cyprus vs Portugal at a glance

What happened to Portugal's NHR?

Cyprus vs Portugal: tax compared

Visas and residence for UK citizens

Portugal

Cyprus

Moving from NHR plans to Cyprus?

Cost of living: Cyprus vs Portugal

Is Portugal cheaper than Cyprus?

Worked examples: what three British movers pay

UK inheritance tax follows you to both countries

Lifestyle and practical differences

Which wins for your situation?

Cyprus vs Portugal: the honest trade-offs

Cyprus vs Portugal: your questions

Is Cyprus better than Portugal for British expats?

What replaced NHR in Portugal?

Can I still get NHR in Portugal in 2026?

Is it cheaper to retire in Cyprus or Portugal?

Which is easier for UK citizens, the D7 or Cyprus Category F?

Do I pay tax on my UK pension in Cyprus?

Is Cyprus in Schengen?

Do I still pay UK inheritance tax if I move to Cyprus or Portugal?

Does Portugal tax capital gains on shares for expats?

Sources checked for this page

Keep reading

Cyprus vs Portugal at a glance

What happened to Portugal's NHR?

Cyprus vs Portugal: tax compared

Visas and residence for UK citizens

Portugal

Cyprus

Moving from NHR plans to Cyprus?

Cost of living: Cyprus vs Portugal

Is Portugal cheaper than Cyprus?

Worked examples: what three British movers pay

UK inheritance tax follows you to both countries

Lifestyle and practical differences

Which wins for your situation?

Cyprus vs Portugal: the honest trade-offs

Cyprus vs Portugal: your questions

Is Cyprus better than Portugal for British expats?

What replaced NHR in Portugal?

Can I still get NHR in Portugal in 2026?

Is it cheaper to retire in Cyprus or Portugal?

Which is easier for UK citizens, the D7 or Cyprus Category F?

Do I pay tax on my UK pension in Cyprus?

Is Cyprus in Schengen?

Do I still pay UK inheritance tax if I move to Cyprus or Portugal?

Does Portugal tax capital gains on shares for expats?