"Showing amazing self-confidence, the man appears to cast his spell over the viewer with a touch of a triumphant smile," Hammerschmidt-Hummel said.
Hung in the bedchamber of Prince Franz (1740-1817), in the Gothic House of the Dessau-Wörlitz Garden Realm, the 2.4- by 2-foot portrait was seized in 1945 by the Soviet army.
"It has been lost ever since. Today there is only a high-quality, monochrome photograph from 1936, now in the Photo Marburg Picture Archive," Hammerschmidt-Hummel said.
Archival research shows Prince Franz brought the picture from his trip to England from 1763 to 1764. Records show it was given to him as a gift by Thomas Hart, a distant relative of Shakespeare.
While the Wörlitz portrait only depicts Shakespeare's facial features, the second portrait shows the whole person of Shakespeare for the first time.
"We can see he wasn't a very tall man," Hammerschmidt-Hummel said.
The painting is estimated to show Shakespeare at the age of 50, about two years before his death and it portrays the Bard as an affluent, older gentleman living in retirement. He sits on an elaborately carved chair, holding a a book in his left hand and resting his right hand on the head of a dog, which is sitting to his right.