NHR, briefly, and why it is over
The non-habitual resident regime (2009–2023) gave ten years of 20 % tax on Portuguese income from listed professions and an exemption of most foreign income — foreign pensions taxed at 10 % from 2020. It closed to new registrations on 1 January 2024; people registered by then, and 2024 arrivals who could show a 2023 contract, lease or visa, keep it until their ten years run out. Nobody arriving in 2026 can obtain it.
For Germans the regime had a flaw the others did not face. Article 22 (1) of the 1980 convention gives the residence state the exclusive right over “other income” — statutory pensions, provident-fund pensions, annuities — but adds that if that state does not tax the income, the other state may. Germany read the NHR exemption as “not taxed” and assessed German pensions of NHR residents; the Bundesfinanzhof agreed on 3 September 2025. German dividends and interest were never fully exempt either: the treaty lets Germany withhold 15 %, and Portugal under NHR simply gave up its share.
- Closed since 1.1.2024 — NHR holders keep their remaining years
- IFICI: 20 % on Portuguese income from listed activities, ten years, foreign income exempt with progression
- Art. 22 (1) sentence 2: German-source "other income" Portugal does not tax reverts to Germany
- 15 January registration deadline for IFICI
IFICI: who qualifies and what it gives
The Incentivo Fiscal à Investigação Científica e Inovação (EBF, art. 58.º-A) applies to people who become tax resident without having been resident in the previous five years and earn income from:
- higher-education teaching and scientific research, including technology and innovation centres;
- qualified jobs and board positions under contractual investment incentives;
- highly qualified professions in companies benefiting from the RFAI investment regime, or in industrial and service companies with a listed CAE code that export at least 50 % of turnover;
- qualified jobs in companies recognised by AICEP or IAPMEI as relevant to the economy;
- R&D staff eligible for SIFIDE;
- jobs and board positions in certified start-ups;
- activities in the Azores and Madeira under regional rules.
Effects: 20 % on the Portuguese employment or business income from the activity (or the general rates if lower), for ten years; foreign salaries, business income, dividends, interest, rents and capital gains exempt in Portugal, counted only to set the rate on the rest (art. 81.º n.º 4). Foreign pensions are not exempt. Former NHR beneficiaries are excluded. Registration with the competent body by 15 January of the year after arrival.
Where the German clause bites under IFICI
| German-source income of an IFICI resident | Portugal | Germany |
|---|---|---|
| Salary from a German employer for work done in Portugal | exempt with progression? No — work done in Portugal is Portuguese-source income (20 %) | nothing (art. 15) |
| Dividends from German shares | exempt with progression | 15 % withholding under art. 10 — final, since Portugal has nothing to credit |
| Interest from German banks | exempt | 10 % under art. 11 (bank interest) |
| Rent from a German flat | exempt with progression | fully taxable in Germany anyway (art. 6) |
| Gain on German shares | exempt | nothing — art. 13 gives the right to Portugal and there is no fallback clause in article 13 |
| Statutory pension, Versorgungswerk, annuity | not exempt — taxed at the progressive rates | nothing, since Portugal taxes |
| Other income under art. 22 that Portugal exempts | exempt | taxable in Germany (subject-to-tax fallback) |
The fallback sits in article 22 only. Dividends, interest and royalties are governed by their own articles with source-state ceilings, so IFICI’s exemption on them costs a German 15 % or 10 % rather than the Portuguese 28 % — a saving, not a trap. Pensions are outside IFICI altogether. The clause matters for income that has no other home in the treaty: private annuities from German insurers, some fund distributions, maintenance payments, income from German trusts or foundations. For those, an IFICI exemption in Portugal means German tax at the tariff instead.
The exit tax comes first
None of this helps a founder or shareholder who leaves Germany with a stake of 1 % or more in a company: AStG § 6 taxes the hidden gains on departure, payable in seven instalments on request. IFICI does nothing to reduce that; a later sale in Portugal is taxed at 28 % on the gain from the original cost, with no credit for the exit tax. Sell, gift within allowances, or restructure before the Abmeldung.
Steps
Five-year check
No Portuguese tax residence in 2021–2025 for a 2026 arrival; no past NHR registration.
Qualify the job
Employer's status and the profession code are checked before the contract is signed; a German employer with no Portuguese entity does not qualify.
Register by 15 January
With the competent body; the return then applies the 20 % and the exemptions.
Map the German income
Which article covers each item, what Germany withholds, what reverts to Germany under article 22.
We check IFICI eligibility against the current lists, file the registration, and prepare the Portuguese return with each German item under the right treaty article — in coordination with your Steuerberater for the German side. Ask whether your job qualifies.
Questions
Can a German retiree get anything like NHR in 2026?
No. IFICI excludes pensions and NHR is closed. German pensions are taxed at the ordinary Portuguese rates — and, because Portugal taxes them, Germany no longer may.
I hold NHR until 2030. Should I switch to IFICI?
You cannot: former NHR beneficiaries are excluded from IFICI. Keep NHR to the end and expect Germany to tax German-source "other income" that Portugal exempts until then.
Does IFICI cover freelance income from German clients?
Only if the activity itself is listed and carried on from Portugal — the income is then Portuguese-source at 20 %. Ordinary consulting for German clients does not qualify unless it fits one of the categories (for instance through a certified start-up you found here).
Sources and official references
- Estatuto dos Benefícios Fiscais, artigo 58.º-A — IFICI: activities, 20 % for ten years, five years of non-residence, NHR beneficiaries excluded — checked 18.9.2026
- Portaria n.º 352/2024/1 — IFICI registration by 15 January — checked 18.9.2026
- Código do IRS, artigo 81.º n.º 4 — exemption with progression for IFICI beneficiaries' foreign income (categories A, B, E, F, G) — checked 18.9.2026
- Bundestag Drucksache 9/897 — Convention 1980: art. 22 (1) second sentence (subject-to-tax fallback), art. 10–12, 18, 24 — checked 18.9.2026
- Bundesfinanzhof, X R 1/24 of 3.9.2025 — Germany may tax pension income that Portugal exempts under NHR — checked 18.9.2026
- AStG § 6 — exit tax on 1 % shareholdings — checked 18.9.2026