Last updated: July 2026 | Reading time: approx. 12 minutes
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One evening in Paris, Patrick was researching the NHR tax regime Portugal offers and suddenly said out loud: “Wait — they tax German pensions at zero percent?” We immediately started asking questions. And found: it’s not that simple. But also not as complicated as it first appears.
We’ve been planning our move to the Silver Coast for some time — specifically to Ferrel near Peniche, where we already have a family home. Our realistic timeline is five years. And in this planning phase, NHR has been one of the topics we’ve researched most intensively. This article summarises what we’ve found so far — honestly, without tax-haven promises, and with a clear disclaimer: we are not tax advisors, and this text is no substitute for advice from a professional.
What Is the NHR Tax Regime Portugal?
NHR stands for Não-Habitual Residentes — Non-Habitual Resident status. It’s a Portuguese tax privilege for people who move to Portugal and become tax resident there.
The original NHR programme was introduced in 2009 and ran for ten years after relocation. Among other benefits, it offered:
- 20% flat rate on certain Portuguese income (instead of the standard top rate of up to 48%)
- Tax exemption on certain foreign income (subject to tax treaty provisions)
- Valid for 10 consecutive years
This sounded attractive — too attractive, as it turned out. At the end of 2023, Portugal closed the programme in its original form.
NHR 2024/2025/2026: What Has Changed?
The End of Classic NHR
From 1 January 2024, no new applications for the classic NHR programme can be made. Anyone who was tax resident in Portugal by 31 December 2023 and had submitted their NHR application retains their rights for the remaining ten years.
IFICI: The Successor
NHR was replaced by IFICI — Incentivo Fiscal à Investigação Científica e Inovação. The tax rate is also 20% on Portuguese income from qualifying activities. The duration: also 10 years. Target group: IT, science, technology companies, research.
What we found in our research: IFICI is more targeted and narrower than the old NHR. For retirees, freelancers without a clear sector classification, or classic “digital nomads”, the programme does not apply.
What Does NHR/IFICI Mean in Practice for Germans?
Tax Rate Comparison
| Type of income | Standard PT rate | NHR (old) | IFICI |
|---|---|---|---|
| Employment income (qualifying) | up to 48% | 20% | 20% |
| German pensions | up to 48% | 0%* | not eligible |
| Capital gains | 28% | 28% | 28% |
| Rental income from Germany | standard | 0%* | not eligible |
| Freelance (qualifying sector) | up to 48% | 20% | 20% |
*Subject to the Germany-Portugal double taxation agreement and proof of taxation in the source country
The Germany-Portugal Double Taxation Agreement
The DTA between Germany and Portugal plays a decisive role. In simplified terms: private pensions are taxed in the country of residence — i.e. in Portugal. However, Portugal largely closed the zero-percent loophole for German pensions with the 2021 DTA renegotiation protocol. Since then, Germany can again exercise its source taxation right — with a maximum 10% withholding tax on pensions.
Who Qualifies?
To apply for NHR or IFICI, you must first be tax resident in Portugal:
- Spend at least 183 days per calendar year in Portugal, or
- Own a property in Portugal on 31 December of the year that indicates permanent residence
Important: you must not have been tax resident in Portugal in the previous five years.
What we found in our research: our house in Ferrel would be the main argument for establishing residence — even if we still spend time in Paris during the transition phase. The Portuguese tax authority AT evaluates the centre of life holistically: where are the children enrolled in school? Where is the place of work?
What NHR Is NOT — Honest Limitations
Not a Tax Haven
Portugal is not a tax haven, and the NHR tax regime Portugal offers should never be marketed as one. The standard top rate is 48%. IFICI reduces that to 20% for part of the income — but only for qualifying income.
The German Exit Tax
Anyone leaving Germany while holding significant stakes in capital companies (at least 1% in a GmbH) may be subject to the German exit tax (§ 6 AStG). The exit tax was significantly tightened in 2022. This can involve six-figure amounts — get professional advice before moving.
What Does the NHR/IFICI Application Cost?
- NIF application: €0 yourself / €50–150 via lawyer
- Portuguese tax advisor (initial consultation): €150–300
- NHR/IFICI application and setup: €500–1,500
- Ongoing tax return: €300–800/year
- German tax advisor (exit planning): €1,000–3,000
- Total budget for move year: €2,000–5,000
Health Insurance and Residency Rights
- HanseMerkur International Health Insurance — German international health insurance for longer stays within the EU. Good for the first phase after the move, until SNS integration is complete.
- DR-WALTER PROTRIP WORLD — Flexible, can be taken out even during your stay, runs up to 12 months. Ideal for scouting trips and the transition phase before the final move.
Money Transfers Between Germany and Portugal
If you receive income in Germany and live in Portugal, you’ll need to transfer money regularly. For our own planning, we’re comparing Wise (formerly TransferWise): transparent fees, real exchange rates, and a feature for recurring transfers.
Conclusion: Is NHR/IFICI Worth It for Germans?
If you move to Portugal as a highly qualified employee in an eligible sector (IT, research, technology), IFICI can save you significant tax. A 20% flat rate over 10 years is a real advantage compared to the German top tax rate.
For us as a family, that means: we first need to clarify whether our planned activity in Portugal qualifies under IFICI — before deciding whether the NHR tax regime Portugal offers still makes sense for us. The tax advantage is real. But it’s not automatic.
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