For a German buyer looking at homes from EUR 2M, Madeira is one of the simplest overseas purchases in Europe, until the question becomes whether to move there. As an EU citizen paying in euros, you face no visa, no currency risk and no restrictions on buying. Portugal’s taxes on the property are moderate and well defined. The planning sits on the German side: how the treaty divides the tax on a Madeira home, how German inheritance tax follows it, and what a German resident should know before turning a holiday home into a new base.
Free movement, no visa
No exchange-rate risk
From several German airports
Portuguese and German law
Last updated: October 2026
By: Alexander Thornbury
What makes Madeira simple for a German buyer?
Three frictions that shape most foreign purchases are absent. As an EU citizen you have free movement, so there is no 90-day limit and no visa, and you can register as a resident after three months if you choose to live there. Germany and Portugal share the euro, so there is no exchange-rate exposure between agreeing a price and paying it. And Portugal places no restrictions on foreign buyers, so a German purchases on the same terms as a Portuguese citizen.
What remains is Portuguese procedure, which is clear: a tax number, a lawyer, a binding promissory contract with a deposit, the transfer taxes, and the deed. Our step-by-step buying guide walks through it, and our international buyer’s guide to Madeira covers the market as a whole.
| For a German buyer | The position |
|---|---|
| Right to stay | Free movement; register after three months to reside |
| Currency | None; both countries use the euro |
| Transfer taxes (non-resident) | 7.5% IMT plus 0.8% stamp duty |
| Annual tax in Portugal | IMI at 0.3% of VPT; AIMI above EUR 600,000 of VPT |
| Inheritance | German inheritance tax on worldwide assets for German residents |
What do you pay in Portugal?
A German resident buying a holiday home is a non-resident in Portugal, so budget about 8.3% of the price in transfer taxes: EUR 166,000 on a EUR 2M home, made up of a flat 7.5% IMT and 0.8% stamp duty. That is more than the Grunderwerbsteuer in any German state. Once you own, the bill is light: IMI at 0.3% of the tax office’s valuation, and AIMI only where that valuation passes EUR 600,000 per person. Portugal has no general wealth tax. Our Madeira property tax guide sets out every charge, including the IMT refund if you move within two years.
How do Germany and Portugal share the tax?
Portugal taxes, and Germany steps aside. Under the 1980 treaty, in force since 1982, Portugal taxes the rent and any gain as the state where the property sits: a flat 25% on residential rent for a non-resident, and half of any gain at its progressive rates, with worldwide income declared to set the rate. Article 24 then takes that Portuguese income out of the German tax base altogether. Germany keeps the credit method only for dividends, interest, royalties, directors’ fees and artistes’ income, none of which a holiday home produces.
The rate is where EU membership helps. Germany normally counts treaty-exempt income when it sets the rate on the rest of your income, but section 32b of the Income Tax Act switches that off for rent from property in another EU state. So Madeira rent is taxed in Portugal and has no effect on your German tax at all. A gain on sale is exempt too, though Germany may count it when setting your rate in the year you sell. Keep the Portuguese assessments, and ask a Steuerberater to model the sale year before you sell.
How does German inheritance tax apply?
Fully, if you or your heir lives in Germany. German inheritance tax reaches the worldwide estate where the deceased or the heir is resident in Germany, so the Madeira home sits inside the German estate like any other asset. Portugal adds little for close family: it has no inheritance tax as such, and spouses, partners, children and parents are exempt from its 10% stamp duty on inherited Portuguese assets. Austrian buyers, by contrast, face no inheritance tax at home; our guide for Austrian buyers sets out that position.
The legal side needs its own decision. Portugal has forced-heirship rules that reserve part of an estate for close family, and a German national can choose German law to govern their succession in a will under the EU Succession Regulation. Without a choice, the law of your habitual residence at death applies to the whole estate, which matters if you later move to Madeira. Make the choice expressly, and check that it fits your German estate plan.
| Event | Portugal | Germany |
|---|---|---|
| Rent | 25% flat for non-residents | Exempt under the treaty; does not raise your German rate |
| Sale | Half the gain at progressive rates | Exempt under the treaty; may count towards your German rate |
| Death | 10% stamp duty; close family exempt | Worldwide estate taxed where deceased or heir is resident |
| Moving abroad | Portuguese tax on worldwide income once resident | Exit tax on company shareholdings; five-year inheritance-tax tail |
What changes if you move to Madeira?
More than the address. As a Portuguese tax resident you are taxed on worldwide income, and in Madeira that comes at regional rates 30% below the mainland in every band from 2026, which puts the top rate at 33.6% against 48% in Lisbon. You also pay the ordinary IMT rates rather than the 7.5% non-resident rate, and can reclaim the difference if you move within two years of buying. The old NHR regime is closed to newcomers, and its successor, IFICI, covers only listed research, innovation and specialist work.
Germany does not let go immediately. Leaving German tax residence can trigger an exit tax on unrealised gains in shareholdings in companies, under section 6 of the Foreign Tax Act. And a German citizen who moves abroad stays within German inheritance tax on the worldwide estate for five years after giving up German residence. Neither is a reason not to move. Both are reasons to plan the move with a German adviser before you go, not after. Our Madeira residency guide covers the Portuguese side.
Getting there, and where to look
Germany is one of the best-connected markets for Madeira. Direct services run from several German airports, including Frankfurt, Düsseldorf and Hamburg, with Condor, Eurowings, TUI fly and Discover among the airlines, and Madeira’s airport handled a record 5.4 million passengers in 2025. Schedules are seasonal, so check the current timetable for your airport.
Where to buy depends on how often you will come. For long weekends, the east near the airport, around Caniço and Garajau, saves the most travel time. For longer stays, Funchal has the schools, the restaurants and the deepest market, and golfers can choose between Palheiro and Santo da Serra. If you plan to let, check the address first: Funchal no longer accepts new holiday lets in apartment buildings. Our guide to Madeira’s prime areas compares them. If you are weighing Madeira against Mallorca, long a German favourite, our comparison of Madeira, the Algarve and Mallorca sets the three side by side.
Key takeaways
- No visa, no currency risk, no buying restrictions: German buyers start from the simplest position.
- Transfer taxes are about 8.3% for a non-resident, and annual tax is light: 0.3% IMI and AIMI only above EUR 600,000 of VPT.
- Portugal taxes the rent and any gain; Germany exempts both under the 1980 treaty, and EU rent does not even raise your German rate.
- German inheritance tax covers the Madeira home where the deceased or heir is German-resident; Portugal exempts close family.
- Moving brings Madeira’s 33.6% top rate, but also German exit tax on shareholdings and a five-year inheritance-tax tail.
- Direct flights run from several German airports, with schedules that vary by season.
Frequently asked questions
Do Germans need a visa to live in Madeira?
No. As EU citizens, Germans have free movement and can live in Madeira without a visa, registering their residence after three months if they stay.
What taxes does a German buyer pay to buy in Madeira?
As a non-resident, about 8.3% of the price: a flat 7.5% IMT and 0.8% stamp duty, both on the higher of the price and the tax office’s valuation. Part of the IMT is refunded if you become Portuguese tax-resident within two years.
What annual taxes apply to a German-owned Madeira home?
IMI at 0.3% of the VPT in every Madeira municipality, and AIMI only where your Portuguese residential VPT exceeds EUR 600,000, or EUR 1.2M for a couple taxed jointly. Portugal has no general wealth tax.
Is there a double tax treaty between Germany and Portugal?
Yes. It was signed in 1980 and has been in force since 1982. Portugal taxes the rent and any gain from a Portuguese property, and Germany exempts both under article 24, using the credit method only for items such as dividends and interest.
How is rent from a Madeira property taxed for a German resident?
Portugal charges a non-resident a flat 25% on residential rent. Germany exempts it under the treaty, and because the property is in the EU, section 32b of the Income Tax Act keeps it out of your German tax rate too.
Does German inheritance tax apply to a Madeira property?
Yes, where the deceased or the heir is resident in Germany. German inheritance tax then covers the worldwide estate, including the Madeira home.
Will my children pay Portuguese inheritance tax?
No. Portugal has no inheritance tax as such, and spouses, partners, children and parents are exempt from its 10% stamp duty on inherited Portuguese assets.
Does Portuguese forced heirship affect German owners?
It can. A German national can choose German law for their succession in a will under the EU Succession Regulation. Without that choice, the law of your habitual residence at death applies, which matters if you move to Madeira.
What happens to my German taxes if I move to Madeira?
You become taxable in Portugal on worldwide income, at Madeira’s regional rates. On leaving Germany, an exit tax can apply to shareholdings in companies, and German citizens remain within German inheritance tax for five years after giving up German residence.
Are there direct flights from Germany to Madeira?
Yes. Direct services run from several German airports, including Frankfurt, Düsseldorf and Hamburg, with airlines such as Condor, Eurowings, TUI fly and Discover. Schedules are seasonal.
How does owning in Madeira compare with Mallorca for a German buyer?
Madeira charges IMI at 0.3% of the VPT and Portugal has no general wealth tax, while Spain levies a solidarity tax on net wealth above EUR 3M and Mallorca’s transfer tax runs from 8% to 13% depending on price. Our comparison article sets the two side by side.
Sources
- Portal das Finanças – IMT Code, article 17, including the 7.5% non-resident rate added in 2026
- Diário da República – Decree-Law 97/2026 (IMT for non-residents)
- Portal das Finanças – IMI Code, article 112 (IMI rates)
- Portal das Finanças – IMI Code, article 135-F (AIMI rates)
- Portal das Finanças – IRS Code, article 43 (gains counted at 50%)
- Portal das Finanças – IRS Code, article 16 (tax residence)
- EUR-Lex – EU Succession Regulation 650/2012
- Jornal Oficial da Região Autónoma da Madeira – Despacho 19/2026, income-tax tables for 2026 with the 30% regional reduction
- ANA Aeroportos de Portugal – Madeira airport passes 5 million passengers in a year for the first time (2025)
- Bundesministerium der Finanzen – Germany-Portugal double tax treaty of 1980 (article 24)
- Gesetze im Internet – Income Tax Act, section 32b (rate effect of exempt foreign income)
- Bundesministerium der Finanzen – inheritance tax handbook on unlimited liability (section 2 ErbStG)
- Gesetze im Internet – Foreign Tax Act, section 6 (exit tax)
- Gesetze im Internet – Inheritance Tax Act, section 2 (unlimited liability)
Figures current at October 2026. German and Portuguese tax rules interact in ways that depend on your circumstances; confirm your position with a Steuerberater and a Portuguese lawyer before you buy or move.
About the author
Alexander Thornbury is a published author who writes on international property, tax and residency for high-net-worth buyers across Europe. His work focuses on the practical mechanics of cross-border purchase: what a buyer actually pays, owes and signs. More at alexanderthornbury.com.