Portugal NHR Successor 2025: New Tax Benefits and Smart Alternatives for International Entrepreneurs

Let me get straight to the truth, even if some don’t want to hear it:

The golden age of Portugals NHR (Non-Habitual Resident) regime is over. Since January 2024, new arrivals can no longer apply for this status. But here’s the thing: this does not mean an end to tax optimization in Portugal.

I have business owners reaching out to me daily, asking desperately: “Richard, what do we do now? Is Portugal still attractive?”

My clear answer: Yes—just differently than before.

Portugal understands it needs to remain attractive even without the NHR program. That’s why the Portuguese have created new tax advantages, which can even be better than the old NHR in some cases. I’ll also show you alternative strategies that go far beyond Portugal’s borders.

As someone who has spent years building international tax structures and has witnessed Portugal’s developments up close, I’ll tell you honestly: What still works? What’s a waste of time? And which new opportunities are opening up right now?

Ready for the whole truth on Portugal 2025?

Yours, RMS

Portugal NHR 2025: What’s Really Changing for Expats

Before we jump into alternatives, we need to clarify what actually happened. The NHR program (Non-Habitual Resident—a special tax status for new residents) was Portugal’s trump card in the global tax competition.

The End of an Era: Why Portugal Ended the NHR Status

The NHR status allowed you to receive certain foreign income tax-free for ten years. It also offered reduced rates on Portuguese-source income for specific professions.

The issue from the Portuguese perspective: too much lost tax revenue, with too little local economic benefit. Many NHR beneficiaries lived in Portugal but ran their businesses from abroad.

Hence the final cut-off on January 1st, 2024.

Who Is Affected by the End of the NHR?

This is crucial for your planning:

• Existing NHR holders: You keep your status for the full 10-year period.
• Applications by 12/31/2023: Processed under the old rules.
• New applicants from 2024 onwards: Must use the new regulations.

So: If you already hold NHR status, you’re safe to continue. For everyone else, a new game begins now.

The Transition Phase: What’s Happening in Portugal Now?

Portugal is currently realigning its tax regime. The government still wants to attract international talent, but in a more targeted way. That’s why new programs are being set up—some of which are even more attractive than the old NHR.

I’m also seeing an interesting trend: Many traditional NHR users are considering alternative strategies. This is opening up new opportunities for clever tax optimization.

Portugals New Tax Benefits After NHR Ends

This is where it gets interesting. Portugal hasn’t just scrapped the NHR and called it quits—instead, the Portuguese have rolled out new tax incentives that can, in some cases, be even better.

The New Portugal Tax Incentive Scheme: The NHR Alternative

Since 2024, there’s a new incentive scheme for certain professions and activities. The great thing about it: it’s more targeted and, in some key areas, even more generous than the old NHR.

The main highlights:

D7 Visa Optimization: For Digital Nomads and Retirees

The D7 visa (also known as the Passive Income Visa) is Portugal’s answer to the rising number of digital nomads and financially independent individuals.

This is how it works in practice:

1. You show passive income of at least €760 per month
2. This can come from rental, dividends, or online businesses
3. You receive a residence permit and become a tax resident
4. Foreign income is only taxed in Portugal if transferred into the country

The key: With smart structuring, you’re only taxed on the funds you actually need in Portugal.

Golden Visa 2.0: The Investment Alternative

Portugal’s Golden Visa program has been reformed, not abolished. The new rules focus on:

• Venture capital funds: Minimum investment €500,000
• Business formation: Create 10 jobs
• Cultural projects: €250,000 toward art or heritage protection
• Research: €500,000 in Portuguese research institutes

The interesting detail: These investments can be tax-optimized and provide extra deduction opportunities.

The Crypto-Friendly Law: Portugal’s Digital Push

Portugal has introduced one of Europe’s most crypto-friendly legal frameworks. Private cryptocurrency gains are generally tax-free—as long as you’re not trading commercially.

What this means for you:

• Long-term crypto investments remain tax-free
• DeFi staking is not currently taxed
• NFT trading is classified as art trading (more favorable tax treatment)

But caution: The line between private asset management and business trading is a fine one. You’ll need a clear strategy here.

Alternative Optimization Strategies: When Portugal Isn’t Enough

Now we’re getting to the really interesting part. Let’s be honest—Portugal was never the only option for international tax optimization. The end of NHR opens up room for strategies that might work even better.

The Multi-Jurisdiction Strategy: Tax Diversification

Why put all your eggs in one basket? Smart entrepreneurs also diversify their tax risks. That means: channeling different business activities through different countries for optimal taxation.

A practical example from my consulting practice:

Thomas, an e-commerce entrepreneur, holds his IP rights in Cyprus (2.5% IP box), his fulfillment operations in Estonia (20% on distributed profits), and lives in Portugal (low living costs). Total tax burden: under 8%.

Dubai as a Portugal Alternative: The New Tax Oasis

Dubai introduced a 9% corporate tax in 2023—and, paradoxically, the country has become even more attractive as a result. Why? Because the structure is now internationally recognized and OECD-compliant.

Dubai at a glance:

The catch: Dubai is expensive and not suited to every lifestyle. Plus, you must spend at least 90 days a year in the country.

The Cyprus Strategy: EU Advantages

Cyprus is currently my dark horse for many entrepreneurs. It offers EU advantages with a Mediterranean lifestyle and attractive taxation.

Cyprus’s main advantages:

• IP Box Regime: 2.5% tax on licensing revenue
• Holding structure: 0% withholding tax on dividends
• Non-dom status: No tax on foreign capital gains
• EU passport: Full access to the European market

Especially for software entrepreneurs and content creators, Cyprus is often even more attractive than Portugal.

The Estonia Option: Reinvest, Not Tax

Estonia’s tax regime is revolutionary: You only pay tax when profits are distributed. As long as you re-invest, gains remain tax-free.

This makes Estonia perfect for:

• Growth companies reinvesting heavily
• Tech startups in expansion mode
• E-residency programs for digital nomads

The key advantage: You can grow tax-free for years and only pay tax when you exit or take money out.

The Switzerland-Singapore Strategy: Premium Optimization

For entrepreneurs with substantial income, a combination of Swiss residence and a Singapore holding company can be optimal. This strategy, however, requires annual earnings over €500,000.

Why does this combination work?

1. Swiss lump-sum taxation for foreign-source income
2. Singapore as a holding center for Asian markets
3. Optimal double tax treaties
4. Maximum legal and political security

Step-by-Step: How to Position Yourself for 2025

Enough theory—let’s get practical. Here’s how you can develop your own personal optimization strategy.

Phase 1: Analyse Your Current Situation and Define Your Goals

Before you submit any applications, you need to answer these questions honestly:

1. Income situation: How much do you earn per year, and from which sources?
2. Business model: Can you work location-independently?
3. Lifestyle: Where do you actually want to live?
4. Compliance readiness: How complex are you willing for your structure to be?
5. Timeline: Are you planning short-term or long-term?

A practical evaluation matrix:

Phase 2: Select and Prepare Your Jurisdictions

Based on your analysis, choose your target countries. Always evaluate at least three options in parallel—laws change, so you need alternatives.

Your country-selection checklist:

• Tax benefits: What are the actual savings?
• Legal certainty: How stable is the tax system?
• Quality of life: Can you actually live there?
• Business environment: Does the country support your business model?
• Exit strategies: Can you leave the structure if needed?

Phase 3: Structuring and Implementing

Now it gets technical—but don’t worry, I’ll keep it practical.

The typical implementation process:

1. Company formation: Usually 2-4 weeks
2. Bank account opening: 4-8 weeks (often the longest step)
3. Residency application: 3-6 months
4. Tax registration: 2-4 weeks
5. Migrating existing contracts: 2-3 months

Critical success factor: the right order. Many entrepreneurs make the mistake of moving first, then building the structure. That leads to unnecessary tax payments.

Phase 4: Optimization and Monitoring

An international tax structure is not a “set-and-forget” system. You need to review and optimize regularly as circumstances change.

Your annual review should cover:

• Checking tax compliance
• Adapting to legal changes
• Optimizing cash flow structure
• Evaluating alternative jurisdictions
• Exit planning for regulatory changes

Remember: flexibility is more important than the theoretically perfect solution. The best structure is the one you can sustainably implement long-term.

Portugal vs. Dubai vs. Cyprus: The Honest Tax Residency Comparison

Let’s be frank. Here’s how the three currently most attractive alternatives to Germany’s high taxes stack up—no sugar-coating.

Portugal: The Lifestyle Champion—with Drawbacks

The reality: Portugal remains a fantastic place to live. The climate, the culture, the cost of living—it’s all spot on. But tax-wise, it’s no longer the goldmine it once was.

Portugal Scorecard:

Ideal for: Entrepreneurs who value lifestyle over maximum tax savings and want to remain in Europe long-term.

Dubai: The Business Powerhouse—with High Living Costs

Dubai is superb from a tax perspective—but you pay for it with high living costs and the challenge of cultural adaptation.

The hidden costs: What many overlook:

• Housing: €3,000–8,000 per month for good locations
• Car: Essential, public transit is limited
• Social costs: Expat community is pricey
• Family: International schools cost €15,000–30,000 per year

Dubai Scorecard:

Ideal for: Entrepreneurs with high incomes (€300,000+), focused on business networking and tax efficiency.

Cyprus: The Underrated EU Insider Tip

For me, Cyprus is currently the best compromise between tax optimization and European lifestyle. But there are pitfalls here too.

How Cyprus works:

Cyprus’s tax system is complex but powerful. You can choose between various tax regimes:

1. Standard resident: Ordinary Cypriot taxation
2. Non-dom status: No tax on foreign dividends and interest
3. IP box regime: 2.5% on intellectual property
4. Holding structure: 0% withholding for EU-wide activities

Cyprus Scorecard:

Ideal for: Tech entrepreneurs, content creators, and anyone who wants to combine EU benefits with tax efficiency.

My Honest Recommendation Based on Your Profile

After over 200 consultations in the past two years, here’s the pattern I’m seeing:

Up to €150,000 annual income: Portugal still remains the top choice for lifestyle and simplicity.

€150,000–500,000: Cyprus usually offers the best overall package of taxes, lifestyle, and EU benefits.

€500,000+: Dubai or multi-jurisdiction strategies become interesting.

But beware: These rules of thumb only apply to “standard” business models. Software licensing, crypto trading, or international consulting can shift the calculation entirely.

Practical Implementation: Your Next Steps

Enough theory; here’s your action plan for the next 90 days.

The First 30 Days: Preparation and Strategic Decision

Weeks 1–2: Gather Documents

Before you do anything else, assemble these documents:

• Tax assessments from the last 3 years
• Corporate registry excerpts for all your businesses
• Proof of foreign income
• Current profit & loss statements
• Overview of your assets

Why is this important? Because every sound consultancy and every visa application will need this information. Plus, you’ll only discover your actual optimization potential with the full overview.

Weeks 3–4: Strategic Decision

Now it’s time for the basic decision: single country or multi-jurisdiction? Be honest:

1. Can I spend at least 183 days per year in another country?
2. Am I willing to adapt my business model?
3. How important is proximity to Germany/Austria/Switzerland?
4. What is my annual budget for setup and ongoing costs?

Days 31–60: Setup and Applications

Stick to the critical order:

This is where most entrepreneurs make expensive mistakes. The right sequence is crucial:

1. First: Plan country structure and set up your company
2. Then: Open the bank account in your target region
3. Next: Gradually shift business operations
4. Finally: Deregister your German residence (if desired)

The most common mistake: moving first, then building the structure. This can cost you tens of thousands.

Be strategic with your choice of bank:

Selecting the right bank is often the bottleneck. My experience from over 100 account openings:

Days 61–90: Migration and Initial Optimizations

Smartly relocating your business:

This is the hands-on part. You need to migrate your existing clients and contracts into the new structure. It won’t happen overnight, but with the right system:

• New clients: Invoice through your new company from now on
• Existing contracts: Gradually transfer or let expire
• Recurring revenue: Migrate at the earliest opportunity
• Asset transfer: Move assets to the new jurisdiction in a tax-efficient way

Compliance from Day 1:

Never underestimate the effort for correct bookkeeping and tax filings. Your new jurisdiction will have different requirements:

1. Engage a local tax advisor (yes, this is necessary)
2. Adapt your accounting software to local rules
3. Implement quarterly reviews
4. Document all foreign activities

Common Pitfalls and How to Avoid Them

My eight years of consulting have shown me the typical mistakes. Here are the top 5:

1. Substance issues: You need real business activity in-country
2. Timing errors: Moving too early or too late
3. Documentation: Insufficient records for tax audits
4. Banking bottlenecks: Underestimating the time for opening accounts
5. Exit strategy: No plan for the event of rule changes

The most important advice: Get professional help implementing these steps. An initial consultation may cost money, but mistakes cost much more.

Frequently Asked Questions

Is tax optimization legal?

Yes, tax optimization is completely legal as long as you comply with all laws and create genuine economic substance. It’s crucial to distinguish between legal tax optimization and illegal tax evasion. With proper structuring and diligent declaration of all income, you remain fully within the law.

Can I reverse my Portugal NHR alternative?

Yes, all strategies outlined here are basically reversible. However, you should plan exit clauses from the outset. Some structures incur exit costs, and tax implications must be considered. Good advice covers the exit strategy from day one.

How much does it cost to set up an international tax structure?

Costs vary widely, depending on complexity. Simple structures (e.g., Portugal D7) cost €5,000–15,000 to set up. Complex multi-jurisdiction strategies can run €25,000–50,000. Ongoing costs for tax advice and compliance add €3,000–15,000 per year.

Do I have to give up my German residence?

Not necessarily. There are various models: complete emigration, limited tax liability, or dual-residency structures. The best solution depends on your business model and personal circumstances. It’s vital to ensure correct tax classification in all relevant countries.

How long does it take to implement a Portugal alternative?

Comprehensive restructuring typically takes 4–8 months. Forming a company is quick (2–4 weeks), but bank accounts, visa applications, and business migrations take time. Allow at least six months for a stress-free process.

What happens if laws change in my target region?

That’s why flexibility is essential. Smart tax structures always include Plan B options. You should also review your structure annually and adapt if needed. Most changes come with advance warning, so timely adjustments are possible.

Can I benefit from Portugal alternatives even with lower income?

Yes, but make sure the cost-benefit equation makes sense. For annual income under €75,000, setup costs are often disproportionately high. Simpler solutions like the Estonia e-residency program or the Portugal D7 visa may be more practical in these cases.

How does health insurance work with international structures?

This is an important point that’s often overlooked. EU citizens can use their European Health Insurance Card. For non-EU countries such as Dubai, you’ll need local or international health insurance. Factor these costs into your overall calculations.

Do my clients need to know I’m based abroad?

Legally, you must list your legal address and company details correctly. Many entrepreneurs continue using German phone numbers and work project-based with German partners. Being transparent with key clients often increases trust.

What about German social security?

If you leave Germany entirely, your social security obligations generally end too. You can, however, make voluntary contributions or arrange private retirement plans. Many expats use international insurance solutions or join their new country’s social system.