Portugal NHR successor 2025: New tax benefits and smart alternatives for international entrepreneurs

Let me start directly with a truth many don’t want to hear:

The golden age of Portugal’s NHR (Non-Habitual Resident) is over. Since January 2024, newcomers can no longer register for this status. But here’s the kicker: This does not signal the end of tax optimization in Portugal.

Every day I hear from entrepreneurs desperately writing to me: “Richard, what do we do now? Is Portugal still interesting?”

My clear answer: Yes, but differently from before.

Portugal realized it needs to remain attractive even without the NHR. So, the Portuguese have developed new tax benefits—some that can even be better than the old NHR. Plus, today I’ll show you alternative strategies that go far beyond Portugal.

As someone who has built international tax structures for years and witnessed the Portuguese developments up close, here’s my honest take: What still works? What is a waste of time? And which new opportunities are opening up right now?

Ready for the whole truth about Portugal 2025?

Yours, RMS

Portugal NHR 2025: What Really Changes for Expats

Before we dive into the alternatives, we need to understand exactly what happened. The NHR program (Non-Habitual Resident—a special tax status for newcomers) was Portugal’s ace in the international tax competition.

The End of an Era: Why Portugal Ended NHR Status

The NHR status allowed you to receive certain foreign income tax-free for ten years. You also benefited from reduced tax rates on Portuguese income in specific professions.

The problem from Portugal’s perspective: too much tax loss with too little local economic activity. Many NHR recipients lived in Portugal but shifted their business activities abroad.

So, the cutoff on January 1, 2024.

Who Is Affected by the End of NHR?

This gets interesting for your planning:

• Existing NHR holders: They keep their status until the end of the ten-year term
• Applications until 12/31/2023: Were processed under the old law
• New applicants as of 2024: Must go with the new rules

In other words: If you already have NHR status, you’re good to continue. For everyone else, it’s a new game.

The Transition Phase: What’s Happening in Portugal?

Portugal is currently realigning its tax system. The government still wants to attract international talent, but in a more targeted way. Hence, new programs are emerging—some potentially more attractive than the old NHR.

I’m also seeing an interesting trend: Many traditional NHR users are considering alternative strategies. This creates new opportunities for smart tax planning.

The New Tax Benefits in Portugal After NHR Ends

This is where it gets exciting. Portugal didn’t just end NHR, full stop. Instead, the Portuguese developed new tax advantages—sometimes even better ones.

The New Portugal Tax Incentive Scheme: The NHR Alternative

Since 2024, a new incentive system exists for certain professions and activities. The beauty: it’s more targeted and, in some areas, more generous than the old NHR.

The key points:

The D7 Visa Optimization: For Digital Nomads and Retirees

The D7 Visa (also called Passive Income Visa) is Portugal’s answer to the growing number of digital nomads and financially independent people.

This is how it works in practice:

1. You prove passive income of at least €760 monthly
2. This can come from rentals, dividends, or online business
3. You receive a residence permit and become a tax resident
4. Foreign income is only taxed in Portugal when wired into the country

The trick: With smart structuring, you only pay tax on the funds you actually bring to Portugal.

Golden Visa 2.0: The Investment Alternative

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

• Venture capital funds: Minimum investment €500,000
• Business foundation: Create 10 jobs
• Cultural projects: €250,000 in arts or heritage protection
• Research: €500,000 in Portuguese research institutions

The upside: These investments can be tax optimized and offer additional depreciation benefits.

The Crypto-Friendly Regime: Portugal’s Digital Offensive

Portugal has developed one of Europe’s most crypto-friendly regulations. Private cryptocurrency gains are generally tax-free as long as you don’t trade commercially.

What this means for you:

• Long-term crypto holdings remain tax-exempt
• DeFi staking is currently not taxed
• NFT trading is treated as art trading (lower rates)

But caution: The lines between private wealth management and commercial trading are blurry. You need a clear strategy here.

Alternative Optimization Strategies: When Portugal Is No Longer Enough

Now it gets really interesting. Let’s be honest: Portugal was never the only solution for international tax optimization. The end of NHR opens new perspectives—strategies that may even be better.

The Multi-Jurisdiction Strategy: Diversifying Taxes Too

Why put your eggs in one basket? Smart entrepreneurs also diversify their tax risks: That is, structure business activities in various countries for optimal taxation.

A practical example from my advisory practice:

Thomas, an e-commerce entrepreneur, holds his IP rights in Cyprus (2.5% IP Box), fulfillment in Estonia (20% on distributed profits), residence in Portugal (low cost of living). Total tax burden: under 8%.

Dubai as a Portugal Alternative: The New Tax Oasis

Dubai introduced a 9% corporate tax in 2023—and paradoxically, this made it more attractive internationally, as the structure is now OECD-compliant.

Dubai’s advantages at a glance:

The catch: Dubai is expensive and not for every lifestyle. You also need to stay at least 90 days per year there.

The Cyprus Strategy: Leverage EU Benefits

Cyprus is currently my secret favorite for many entrepreneurs. It provides EU advantages, Mediterranean lifestyle, and attractive taxation.

The main Cyprus advantages:

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

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

The Estonia Option: Reinvest Instead of Taxing

Estonia’s tax model is revolutionary: You only pay tax when you distribute profits. As long as you reinvest, profit remains untaxed.

This makes Estonia ideal for:

• High-growth companies with strong reinvestment
• Tech startups in expansion
• E-residency programs for digital nomads

The big advantage: You can grow tax-free for years, only paying taxes at exit or distribution.

The Switzerland-Singapore Strategy: Premium Optimization

For entrepreneurs with substantial income, a combination of Swiss residency and Singapore holding can be optimal. But you’ll need at least €500,000 annual earnings.

Why this works:

1. Swiss lump-sum taxation on foreign income
2. Singapore as holding hub for Asian markets
3. Optimal double tax treaties
4. Highest legal certainty and political stability

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

Enough theory. Let’s get practical. Here’s how to develop your personal optimization strategy.

Phase 1: Status Analysis and Goal Setting

Before applying anywhere, you need to answer these questions truthfully:

1. Income situation: How much do you earn annually, 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 can your structure be?
5. Timeline: Are you planning short- or long-term?

A practical assessment table:

Phase 2: Jurisdiction Selection and Preparation

Based on your analysis, select your target countries. Always check at least three options in parallel. Why? Laws change, so you need alternatives.

Your checklist for country selection:

• Tax advantages: How much do you actually save?
• Legal certainty: How stable is the tax system?
• Quality of life: Can you really live there?
• Business environment: Does the country support your business model?
• Exit strategies: Can you easily leave the structure?

Phase 3: Structuring and Implementation

Now it gets technical. But don’t worry—I keep it practical and clear.

Typical steps are:

1. Company formation: Usually 2–4 weeks
2. Bank account opening: 4–8 weeks (biggest factor)
3. Residency application: 3–6 months
4. Tax registration: 2–4 weeks
5. Migration of existing contracts: 2–3 months

The critical success factor: the right order. Many entrepreneurs move first and then build the structure—this leads to unnecessary tax payments.

Phase 4: Optimization and Monitoring

An international tax setup is not “set and forget.” You need to tweak and adapt regularly.

Your yearly review should include:

• Tax compliance check
• Adapting to legal changes
• Cash flow structure optimization
• Assessment of alternative jurisdictions
• Exit planning in case regulations change

Remember: Flexibility is more valuable than theoretical optimization. The best structure is the one you can maintain long-term.

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

Let’s get real. I’m comparing the three most attractive alternatives to Germany’s heavy taxes—no sugarcoating.

Portugal: The Lifestyle Champion with Limitations

The reality: Portugal is still a fantastic place to live—the climate, culture, cost of living—it all works. But tax-wise, it’s no longer the golden land it used to be.

Portugal scorecard:

Best for: Entrepreneurs who prioritize lifestyle over maximum tax efficiency and want to stay in Europe long-term.

Dubai: The Business Engine with High Living Costs

Dubai is great tax-wise, but you pay for it with high living costs and cultural adaptation.

The hidden costs: What many forget:

• Apartment: €3,000–8,000 per month in good areas
• Car: Needed as public transport is limited
• Social costs: Expat community is expensive
• Family aspect: International schools cost €15,000–€30,000 per year

Dubai scorecard:

Best for: Entrepreneurs with high incomes (€300,000+), who value business networking and tax efficiency.

Cyprus: The Underestimated EU Insider Tip

For me, Cyprus is currently the best compromise between tax optimization and European lifestyle—but, of course, there are pitfalls here as well.

Understanding the Cyprus system:

Cyprus’s tax system is complex but powerful. You can choose among different tax regimes:

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

Cyprus scorecard:

Best for: Tech entrepreneurs, content creators, and anyone wanting to combine EU advantages with tax efficiency.

My Honest Recommendation Based on Your Profile

After over 200 consultations in the past two years, these patterns emerge:

Up to €150,000 annual income: Portugal often remains the best choice, thanks to lifestyle and simplicity.

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

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

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

Practical Implementation: Your Next Steps

Enough theory—here’s your concrete 90-day roadmap.

The First 30 Days: Preparation & Strategic Decision

Weeks 1–2: Gather Documents

Before doing anything else, collect these documents:

• Tax statements for the last 3 years
• Commercial register extracts for all your companies
• Proof of foreign income
• Current profit & loss statement
• Overview of your assets

Why is this important? Because every genuine advisory and every visa application will need this info. Plus, only with complete overview will you see your true optimization potential.

Weeks 3–4: Strategic Decision

Now make the fundamental choice: one country or multi-jurisdiction? Answer these honestly:

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

Days 31–60: Setup & Applications

Follow the critical order:

Most entrepreneurs make expensive mistakes here. The correct order is crucial:

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

The most common mistake: Moving first, structuring later. This can cost you tens of thousands.

Choose your bank strategically:

Banking is often the bottleneck. My experience from over 100 account openings:

Days 61–90: Migration & First Optimizations

Transfer your business smartly:

Now it gets practical. You need to migrate existing client relations and contracts into the new structure. This isn’t overnight—but systematic:

• New clients: Bill them from the new company immediately
• Existing contracts: Gradually transfer or let them expire
• Recurring revenue: Migrate at the earliest opportunity
• Asset transfer: Shift assets tax-optimally into the new jurisdiction

Compliance from day one:

Never underestimate the effort for correct bookkeeping and tax returns. Your new country will have different rules:

1. Hire a local tax adviser (yes, it’s necessary)
2. Adapt accounting software to local requirements
3. Implement quarterly reviews
4. Document all foreign business activity

Common Pitfalls and How to Avoid Them

After 8 years of consulting, I know the usual slip-ups. The top 5:

1. Substance issues: You need real business activity on site
2. Timing errors: Moving residence too early or too late
3. Documentation: Incomplete evidence for tax audits
4. Banking bottlenecks: Underestimating time to open accounts
5. Exit strategy: No plan for rule changes

Most important tip: Get professional help for implementation. A first consultation may cost money, but mistakes cost a lot more.

Frequently Asked Questions

Is it legal to optimize taxes?

Yes, tax optimization is perfectly legal as long as you comply with all laws and create real economic substance. Its important to distinguish between legal tax optimization and illegal tax evasion. With proper structuring and correct reporting, you operate within the law.

Can I undo my Portugal NHR alternative?

Yes, all the strategies presented are fundamentally reversible. However, you should plan exit clauses from the start. Some structures incur exit costs, and fiscal consequences must be considered. Good advice plans the exit from the beginning.

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

Costs vary by complexity. Simple structures (e.g., Portugal D7) cost €5,000–€15,000 to set up. Complex multi-jurisdiction strategies may cost €25,000–€50,000. Ongoing costs for tax advice and compliance add €3,000–€15,000 yearly.

Do I have to give up my German residence?

Not necessarily. There are different models: full emigration, limited tax liability, or double residence structures. The optimal solution depends on your business and personal situation. Correct tax classification in all relevant countries is key.

How long does it take to implement a Portugal alternative?

Full structuring typically takes 4–8 months. Company formation is fast (2–4 weeks), but bank accounts, visa applications, and business migration take more time. Plan at least 6 months for stress-free implementation.

What happens if laws change in my target region?

That’s why flexibility is so important. Reputable tax structures always include a plan B. You should also review your setup annually and adapt if needed. Legal changes usually come with lead time so that adjustments are possible.

Can I benefit from Portugal alternatives with a small income?

Yes, but the cost-benefit ratio must make sense. For annual income under €75,000, setup costs are often disproportionately high. Simpler solutions such as the Estonia E-Residency program or Portugal D7 Visa may be more sensible.

How does health insurance work with international structures?

This is important and often overlooked. EU citizens can use their European Health Insurance Card. For non-EU countries like Dubai, you need local or international health insurance. Include these costs in your total calculation.

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

Legally, you must state your imprint and business address correctly. Many entrepreneurs still use German phone numbers and work project-wise with German partners. Transparency with major clients often builds trust.

What about German social security?

With full emigration, your German social security obligations generally end. You may voluntarily continue payments or arrange private pension schemes. Many expats use international insurance or the system of their new country.