How to Establish Portugal Tax Residency in 2025

Relocating to Portugal offers an exciting new life, safety, and culture, but it also brings new tax obligations. Whether you are moving for work, retirement, or to enjoy Portugal’s lifestyle, determining your tax residency status is critical.

Tax residency defines how and where your income will be taxed, both locally and globally. In Portugal, becoming a tax resident can mean exposure to worldwide taxation, but it may also open the door to attractive benefits.

In this article, we'll explore what it means to be a tax resident in Portugal, and you'll also find out more about:

• What is a tax resident in Portugal?
• How to get tax residency in Portugal
• Benefits of tax residency in Portugal

What is a tax resident in Portugal?

A tax resident in Portugal is defined as someone who spends more than 183 days in the country during any 12 months (consecutive or not) or maintains a habitual residence in Portugal (such as a permanent home) and demonstrates intention to make Portugal their main place of living.

Once classified as a tax resident, an individual is generally taxed on their worldwide income, unless exempt under specific regimes like the now-discontinued Non-Habitual Resident (NHR) program, which offered reduced tax rates and exemptions for up to ten years on certain foreign income.

How to get Tax Residency in Portugal

Even if you meet the conditions of spending more than 183 days in Portugal, it doesn't mean you are automatically awarded tax residency in Portugal. There are several steps you must take before you can get an official Portugal tax residency certificate, and it starts with obtaining a Portuguese tax identification number, or NIF.

The Número de Identificação Fiscal (NIF) is a unique tax identification number assigned to individuals and businesses operating in Portugal and is vital for anyone looking to reside, work, or carry out financial and administrative activities. It is used for everything from opening a bank account and signing contracts to buying or selling property, and paying taxes in Portugal as a foreigner.

While anyone can apply for a NIF, a tax representative is mandatory for non-EU/EEA/Swiss citizens who do not reside in Portugal. This representative acts as an intermediary between the NIF holder and Portuguese tax authorities and we offer tax representation and NIF acquisition services.

Simply apply online, and we'll apply for a NIF on your behalf and offer you tax representation services, resulting in you getting your NIF straight to your inbox, taking out all of the hassles of applying for a NIF and appointing a representative independently. We can also help you open up a bank account in Portugal, making it easier for you to pay taxes on any income obtained in Portugal.

How to obtain a NIF

1. Gather necessary documents: A passport or national ID card is usually sufficient for EU citizens. Non-EU citizens will also require a valid residence permit or visa.
2. Visit a local tax office (Finanças): To apply for the NIF, book an in-person appointment at your local tax office. Ensure you have your identification documents with you.
3. Appoint a tax representative (if applicable): Non-EU residents must appoint a tax representative who resides in Portugal. This representative will be the main point of contact for the Portuguese tax authorities concerning the NIF holder's tax obligations. The representative's details will need to be provided when applying for the NIF.

Register as a tax resident

Once you've been allocated your NIF and you meet the 183-day rule or establish habitual residence, you must declare yourself a tax resident.

• Go to a Finanças office or register online if you have a tax portal account.
• File a "Declaração de Alteração de Morada" (Declaration of Change of Address) form, stating your Portuguese address as your habitual residence.
• Indicate on the form that this is your main and permanent residence, which triggers tax residency status.
• Provide proof of address, such as a rental contract or utility bill.

If successful, Finanças will update your NIF profile to “resident” and apply Portuguese tax residency rules to your file.

Benefits of Tax Residency in Portugal

Portugal's tax residency rules provide several benefits, making it an attractive option for potential residents. The tax benefits depend on the tax situation and whether the resident's income is locally sourced or foreign. Portugal has over 60 double tax treaties, meaning that most foreign-sourced income can be exempt from income tax.

This is only applicable if it's taxed in the source state as per the applicable tax treaty, or, if no treaty applies, the income is effectively taxed in the source state and not deemed as derived in Portugal. When derived from high-value-added activities, Portuguese-sourced income is taxed at a reduced rate, at a flat rate of 20 percent.

No tax applies to dividends, rental income, interest, and capital gains when structured correctly. Furthermore, no inheritance tax on assets passed to a spouse, descendants, or ascendants, and no wealth taxes apply.

Non-Habitual Residency Status

Portugal officially discontinued the hugely popular Non-Habitual Resident (NHR) tax regime in 2025, but those who have been granted the status will still benefit from it. If you acquired non-habitual resident status, you qualify for tax advantages such as a flat rate of 10 percent on all foreign-sourced income, including pensions, received in Portugal.

Individuals with NHR status enjoy a lowered tax rate of 20 percent on specific Portuguese-source revenues, or taxable income such as that from high-value-added tasks or royalties. This tax rate is notably less than typically levied on Portuguese tax residents.

The following income tax rates apply to non-habitual residents:

• A 20 percent tax applies to freelance self-employment income.
• No taxes (a tax exemption) on wealth or inheritance.

Portugal doesn't levy any inheritance or wealth tax for those holding NHR status.

Do foreigners incur income tax in Portugal?

Whether or not a foreigner is liable for income tax in Portugal hinges on their residency status and their employment conditions. Typically, non-residents in Portugal face a flat tax rate of 25 percent on income sourced within the country.

Conversely, residents encounter progressive tax rates linked to their global earnings. Yet, residents might be eligible for the Non-Habitual Residency (NHR) program, presenting them with advantageous tax provisions for a decade.

The personal income tax, referred to as Imposto sobre o Rendimento das Pessoas Singulares (IRS), is relevant for both residents and non-residents earning income within Portugal. Income taxes are usually extracted directly from monthly salaries. Nonetheless, submitting an annual tax return remains obligatory.

The exact income tax liability is ascertained by evaluating the taxable earnings, administering the appropriate tax rate, and subtracting eligible deductions, including those tied to educational or medical expenditures.

IRS estimates are primarily individualized; however, married individuals or civil partnership couples can opt for a combined filing. In such scenarios, the tax rate encompasses the total taxable income of all family members. As per 2023's data, individual tax rates in Portugal span from 14.5 percent to 48 percent.

Portuguese income tax encompasses revenues spanning six primary segments:

• Employment-based income
• Revenues from entrepreneurial ventures
• Investment yields
• Earnings from property rentals in Portugal
• Capital gains from selling assets, real estate, or shares
• Pensions disbursed in Portugal, including personal pension plans

IFICI Replaced the NHR Regime

Since the Non-Habitual Residency (NHR) tax regime officially closed to new applicants in 2025, the Portuguese government has introduced a new program called the Tax Incentive for Scientific Research and Innovation (IFICI), also known as the Incentivised Tax Status Program (ITS).

Eligible individuals will benefit from a flat tax rate of 20 percent on professional income earned in Portugal. They may also receive an exemption on certain foreign-sourced professional income.

Furthermore, the majority of foreign-sourced income—such as dividends, interest, capital gains, and rents—will be exempt. However, it is important to note that pensions are excluded from these exemptions. These benefits will be available for a period of 10 years.

To qualify, individuals must fulfill the following conditions:

• They become tax residents in Portugal
• They have not been tax residents in the previous five years
• They earn income in certain professional categories

Individuals in the following categories will be eligible for the Tax Incentive for Scientific Research and Innovation program:

• Teachers and scientists
• People with qualified jobs according to the tax code and members of corporate bodies within the scope of contractual benefits for productive investment, such as:

1. 1. Activities carried out within the scope of the extractive industry and the manufacturing industries
   2. Tourism, including activities of interest to tourism
   3. IT and related activities and services
   4. Agricultural, aquaculture, fish farming, farming, and forestry activities
   5. Research and development, and high technological intensity activities
   6. Information technologies and audiovisual and multimedia production
   7. Defense, environment, energy, and telecommunication
   8. Activities of shared service centers

• Highly qualified professionals, who will be anyone performing one or more of the above activities and carrying them out in a qualifying entity
• People working for companies recognized by relevant government agencies — AICEP, EPE, IAPMEI, IP — or relevant to the national economy, working with investment etc.
• Research and development personnel who meet the definitions of the tax code
• People working for startups, certified by law as such
• People working in Madeira and the Azores who meet the terms set by these regions

Beneficiaries of the NHR program or the Regressar Program cannot apply.