From about 1590 on, there had been a Portuguese Jewish community in Hamburg, whose qehilla (קהילה "congregation") existed until its compulsory merger with the Ashkenazi congregation in July 1939. The first Sephardic settlers were Portuguese Marranos, who had fled their country under Philip II and Philip III, at first concealing their religion in their new place of residence. Many of them had emigrated from Spain in the belief that they had found refuge in Portugal.
In 1603 the aldermen ("Bürgerschaft") made complaints to the senate (city government) about the growing influx of Portuguese Jews. The senate asked the Lutheran theological faculties of Jena and Frankfort-on-the-Oder for their opinions in the matter, and, after many negotiations, it was agreed that, in consideration of a payment made for their protection, the Sephardim should be tolerated in the town as strangers, though they were not to be allowed to practise their religion publicly.
This practice was not new in the city's policy. Immigrants, many as refugees during the Thirty Years' War, were differently treated according to their religion and denomination, all non-Lutherans, Anglican Britons (Merchant Adventurers of London, in Hamburg 1563–1577, and again 1611), Catholics, Jews, and Reformed (Calvinist) Dutch merchants were forbidden to publicly perform their religion. "Lutheran refugees, in contrast, were rapidly absorbed into the population. … With so-called “foreigner contracts” (Fremdenkontrakte) in 1605, the senate regulated the city's relationship to its other refugees, mostly Calvinists, in return for an annual tax. In 1612, the Sephardic Jewish community also received foreign contracts, as did the Ashkenazi community soon thereafter." Thus the senate argued towards the aldermen, that the Sephardim were just another group of foreign merchants enhancing Hamburg's international commercial relations, emphasising their Portuguese nationality.