Portugal NHR Successor 2025: New Tax Benefits After the Expiration of the Non-Habitual Resident Status – Alternative Optimization Strategies

Let me get straight to the point:

The end of Non-Habitual Resident Status (NHR) in Portugal as of December 31, 2023, initially unsettled many of my clients. Understandable. After all, the NHR program had opened the door for many to a tax-optimized life in Portugal.

But here’s the good news:

Portugal hasn’t simply slammed the door shut. Instead, new, targeted tax benefits have been introduced. And to be honest: For most of my clients, these are actually more attractive than the old NHR program.

Why? Because they’re more targeted and have fewer gray areas.

In this article, I’ll walk you through the specifics of the NHR successor regime. I’ll also explain which alternative tax strategies make sense now. I’m holding nothing back—neither the upsides nor the pitfalls.

You’ll be surprised at the opportunities that await in Portugal from 2025 onwards.

Yours, RMS

Portugals NHR Successor 2025: What’s Really Changing

Before we dive into the details, let me clear up a common misconception:

Many believe Portugal has scrapped all tax advantages for international residents. That’s not true.

In fact, the Portuguese government has introduced the Tax Incentive Regime (TIR). This replaces the NHR status and is in many respects even more advantageous.

An Overview of the New Tax Incentive Regime (TIR)

The TIR is specifically targeted at qualified professionals and entrepreneurs. Here are the key facts:

• Duration: 10 years
• Tax Rate: 20% on Portuguese income (instead of up to 48%)
• Foreign income: Mostly tax-exempt if taxed in the country of origin
• Requirement: At least 183 days per year in Portugal
• Qualification: Proof of certain professional qualifications

At first glance, this looks similar to the NHR—but the devil is in the details.

The Crucial Differences Compared to the Old NHR Status

The biggest difference lies in the application process and qualification requirements. While NHR was relatively easy to obtain, the TIR is more selective.

Especially interesting: The TIR offers further incentives for property investors. Those purchasing real estate from €500,000 can benefit from additional tax breaks.

Who Will Benefit Most from the New TIR

Based on my consulting experience, I see three groups who particularly profit under the TIR:

1. IT entrepreneurs and consultants: The academic qualification is usually there, and the 20% flat tax is much lower than in Germany or Austria
2. Pensioners with foreign pensions: Especially with high pensions from EU countries, there are significant tax advantages
3. Real estate investors: The combination of TIR and property purchase brings double benefits

A concrete example from my practice: A German IT consultant with €150,000 in annual turnover saves around €45,000 a year in taxes under the TIR compared to German taxation.

That’s quite a sum.

The New Portugal Tax Incentive Regimes in Detail

Let’s get practical—because the TIR isn’t the only new tax tool in Portugal.

The government has introduced a whole package of measures, targeting different groups and life situations.

The Scientific Research Activities Regime

This regime is aimed specifically at researchers and scientists. The requirements are stricter, but the advantages are even greater:

• Tax rate: 0% for the first two years, then 20%
• Duration: Up to 10 years
• Requirement: Employment in a recognized research institution
• Additional advantage: Exemption from social security in the first two years

Especially interesting for entrepreneurs: Innovative technology development may also qualify under this regime.

The Digital Nomad Visa and Its Tax Implications

Portugal introduced the Digital Nomad Visa (D7 Visa) in 2022. But beware: This is not a tax program, but a residence permit.

Still, there are tax advantages:

• Simpler application for TIR status
• Clear tax residency status
• Access to all Portuguese tax incentives

A key practical tip: Many of my clients combine the Digital Nomad Visa with TIR status. This works brilliantly but requires careful planning.

Tax Benefits for Startup Founders

Portugal aims to position itself as a startup hub. That’s why there are special rules for company founders:

The best part: The definition of “innovative activity” is intentionally broad. Even classic online businesses can qualify.

The Golden Visa Alternative: Art. 73º-A of the IRC

With the phase-out of the Golden Visa program, Portugal introduced a new rule. This targets wealthy foreigners interested in significant investment in Portugal.

The key facts:

• Minimum investment: €500,000 in Portuguese real estate or companies
• Tax advantage: Flat tax of 20% on worldwide income
• Duration: 10 years, extendable
• Residency requirement: Only 7 days per year

In effect, this is the Golden Visa’s successor—with a focus on taxation instead of residence rights.

Alternative Tax Optimization Strategies for Portugal

Now we come to the part I find particularly fascinating as a tax mentor:

The combinations.

Because Portugal’s new tax regimes don’t work in isolation. They can be smartly combined with other European tax structures.

The Portugal–Cyprus Combination

Many of my clients use this structure successfully:

1. Personal residency: Portugal (TIR status)
2. Holding company: Cyprus (12.5% corporate tax)
3. Operating company: Depending on business activity

The advantage: Dividends from the Cypriot holding are often tax-free in Portugal under the TIR—provided they are duly taxed in Cyprus.

A case from real life: An e-commerce entrepreneur with €500,000 annual profit can save about €180,000 in taxes per year compared to German taxation using this structure.

Impressive, right?

Portugal as a Base for International Tax Planning

Portugal offers a key advantage over Dubai or other tax havens: It’s an EU member state.

Specifically, this means:

• Access to EU double taxation treaties
• Recognition by German and Austrian tax authorities
• Legal certainty under EU standards
• No CRS (Common Reporting Standard) issues

The last point is especially crucial. While Dubai bank accounts are automatically reported to the German tax office, EU-internal structures usually remain trouble-free.

Using the 183-Day Rule to Your Advantage

The minimum 183-day stay per year is off-putting for many at first. But with the right planning, it becomes an advantage.

Here’s my proven 183-day strategy:

Total: 260 days in Portugal. That’s more than required and offers flexibility for unplanned travel.

Property as a Tax Optimization Tool

Portugal offers additional tax benefits for property investors. These can be cleverly integrated into your overall strategy:

• Urban Rehabilitation Tax Benefits: Up to 45% tax savings on renovations
• Rural Tourism Incentives: Additional depreciation for tourist properties
• Energy Efficiency Credits: Tax credits for sustainable upgrades

A smart approach: Use the property not just as a residence but as an income source. Many clients rent out their Portuguese property during months they are away.

The best part: Rental income is taxed at only 20% under TIR.

Cyprus vs. Dubai vs. Portugal: The Honest Comparison

Let me be straightforward:

I get this question every day: “Richard, where will I pay the least tax?”

But as I said in the introduction: That question is too narrow. It’s not just about the lowest tax rate—it’s about the best overall strategy for your life and your business.

Still, I want to give you a frank comparison.

Tax Rates at a Glance

At first glance, Dubai is the winner. But let’s look closer.

Hidden Costs and Disadvantages

Every system has its pitfalls. Here’s what to watch out for:

Dubai: Glitter with a Shadow Side

• Living costs: 40–60% higher than in Portugal
• Banking issues: Difficult to open accounts, high minimum deposits
• Substance requirements: EU is increasingly tightening regulations
• Cultural difference: Not everyone finds it suitable long-term
• CRS reporting: Automatic notification to German authorities

Cyprus: Solid, but Complex

• Complex structures needed: Without a holding, often not optimal
• Substance requirements: Office and local employees required
• Limited infrastructure: Smaller economy, fewer opportunities
• EU pressure: New restrictions constantly announced

Portugal: Transparent and Reliable

• 183-day rule: You must tie yourself to one place
• EU-level taxation: Higher than zero-tax countries
• Bureaucracy: Typical southern European delays
• Proof of qualification: Not everyone gets TIR status

My Honest Assessment for Different Entrepreneur Types

After hundreds of consultations, here are my rules of thumb:

Portugal is ideal for:

• Entrepreneurs with an EU focus
• Families with children
• People who value legal certainty
• Long-term tax planners
• Real estate investors

Dubai is better for:

• Very high incomes (€500k+ per year)
• Short to medium-term strategies
• Trade with Middle East/Asia
• Entrepreneurs without family ties
• Risk-hungry optimizers

Cyprus works for:

• Holding structures
• International service providers
• Combinations with other EU countries
• Medium incomes (€100k–300k per year)
• EU citizens with flexible structures

A real-life example: A German software developer with €200,000 annual income and a family chose Portugal. Reason: “The €40,000 tax saving is nice, but the quality of life in Lisbon is priceless.”

That says it all.

Step by Step: How to Optimize Your Tax Strategy for 2025

Enough theory. Let’s get practical.

Here’s my proven 6-step method for successful tax optimization with Portugal as your base.

Step 1: Assess Your Current Tax Burden

Before you relocate anywhere, you need to know your starting point. Calculate your current total tax burden:

• Income tax + solidarity surcharge
• Business tax (if you run a business)
• Social security contributions
• VAT (where applicable)
• Church tax (if applicable)

Example: A consultant from Munich with €150,000 profit pays approximately:

Almost half your earnings go to the state. That’s the benchmark for any alternatives.

Step 2: Check Your Eligibility for TIR Status

Not everyone qualifies for TIR status. Check in advance that you meet the requirements:

1. Academic degree: Bachelor’s or higher in a relevant field
2. Professional experience: At least 3 years in a qualifying role
3. Proof of income: Sufficient financial means
4. Clean criminal record: Certificate of good conduct required
5. Medical certificate: Health check

The trick: Prepare all documents before moving. It will save you months of processing time.

Step 3: Adapt Your Business Structure

Your current German GmbH or sole proprietorship may not be optimally suited for a Portugal strategy. Typical adjustments include:

Option A: Found a Portuguese Company

• Unipessoal por Quotas (equivalent to a German GmbH)
• Formation costs: around €2,500
• Taxation: 17% (startups) or 21% (regular)
• Advantage: Full relocation to Portugal

Option B: Holding Structure

• Keep German company operational
• Portuguese holding acquires shares
• Dividends taxed in Portugal at 20%
• Advantage: Flexibility for future changes

Option C: International Structure

• Operational company in Portugal
• Holding in Cyprus or another EU country
• Optimization via double tax treaties
• Advantage: Maximum tax efficiency

Which option is best depends on your business model. Pure service providers usually go for A; product sellers often favor C.

Step 4: Strategically Plan Your Change of Residency

Changing residency is more than moving—it’s a fiscal act with far-reaching consequences.

My checklist for perfect timing:

1. Use the year-end: Moving at 12/31 avoids complicated year splitting
2. Mind the fiscal year: If your financial year differs, plan accordingly
3. Observe lock-in periods: Spend at least 183 days in Portugal
4. Deregister in Germany: Officially notify all authorities
5. Register in Portugal: Apply for a NIF number and social security

One critical point: Many overlook Germany’s exit (emigration) tax. With more than a 1% stake in a company, up to 26% tax may apply to hidden reserves.

But there are solutions.

Step 5: Restructure Banking and Asset Management

Moving to Portugal changes your banking requirements, too. Important considerations:

• Portuguese bank account: For local expenses and TIR proof
• International private banking: For larger assets
• Multi-currency accounts: For cross-border business
• Credit cards: Adapt to new tax residency

Pro tip: Open your Portuguese account before officially moving. It signals your serious intent to the authorities.

Step 6: Ensure Ongoing Compliance

TIR status is not autopilot; you must continuously meet requirements:

My tip: Invest in a good Portuguese tax advisor. Costs of €2,000–5,000 a year are money well spent if it keeps your TIR status safe.

Common Mistakes to Avoid with Portugals NHR Successor

After 200+ Portugal consultations, I know the typical pitfalls. Here are the most frequent mistakes—and how to sidestep them.

Mistake 1: Underestimating the 183-Day Rule

Many think, “183 days? Easy.” Then reality hits.

The most common problems:

• Family obligations: Suddenly a parent falls ill
• Business emergencies: Important meetings in Germany
• Incorrect calculation: Arrival and departure days miscounted
• Poor documentation: No proof for days spent in Portugal

My solution: Keep a digital stay log. There are apps that automatically track your stay days. That’s gold in any dispute with the authorities.

Mistake 2: Misjudging the Tax Savings

I often hear: “In Portugal I’ll pay only 20% tax!” That’s only partly true.

The reality is more complex:

Many overlook social security—it comes on top of the 20% tax.

Mistake 3: Incomplete Business Structure

Many optimize only on a personal level and forget their company structure. That can be costly.

Typical oversights:

• German GmbH left unchanged
• Permanent establishment unintentionally created in Germany
• Substance requirements ignored
• Double tax treaties misapplied

Example from practice: A client kept his German GmbH unchanged. Result: The German tax office didn’t recognize the Portugal relocation, as “economic activity” was still based in Germany.

The solution: A real transfer of business activity to Portugal.

Mistake 4: Poor Recordkeeping

Portuguese authorities are thorough. Without proper documentation, your TIR status can become problematic quickly.

What you must document without fail:

1. Days spent in Portugal: Complete proof for 183+ days
2. Professional activity: Proof of qualifying work
3. Income: Full record of all income types
4. Expenses: Proof of living costs in Portugal
5. Contracts: Rental contracts, employment contracts, corporate agreements

My tip: Scan all documents and store them in the cloud. That way you always have access in case of surprises from the authorities.

Mistake 5: Missing an Exit Strategy

What happens if you want to leave Portugal? Many forget this—and pay double later.

Key points for your exit strategy:

• Lock-in periods: Hold TIR status for at least 5 years
• Plan B: Make corporate structures flexible
• Tax consequences: Exit tax applies even when leaving Portugal
• Property: Strategically plan sale or rental

For example: A client sold his Portugal structure after three years. Problem: He missed the holding period for capital gains and had to pay 28% tax on the property sale.

With better planning, it would have been just 14%.

Mistake 6: Neglecting German Obligations

Moving to Portugal doesn’t automatically end all German tax obligations. Common issues:

• Limited tax liability: Some income remains taxable in Germany
• Permanent establishment: Unintended home office in Germany
• Exit tax: With substantial corporate holdings
• Mandatory notifications: Various reporting requirements still apply

My recommendation: Have your last German tax assessment reviewed by an expert. The German tax office can come back with questions even years later.

Better to be prepared.

Frequently Asked Questions about Portugal’s NHR Successor

Can I apply for TIR status retroactively?

No, you can only apply for TIR status prospectively. You must submit your application before starting your activity in Portugal. Retroactive applications for past periods are not possible.

What happens to my German health insurance?

If you genuinely relocate to Portugal, your German health insurance obligation ends. You must obtain health insurance in Portugal. Privately insured individuals can often keep a dormant membership. EU health insurance is valid in both countries.

How does TIR status affect German property?

German real estate remains subject to German taxation. Rental income is taxable in Germany. However, you can usually exempt this income from Portuguese tax to avoid double taxation.

Can I use TIR status as a retiree?

Yes, but only if you engage in a qualifying professional activity. Pure pension income does not entitle you to TIR status. Many retirees therefore work as consultants or in other qualifying roles to obtain the status.

How high are the ongoing costs for TIR status?

The direct costs are low (about €200 application fee). Indirect costs include tax advice (€2,000–5,000/year), bookkeeping (€1,000–3,000/year), and possibly legal fees for more complex structures.

What happens if I lose TIR status?

If you lose TIR status, you fall under normal Portuguese taxation (up to 48% progressive). Already used benefits do not have to be repaid. The important thing is to continuously meet the requirements.

Can I combine TIR status with other EU programs?

Yes, with certain restrictions. You can only be a tax resident in one EU country at a time. However, combinations with holding structures in other EU countries are possible and often advantageous.

How do I prove 183 days in Portugal?

Collect all evidence: flight tickets, hotel bills, rental contracts, credit card statements, fuel receipts. Keep a digital travel diary. Border stamps are recorded automatically. Apps can use GPS data for documentation.

Which language is required for official documents?

All official documents must be in Portuguese or accompanied by a certified translation. German documents require an apostille and certified translation. Allow 4–6 weeks for document preparation.

Can TIR status be revoked?

Yes—if requirements are not met, the status can be withdrawn. Typical reasons are falling below the 183-day rule, loss of professional qualification, providing false information in the application, or repeated reporting violations.