Portugal vs UK: The European Tax League, Edition 5

The European Tax League — a series comparing Portugal's IFICI expat tax regime against the best equivalent regime in one European country. Same rules every time: €500K salary, best available expat regime, no cherry-picking.

The crown jewel of British tax planning is gone. What they replaced it with is... underwhelming.

For over two centuries, the UK's Non-Dom regime was the envy of the world. Live in London. Keep your foreign wealth offshore. Pay tax on nothing you didn't bring in. Hedge fund managers, tech founders, Indian steel magnates. London became the default home for the world's wealthiest internationals. Smart policy. It worked.

Then they abolished it. On 6 April 2025. Gone.

What replaced it is the FIG regime — Foreign Income and Gains. 4 years. Foreign income only. After that, 45% on everything worldwide. 4 years. That's it. Portugal gives you 10.

Round 1: What the UK brings to the table

The FIG regime is the UK's answer to losing the Non-Dom. Here's what it actually offers — and where it falls apart.

🇬🇧 London — FIG regime at a glance:

• 0% on foreign income for 4 years only

• 45% top rate on UK source income from day 1. No flat rate. No relief. Nothing.

• Must have been non-UK resident for 10 consecutive years prior

• Year 5 onwards: full worldwide taxation at 45%

• Duration: 4 years. Then the most expensive city in Europe takes everything.

Two things worth understanding clearly:

The 0% only covers foreign income. Your UK salary — what you earn in London — is taxed at 45% from day one. Every single year. There is no flat rate for UK earnings. This is fundamentally different from IFICI, which gives you a 20% ceiling on Portuguese source income too.

The clock is brutally short. 4 years goes fast. After that, the UK taxes everything worldwide at 45%. No extension. No renewal. No grace period.

Round 2: What Portugal brings to the table

🇵🇹 Lisbon — IFICI at a glance:

• Exemption from Portuguese tax on most categories of qualifying foreign-source income for 10 years (except pensions and blacklisted jurisdictions, subject to applicable treaties)

• 20% flat on qualifying Portuguese source income. No matter your salary.

• No salary cap on the 20% rate for qualifying income

• 10 years. 2.5x longer than the FIG.

• Formally status-based — you hold it as a taxpayer — though you must continue performing qualifying activities for eligible entities

• No wealth tax (AIMI applies to high-value real estate)

The structural difference is stark. Portugal gives you a 20% ceiling on everything you earn in Portugal, plus exemptions on qualifying foreign income, for 10 years. The UK gives you 0% on foreign income only, for 4 years, while taxing your UK earnings at 45% throughout.

For a working founder or senior exec earning their salary in the country they live in, the FIG regime offers almost nothing compared to IFICI.

Round 3: The numbers

Illustrative figures based on a stylised €500K salary, all income qualifying under each regime's best available treatment. Individual outcomes depend on income structure, personal circumstances, and applicable rules.

On a €500K salary:

· London (FIG, yr 1-4) · London (yr 5+) · Lisbon (IFICI)

Rate on foreign income · 0% · 45% · Exempt (qualifying categories)

Rate on UK/PT source income · 45% · 45% · 20% flat

Illustrative take-home · ~€275K-€300K · ~€275K · ~€400K+

Duration · 4 years · Indefinite · 10 years

Illustrative gap: up to ~€125K-€225K per year in favour of Portugal — from day one.

The year 5 cliff

After 4 years under FIG, everything changes overnight. Your €500K salary — wherever it comes from — is suddenly taxed at full UK rates. 45% above £125,140. No transition. No extension. No relief.

After 4 years in Lisbon under IFICI, nothing changes. You still have 6 more years of 20% flat rate plus exemptions on qualifying foreign income.

The Non-Dom gave you decades. The FIG gives you 4 years and a cliff.

The verdict

The UK tried. The FIG regime is better than nothing. But replacing a regime that gave indefinite offshore shelter with one that lasts 4 years and doesn't even touch your domestic income is not a competitive offering for the founders and senior executives who made London great.

The UK didn't just lose the Non-Dom. They replaced a Rolls-Royce with a bicycle and called it progress.

Portugal wins Edition 5. Clearly.

The running table

# · Country · Take-home on €500K · Regime · Duration · Notes

1 · PORTUGAL · ~€400K+ · IFICI · 10 yrs · Exemption on most qualifying foreign income

2 · FRANCE · ~€300K-€330K · Impatriate Regime · 8 yrs · 50% exemption cap, employer-tied

3 · NETHERLANDS · ~€330K · 30 Ruling · 5 yrs · €233K salary base cap

4 · SWEDEN · ~€285K-€305K · Expertskatt · 7 yrs · SEK 88,800/mo eligibility floor

5 · UK · ~€275K · FIG regime · 4 yrs foreign income only · 45% on UK source from day 1

6 · GERMANY · ~€262K · Standard progressive PIT · No expat regime · 47.5% top rate

Next match: Portugal vs Switzerland 🇨🇭 — The lump sum tax. A different beast entirely.

Is IFICI right for you?

IFICI eligibility depends on your professional profile, residency history, income structure, and qualifying activity. The regime is powerful — but it requires proper setup to access the full benefit.

At Expatico, we help founders and senior hires assess whether they qualify, structure their move to Portugal correctly, and access the full range of Portuguese incentives — from IFICI applications and company incorporation to talent sourcing and grant access.

👉 Register on expatico.eu to find out if you qualify and connect with our team.

📖 Read more editions of The European Tax League at expatico.eu/blog

*All figures are illustrative based on standard assumptions for qualifying employment income under each regime's best available treatment. Tax outcomes depend on individual circumstances, income structure, applicable treaties, and anti-abuse rules. This is not tax advice — consult a qualified advisor before making relocation decisions.*