Taxes in Portugal For Foreigners: Everything You Must Know Now

Are you planning a move to Portugal but unsure about its tax landscape? Discover everything you need here. Renowned for exceptional quality of life, mild weather, and attractive incentives like the new IFICI tax regime (NHR 2.0), Portugal draws expats seeking residency and smart fiscal planning.

Mastering income taxes, rates, and rules is essential for foreigners to stay compliant, safeguard residency or citizenship, and leverage opportunities in 2026.

This guide demystifies Portugal’s tax system for expats, covering key entities, legal requirements, filing processes, and strategies for ongoing compliance with your worldwide or local income.

You’ll find out more about:

• How to register in the Portugal tax system
• Who has to pay taxes in Portugal
• Types of taxes in Portugal

About The Tax System in Portugal

Portugal’s tax system balances progressive taxation with expat incentives, overseen by the Autoridade Tributária e Aduaneira (AT) through its Portal das Finanças. Residents like on the D7 Visa Portugal, face worldwide income tax while non-residents pay 25% flat on Portuguese-source earnings.

Key pillars include IRS (Imposto sobre o Rendimento das Pessoas Singulares) income tax, IRC (Imposto sobre o Rendimento das Pessoas Coletivas) corporate tax, IVA (Imposto sobre o Valor Acrescentado) value-added tax, and property taxes like IMI (Imposto Municipal sobre Imóveis). New residents in qualifying fields like tech, research, and startups, can access IFICI for 20% flat on eligible Portuguese income and foreign exemptions over 10 years.

The tax system also has some targeted benefits that keep Portugal competitive: no wealth, gift, or inheritance tax for most expats and it has double-tax treaties with more than 80 countries.

How to Register in the Portuguese Tax System

The process starts by registering as a taxpayer and obtaining your NIF (Número de Identificação Fiscal) number. You can request your NIF online through their website or in person at the Finanças office.

Once you’ve received your NIF, you’ll need to fill out this declaration stating that you’re starting a new tax activity and submit it to your local tax office, which you can find on the Portuguese Tax Agency’s online portal.

With your NIF, you can apply for your Social Security number (NISS) to be eligible for unemployment benefits, public health insurance, and other assistance.

As per tax laws, the Portuguese tax year follows the calendar, starting on 1 January and ending on 31 December, with a tax return submitted between April and June of the following year. Returns can be completed online via the Portuguese Tax Authorities’ website or printed forms.

Be sure to file your returns on time to avoid the loss of tax credits and potentially hefty penalties ranging from €200 to €2,500. If you are doing business in the country, hiring an accountant or bookkeeper is recommended.

Who has to pay taxes in Portugal?

Your tax liability as an expat depends on your residency status, which is defined by how much time you spend living and working in Portugal each year. If you are in Portugal for 183 or more days in a single calendar year, you will typically be considered a Portuguese tax resident.

For example, you’ve decided to spend most of your time in the country while on the Portugal Golden Visa, even though you only have to be in the country for seven days in the first year.

However, the following may also make you a tax resident:

• You have a permanent residence in Portugal on 31 December of that tax year
• The head of your household is a tax resident in Portugal
• You are crew on a ship, yacht, or aircraft owned by a Portuguese entity
• You work for the Portuguese state, regardless of where you work from

If you are unsure, it is always a good idea to arrange for a Portugal tax consultation.

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Taxes in Portugal for Foreigners: Expat Taxes in Portugal

Non-resident income tax rate in Portugal

Non-resident foreigners are subject to flat rates on all taxable income earned. The tax rate in Portugal for foreigners is 25 percent and applies to all annual income derived from a Portuguese source.

Non-residents must also pay a flat percentage rate on income earned from interest or dividends. This means that if you earned €50,000 in Portugal during 2025, you would owe €12,500 in taxes. Some income, such as capital gains tax from selling shares, may be exempt from this rate, as per the tax laws.

How to file your income tax return in Portugal

In line with the laws that govern federal taxes, the Portuguese tax year runs from 1 January to 31 December, with returns submitted the following spring. Returns can be completed online or via a paper form.

You can submit your annual tax return statement online with access to the Finances Portal. You can also submit in person at the following locations*:

1. Serviço de Finanças offices
2. Citizen Shops (Lojas de Cidadão)
3. Parish councils (Câmara Municipal)

* In specific locations, you must schedule the service.

Self-employed income tax in Portugal

Sole traders, freelancers, and people who run unincorporated businesses in Portugal will have their income assessed as personal earnings. This results in them paying Portuguese income tax rather than corporate tax.

Types of Tax in Portugal

Local Taxes

The IMI (Imposto Municipal Sobre Imóveis) is Portugal’s equivalent of council tax and is to be paid by property owners. Each municipality sets different rates according to the area in which your property is located. The IMI goes towards maintaining public infrastructures such as bin collections and street cleaning.

If you own property on the last day of the respective tax year, you are liable to pay IMI tax. Residents with homes valued at more than €600,000 need to pay a higher level of IMI known as AIMI.

Taxes on Goods and Services

Established businesses in Portugal with a turnover of more than €10,000 on taxable goods and services must pay VAT (IVA for short in Portugal) and comes with three chargeable bands:

• Reduced rate: 6 percent in mainland Portugal, 4 percent in the Azores, and 4 percent in Madeira for the goods and services included in the List I of the Value Added Tax Code. The reduced rate applies to goods such as bread, pasta, milk and dairy products, books, newspapers, and chocolate.
• Intermediate rate: 13 percent in mainland Portugal, 9 percent in the Azores, and 12 percent in Madeira on goods and services included in List II of the Value Added Tax Code. The intermediate rate applies to goods like pickles, wine, musical instruments, and condoms.
• Standard rate: 23 percent in mainland Portugal, 16 percent in the Azores, and 22 percent in Madeira for all remaining taxable goods and services. For more information, please refer to Article 18 of the Value Added Tax (VAT) Code.

Personal Income Tax (IRS) Rates in Portugal

Personal income tax rates (IRS) apply to the incomes of Portuguese residents and non-residents currently working or employed.

Tax is automatically deducted from pay slips, but you must complete an annual tax return. Your income tax rates are determined by calculating your taxable income earned and the corresponding tax rate, and removing any legal deductions (e.g., education or health-related expenses).

IRS is considered individual income tax and is filed individually, but couples and civil partnerships can opt to file jointly. In this case, tax rates are charged on the total taxable income of the household members.

The Portugal tax rates for individuals for 2025 are as follows, ranging from 13 percent to 48 percent:

Income tax in Portugal has six categories:

1. Employment income
2. Self-employment income
3. Investment income
4. Rental income from properties let in Portugal
5. Capital gains tax, calculated from selling properties, capital investments, and assets, or shares
6. Pensions in Portugal, including private pension plans

Capital gains tax

Capital Gains Tax in Portugal applies to the profit made from selling any capital asset, including real estate, stocks, and bonds. The tax rate for capital gains in Portugal is 28 percent. This flat rate applies to both residents and non-residents, and 25 percent for companies.

However, certain exemptions and reductions may apply to capital gains, such as a 50 percent reduction for assets held for more than two years or a complete exemption for capital gains made from the sale of a main residence. Exemptions on Portugal Capital Gains Tax also apply for residents selling their primary home and buying another property in Portugal or elsewhere in the EU, as well as those selling a property they purchased before 1989.

Property taxes in Portugal (IMI)

In Portugal, property owners must pay a property tax, Imposto Municipal Sobre Imóveis (IMI). Rates on property taxes are set according to each municipality and area where the house is located.

In urban areas, IMI varies from around 0.3 percent to 0.45 percent of the home’s value. In rural areas, a rate of 0.8 percent applies. You can consult the IMI rates in your area for 2025 on the Portal das Finanças website.

Homeowners in urban areas with properties worth less than €125,000 can benefit from a three-year exemption on IMI as long as they live in the property themselves. You can get a further deduction of around €20 for each dependent, and exemptions also exist for people with low incomes or those with energy-efficient homes.

Property wealth tax (AIMI)

Another post-purchase property tax in Portugal is the Adicional Imposto Municipal Sobre Imóveis (AIMI). This tax affects those who own high-value property, with a total real estate worth above €600,000.

The tax is calculated on an individual taxation basis, meaning that if a property is jointly owned, it must be worth over €1.2 million before it starts owing AIMI.

The tax rates for AIMI are as follows:

• 0.7 percent on property valued between €600,001 and €1 million
• 1 percent on property valued between €1 million and €2 million
• 1.5 percent if the total value exceeds €2 million

Tax on rental income

If you decide, after purchasing your property, to rent it out, you might be liable for property tax in Portugal on any profits you make from rental income. Generally, net rental income is taxed at a flat rate of 28 percent. However, depending on the specific characteristics of the contract, you may benefit from reduced rates or exemptions.

When declaring your rental income to the Portuguese tax authorities, you might be entitled to certain tax deductions. Deductions for fire insurance are allowed (as it is compulsory for all rental properties) alongside value expense deductions such as IMI, costs associated with obtaining an energy certificate, and condominium fees, if applicable.

Portugal’s Inheritance Taxes

Portugal has a favorable inheritance tax scheme, as no tax is applied to direct family members.

However, a 10 percent stamp duty (Imposto do Selo) is imposed on Portuguese assets when an estate is inherited or gifted to a spouse or children, making it essential to consider the inheritance tax implications when planning your estate. The donation of property is also subject to an additional standard tax rate of 0.8 percent.

Company Taxes

In Portugal, if you own a company/business, you must pay Corporate Tax at a flat rate of 20 percent on any taxable profits. Local municipality corporate tax rate surcharges of up to 1.5 percent apply, as do additional charges on profits of more than €1.5 million.

Small businesses and sole traders with an annual turnover of less than €200,000 can pay business taxes through a simplified regime. Under this regime, they pay tax on their turnover rather than their profit. The deadline for completing Portuguese corporate tax returns is between 16 April and 16 May each year.