UK Company, Portugal Home: Business Under Portugal NHR

One of the most common questions we hear from entrepreneurs is: “I have a UK limited company—what happens to my taxes if I move to Portugal and apply for the Portuguese NHR (Non-Habitual Resident) tax regime?"

This is a great question, because the answer is not as simple as "Portugal good, UK bad." It depends on where your company is managed and controlled, where you make a profit, and how you structure things. Here, we'll explain how to move to Portugal from the UK with your business in a tax-efficient manner. Let's break it down.

Unpacking the Basics: The Non-Habitual Resident (NHR) Regime

The Non-Habitual Resident (NHR) regime, which has been updated to the new IFICI, is now commonly referred to as NHR 2.0 and provides a special tax status for new residents in Portugal. It's designed to:

• Give eligible expats a 20% flat tax rate on certain Portuguese-source employment/self-employment income.
• Provide exemptions (or reduced taxation) on certain types of foreign income, like dividends and royalties, if they may be taxed in the source country under a tax treaty (in this case: the Portugal-UK Double Tax Treaty).

Important: NHR is 'personal' - it applies to you as an individual. It doesn’t change how your company is taxed or where your company is located.

Can I Own a UK Company and Live in Portugal?

If you own a UK limited company (Ltd) and are considering a move to Portugal from the UK, there are three key considerations to address:

1. Where is the Company Managed and Controlled?

Even if the company is legally incorporated in the UK, Portugal can argue that the company is a tax resident of Portugal if its "place of effective management" is in Portugal. If you, as the main director/shareholder, live full-time in Lisbon and make all the decisions from there, the Portuguese tax authorities could say the company is actually Portuguese. That means Portuguese corporate tax rules could apply, not (just) UK ones.

This is where “substance” in the UK becomes important.

2. What Does “Substance” Mean?

Substance means proving that your UK company is a genuine UK business, not just a shell on paper.

Examples of UK substance include:

• Having a UK-based co-director who can make decisions independently.
• Holding board meetings (and keeping minutes) in the UK.
• Having a UK office, employees, or at least some real operations.
• UK bank account, contracts, suppliers, and clients located in the UK.

Without substance, it’s much easier for Portugal to argue that your company is “run” from Portugal, even if it has a UK Companies House registration. One important international tax principle to always keep in mind: substance over form.

3. How the Portuguese NHR Interacts with Dividends

If your UK company is genuinely UK-based and paying UK corporation tax, you, as a Portuguese tax resident, can receive dividends. In accordance with the Portuguese NHR (2.0) and the Portugal-UK Double Tax Treaty:

• The UK may withhold some tax at source (reduced under the treaty).
• Because the UK has the right to withhold taxes, Portugal may exempt those dividends under the Portuguese NHR.

For many expats, this is where the real tax savings come in: your dividends may end up untaxed, since the UK doesn't have a withholding tax on outgoing dividends and Portugal may exempt them under Portuguese NHR.

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A Practical Example on How to Move to Portugal from the UK With a Company

Sarah runs a digital marketing company in London. She successfully applied for a Portugal Work Permit Visa (D2 Visa), relocated to Lisbon in 2024, and obtained her Portuguese NHR status.

• She appoints a UK-based co-director who attends board meetings and can sign contracts. She keeps a part-time employee in the UK.
• The company continues to pay UK corporation tax.
• Sarah receives dividends in Portugal.

Result:

• The UK will continue to tax the company's profits at UK corporation tax rates.
• Sarah then receives dividends, which under Portuguese NHR may be exempt from Portuguese taxation.
• Double taxation is avoided, and Portugal doesn’t re-classify its company as Portuguese because it has real substance in the UK.

A common pitfall to avoid: If you are the only director and run your UK company from Portugal, your business might be treated as a Portuguese company. Therefore, if you have a UK company, make sure that important decisions are made in the UK and not over coffee in Porto!

How Tytle Helps if You’re Moving to Portugal from the UK

At Tytle, we know the rules can get complicated when your business is in one country and your life is in another. That’s why we work with you step by step:

1. Initial Call With Our Portugal Expert

We look at your situation, walk you through the Portugal-UK Double Tax Treaty, and tell you how Portuguese NHR (or NHR 2.0) would apply to your income (dividends, salary, pensions).

2. Substance Check With Our UK Expert

If needed, we bring in one of our UK partners. They review whether your company has enough “substance” in the UK—think board meetings, co-directors, and operations—so it won’t accidentally be treated as a Portuguese company.

3. Personal Income Planning 

Together, we determine the most tax-efficient way for you to pay yourself—dividends, salary, or a combination—while ensuring full compliance with both Portuguese and UK regulations.

4. Ongoing Compliance and Support 

We don’t just set things up and walk away. Our advisors can help you with filings, annual reviews, and keep you updated if the law changes in Portugal or the UK.

Conclusion

Running a UK company while living in Portugal under the Portuguese NHR status can be a smart and tax-efficient setup, but only if it’s structured correctly. With Portuguese NHR exemptions, double tax treaty relief, and real UK substance, you can often reduce your personal tax burden significantly while staying compliant in both countries.

Moving to Portugal doesn’t necessarily mean you have to give up your UK company. The key to success lies in getting the details right: who are the decision-makers, where are the decisions made, and how do you pay yourself. Switching to a Portuguese company could be a viable solution if your company doesn’t have real substance in the UK.

We guide expats through this process step by step. We provide expert advice on double taxation agreements, specifically the Portugal-UK Double Tax Treaty, ensure substance, and manage ongoing compliance. Our international tax consultancy, provided by a chartered tax adviser, can help you to live in Portugal under the Non-Habitual Resident (NHR) scheme while continuing to run your UK business.

At Tytle, we provide global tax services, including:

• Accounting/bookkeeping
• Accurate tax filing
• Estate planning
• Cross-border advice
• Immigration services
• And much more!

For more international tax advice, feel free to explore: “Americans Freelancing in Portugal: Keep US LLC or Go Local?” and “How to Move to Portugal in 2025? A Guide to All Visa Types”.

Jump on a call with our advisors! It's free!