Tax Mistakes German and French Digital Nomads Make in Portugal

INLIS Consulting
7 hours ago
3 min read

A simple 2026 guide for German and French digital nomads in Portugal. Learn the most common tax mistakes, residency pitfalls, LLC issues, and how to stay compliant.

Why Digital Nomad Tax Rules in Portugal Confuse EU Citizens

Many German and French citizens think:"I’m an EU citizen, so moving to Portugal is simple. Taxes will sort themselves out."

Here’s the reality: tax residency rules in Portugal apply to every Digital nomad equally, including EU nationals:

Spending more than 183 days in Portugal in a year makes you a tax resident.
Owning or renting a habitual residence can also trigger tax residency.

The Risk: Ignoring these rules may result in fines, retroactive tax bills, and even double taxation if your home country assumes you are still a tax resident there.

Tip: Track your days carefully and apply for a Portuguese NIF (tax number) early. Notify your home country about your move to avoid residency conflicts.

Misunderstanding IFICI Eligibility as a European Nomad

Many EU nationals assume that moving to Portugal as a freelancer or remote worker automatically qualifies them for IFICI (the successor to the NHR regime).

IFICI favors high-value innovation, research, and tech activities.
Many remote jobs or consulting work for foreign clients do not qualify, even if your income is high.
Foreign income may be exempt, but pensions and passive income are taxed normally.

Scenario: A German software developer working remotely for a Berlin-based company may not automatically qualify, while a French startup founder running a registered Portuguese entity might.

Tip: Verify IFICI eligibility before relocating. The structure of your work, clients, and income source matters.

Setting Up a Company Without Considering EU Tax Implications

Many Germans and French nomads think that forming an LLC (LDA in Portugal) or freelance business automatically resolves tax compliance.

Business must be properly registered with Finanças and, if applicable, Segurança Social.
Incorrect setup may lead to double taxation, social security liabilities, or disallowed deductions.
Freelancers often just need “recibos verdes” (green receipts) rather than a full LLC.

Scenario: A French consultant invoices German clients through a Portuguese LLC but fails to account for VAT rules and social security, ending up with unexpected obligations in Portugal and France.

Tip: Choose the right structure for your work type and check cross-border compliance with your home country.

Overlooking Costs and Administrative Fees

Germans and French nationals often underestimate all the costs of staying compliant in Portugal:

Accounting fees
Social security contributions
IRS filings
VAT obligations (if invoicing EU clients)

The Risk: Unexpected expenses can make Portugal more expensive than expected, even for high earners.

Tip: Budget for all compliance-related costs and work with a tax consultant who understands cross-border EU rules.

Forgetting About Double Tax Treaties

Germany and France both have treaties with Portugal to avoid double taxation, but digital nomads often make mistakes:

Assuming all foreign income is exempt
Not declaring foreign income properly
Ignoring home-country reporting obligations

Scenario: A French freelancer earning from Paris clients while living in Lisbon may incorrectly assume income is tax-free in Portugal, and risk fines from both French and Portuguese authorities.

Tip: Check your home country’s treaty with Portugal and declare income accurately.

Missing Deadlines

Portugal is strict with deadlines:

IRS filing for the previous year is from March to June
Social security and VAT filings have separate schedules

Scenario: A German digital nomad forgets to submit the annual IRS declaration while thinking their freelance LLC handles it automatically, ending up with penalties.

Tip: Use a calendar, set reminders, and rely on a tax advisor familiar with EU cross-border rules.