Taxes in Portugal for Foreigners: Navigating the Portuguese Tax System in 2025

Taxes for expats in Portugal can be complex, but understanding them is crucial if you’re a non-EU entrepreneur, pensioner, investor, highly-skilled professional, or digital nomad looking to immigrate to Portugal.

Understanding taxes in Portugal for foreigners can seem complex, but it’s essential for managing your finances effectively as an expat. To help you better understand how things work, we've compiled a guide to Portugal's tax landscape.

In this guide, we’ll walk you through:

• The key aspects of Portugal's tax system for foreigners
• How to register with the Portuguese tax authorities
• Mandatory Tax Representatives in Portugal for Foreigners
• Insights on changes to and benefits of the Non-habitual Residency (NHR) program
• Taxation criteria for foreigners

An Overview of the Portuguese Tax System

Portugal’s tax system is managed by the Tax and Customs Authority (Autoridade Tributária e Aduaneira). It encompasses a variety of federal and local taxes that affect residents and non-residents.

At the federal level, the main taxes include income tax, corporate tax, value-added tax (VAT), capital gains tax, and inheritance tax. Each of these taxes funds public services and infrastructure. On a local level, property owners are subject to the IMI (Imposto Municipal sobre Imóveis), which is based on the value of their property.

Portugal's tax year is from 1 January to 31 December, aligning with the calendar year. This structure ensures that taxpayers' tax obligations are clear and manageable, as the rules governing taxes in Portugal for expats depend heavily on your residency status and sources of income.

Who in Portugal has to pay taxes?

So, how do you know if you're considered a taxpayer in Portugal? Determining your residency status directly impacts your Portugal tax for expats, influencing which income is taxable, 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.

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

How to Register in the Tax System in Portugal

Registering in the Portuguese tax system starts with registering as a taxpayer and obtaining your NIF (Número de Identificação Fiscal) number. You can request your NIF online through this website or go to Finanças and request a NIF in person.

Once you've received your NIF, you'll need to fill out a form 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.

As highlighted before, the Portuguese tax year starts on January 1 and ends on December 31. Returns are submitted between April and June of the following year and can be completed online via the Portuguese Tax Authorities' website or in print.

Returns must be filed on time to avoid potentially hefty penalties, ranging from €200 to €2,500. If doing business in the country, hiring an accountant or bookkeeper is advisable, even for small businesses.

Types of Taxes in Portugal

Understanding the different types that apply to goods, services, and property is important.

Taxes on goods and services

Businesses with taxable sales exceeding €10,000 must pay VAT (Imposto Sobre o Valor Agregado, or IVA). This tax has three rates:

• Reduced Rate: 6% in mainland Portugal for essential items like food and books.
• Intermediate Rate: 13% in mainland Portugal for goods such as wine and musical instruments.
• Standard Rate: 23% in mainland Portugal for most other goods and services.

These taxes are crucial for funding public services and infrastructure.

Local taxes

The main local tax is the IMI (Imposto Municipal Sobre Imóveis), applicable to property owners. Rates differ by municipality and contribute to local services like waste collection and street maintenance. If you own property on the last day of the tax year, you’re liable for IMI. Homes valued over €600,000 incur a higher tax called AIMI, which is often seen as a “wealth” tax.

Does Portugal Have Special Tax Regimes for Foreigners?

No. The tax rate for non-resident foreigners in Portugal is 25%. This applies to all income derived from a Portuguese source. Non-residents must also pay a flat 25% rate on income earned from interest or dividends (capital gains from selling shares may be exempt from this rate).

Income Tax in Portugal for Foreigners

Portugal operates a progressive income tax system for residents, a flat rate system for non-residents, and a variety of taxes for individuals and businesses. Residents are taxed on worldwide income, while non-residents are taxed only on Portuguese-sourced income. The system applies to various categories of earnings, including employment, self-employment, investment returns, rental income, and capital gains.

Tax residency is generally established if you spend more than 183 days in Portugal in a 12-month period or maintain a habitual residence there. The standard rates range from about 14.5% for lower income brackets to 48% for the highest earners, with an additional solidarity surcharge for very high incomes.

The income tax rate expats in Portugal pay depends on their residency status and employment situation. For non-residents, the Portugal tax rate for foreigners is generally fixed at a flat 25 percent on Portuguese-sourced income. To simplify estimating your liability, consider using a Portugal tax calculator for foreigners, which helps approximate your annual tax responsibilities.

Residents are subject to progressive tax rates based on their worldwide income. However, some residents are also registered in the Non-Habitual Residency (NHR) regime, which, as discussed previously, offers beneficial tax treatment for ten years. Personal income tax, or Imposto sobre o Rendimento das Pessoas Singulares (IRS), applies to Portuguese residents and non-residents earning Portuguese-sourced income.

The resident income tax rates for 2024 are as follows:

Typically, income taxes are deducted automatically from paychecks. However, it's still mandatory to file an annual tax return. The income tax owed is determined by considering the taxable income earned, applying the corresponding tax rate, and subtracting any allowable deductions, such as those related to education or healthcare expenses.

IRS is calculated on an individual basis, but married couples or those in civil partnerships have the option to file jointly. In these instances, the tax applies to the combined taxable income of the household members. The Portugal income tax rate for individuals ranges from 14.5 percent to 48 percent.

Income tax in Portugal is imposed on revenues that are categorized into six key areas:

1. Income from employment
2. Income from self-employment activities
3. Returns from investments
4. Income derived from renting properties within Portugal
5. Capital gains realized from the sale of properties, assets, or stocks
6. Pensions received in Portugal, encompassing private pension schemes

Self-employed income tax in Portugal

Sole traders, freelancers, employed digital nomads, and individuals operating unincorporated businesses in Portugal are considered personal earnings. As a result, they pay Portuguese income tax instead of corporate tax.

Filing a Tax Return in Portugal

If you have access to the Finanças Portal, you can submit your annual tax return statement online. Alternatively, you can submit it in person at:

• Serviço de Finanças offices
• Citizen Shops (Lojas de Cidadão)
• Parish councils (Câmara Municipal)

Portugal Property Taxes

Portugal's property taxes primarily revolve around two key levies: the Municipal Property Tax (IMI) and the Property Transfer Tax (IMT). IMI is an annual tax paid by property owners, calculated based on the assessed value of the property (known as Valor Patrimonial Tributário - VPT).

The rates typically range from 0.3 percent to 0.45 percent for urban properties, although local municipalities may adjust these within defined limits. Properties in rural areas are usually taxed at a fixed rate of 0.8 percent. IMI revenue supports local services such as maintenance of roads, schools, and other public infrastructure, making it a crucial aspect of property ownership in Portugal.

When acquiring a property, buyers are required to pay IMT, a one-time property transfer tax. IMT rates vary depending on factors like property type, intended use, and purchase price. Residential property tax rates progressively range from 1 percent to 8 percent, depending on property value, with higher-value properties attracting higher rates. Buyers also incur Stamp Duty, typically at a flat rate of 0.8 percent of the purchase price, further contributing to the initial acquisition costs.

Additionally, homeowners owning properties with a tax value exceeding €600,000 face an annual wealth tax known as the Additional IMI (AIMI). The AIMI rates range from 0.7% to 1.5%, increasing progressively based on the property's assessed value.

While Portugal’s tax framework on property is relatively straightforward compared to other European countries, understanding these obligations and incorporating them into financial planning is essential for avoiding unexpected expenses and ensuring compliance with local regulations.

Capital Gains Tax in Portugal

Capital Gains Tax is a tax charged on the profit when you sell or dispose of an asset that has increased in value. This tax applies to residents and non-residents in Portugal, including foreigners. It's important to note that different capital gains tax rates and exemptions may apply depending on your residency status and the type of asset in question.

Capital gains property tax

For real estate sales, the capital gains are the difference between the sale price and the original purchase price (adjusted for inflation). The cost of major improvements made within the last 12 years can also be deducted.

If you're a tax resident in Portugal, you may have to pay tax on 50 percent of the gain from the sale of your property. This gain is then added to your other taxable income for the year and taxed at the marginal rate (between 14.5 percent and 48 percent).

However, the capital gain could be tax-exempt if the proceeds are reinvested in the purchase of another primary residence in Portugal or in the EU/EEA within 36 months.

Non residents in Portugal are taxed at a flat rate of 28 percent on 100 percent of the gain from the sale of Portuguese property. However, you may be given tax credits under double taxation treaties and only need to pay this tax in your home country.

Capital gains tax on shares and securities

Capital gains from selling shares and other securities are also subject to tax in Portugal. For residents, these gains are taxed at a flat rate of 28 percent. However, only 50 percent of the gains from selling shares in micro and small enterprises are subject to this tax if the shares were held for more than three years.

For non-residents, only capital gains derived from selling shares in Portuguese companies are subject to Portuguese CGT.

Inheritance Tax in Portugal

Technically, there's no "inheritance tax" for foreigners in Portugal. However, you must be aware of stamp duty, which applies to inherited assets in Portugal, regardless of the beneficiary's residency status. Here's the key information:

Rate: 10 percent on the value of inherited assets (real estate, cars, art, etc.)
Exemptions: Spouses, descendants (children, grandchildren), and ascendants (parents) are exempt from paying stamp duty.
Tax base: Calculated on the VPT (Valor Patrimonial Tributário) for real estate or market value for other assets.

Any inherited assets in Portugal are subject to this 10 percent stamp duty unless exempt. Remember, this only applies to Portuguese assets, not assets you inherit elsewhere.

Portugal Company Taxes for Expats

As a foreign entrepreneur or representative of a foreign company establishing operations in Portugal, the main company taxes you'll encounter in Portugal are:

Corporate Income Tax (IRC): The cornerstone of the Portuguese tax system for businesses, the IRC applies a standard rate of 21 percent to your company's taxable profits.

However, certain circumstances, such as engaging in research and development activities or operating in designated low-density areas, might entitle you to a reduced corporate tax rate, ranging from 17 percent to 12.5 percent. Additionally, companies are subject to a municipal surtax of 0.4 percent to 0.475 percent, depending on the municipality in which they operate.

Value-Added Tax (IVA): Portugal's standard VAT rate is 23 percent. However, essential goods and services like food, medicines, and public transportation benefit from reduced rates of 13 percent and 5 percent. Certain transactions, including exports and international services, are exempt from VAT.

Other potential taxes: Depending on your company's activities and assets, you might encounter additional taxes. The annual Local Business Tax (IMI) applies to any real estate owned by your company, while the Stamp Duty (Imposto do Selo) taxes specific legal documents and transactions, such as company registrations and contracts.

The deadline for completing Portuguese corporate tax returns is the last day of the fifth month following the end of the tax year. So if the company's tax year runs from January to December, the deadline would be the end of the following May.

Mandatory Fiscal Representatives in Portugal for Foreigners

One essential aspect of understanding is the requirement for a mandatory tax representative. You must appoint a tax representative if you are a non-resident individual from a non-European Union, European Economic Area country, or a foreign company generating income in Portugal.

The primary purpose of a tax representative is to ensure compliance with Portugal's tax laws and to act as a liaison between you and the Portuguese tax authorities.

A tax representative can assist you with the following tasks:

• Filing tax returns: Your tax representative will help you prepare and submit your annual income tax return according to the tax year, ensuring you meet all deadlines and requirements, record your annual turnover, pay Value Added Tax (VAT) if you need to, pay business taxes, and pay tax on income earned.
• Handling tax payments: Your representative will manage your payments to the Portuguese tax and customs authority, including income tax, property tax, municipal real estate tax, local taxes, and any other applicable taxes.
• Communicating with tax authorities: As your intermediary, your tax representative will handle all correspondence with the tax and customs authority, ensuring that your tax affairs are current and that you comply with local laws.
• Providing guidance on tax matters: Your tax representative will offer tax advice on matters such as tax deductions, property taxes, tax liability, understanding the implications of the NHR program or navigating the complexities of Portugal's double tax treaty agreements.
• Record-keeping: Your tax representative will maintain records of your tax filings, payments, and other relevant documents, ensuring you can access these records if needed. Given the intricacies of Portugal tax laws for expats and tax brackets, seeking professional advice can significantly simplify compliance.

To appoint a tax representative, you must choose a Portuguese resident with a Portuguese address registered with the tax authorities. This person will require your NIF number and a signed power of attorney to act on your behalf. Choosing a reliable and experienced tax representative is crucial to ensure the smooth management of your tax obligations in Portugal.

This mandatory tax representative is also essential to obtain your NIF if you're a non-EU/EEA national. Non-EU residents seeking a NIF usually incur charges from their fiscal representative for the application process. Additionally, many lawyers charge recurring annual fees for providing fiscal representation. The cost of securing a fiscal representative in Portugal can vary widely, ranging from as low as €50 to well over €1,000.

At GetNIFportugal, we charge €350 to link you with a Portuguese attorney who will act as your fiscal representative and secure an NIF on your behalf. Our ongoing fiscal representation service includes relaying messages from the Tax Office to you until a new NIF tax representative is assigned to you (this service is billed at an annual rate of €350).

The Importance of Getting a NIF and NISS in Portugal

Navigating taxes in the country is significantly simplified by obtaining two crucial tax identification numbers: the Número de Identificação Fiscal (NIF) and the Número de Identificação da Segurança Social (NISS). These identification numbers are essential for managing your tax and social security obligations as well as your social security benefits in Portugal.

Portugal's tax identification number (NIF)

The NIF is a unique tax identification number assigned to both individuals and companies operating in Portugal. Getting a NIF number is one of the most important steps towards living and working in Portugal.

It is essential for various aspects of living and doing business in the country. Some of the primary purposes of a NIF include:

• Registering with the tax authorities: The NIF is necessary for tax registration, ensuring that the tax authorities correctly identify you.
• Opening a Portuguese bank account: Portuguese banks require your NIF to open an account in Portugal, which is vital for managing your finances and making transactions within the country.
• Buying or selling property: When purchasing or selling real estate in Portugal, you must provide your NIF to finalize the transaction and manage property taxes in Portugal.
• Signing contracts: A NIF is required for any legally binding contract in Portugal, whether you're entering into a rental agreement, employment contract, or setting up utility services.
• Filing tax returns and making tax payments: A NIF is necessary for filing your income tax returns and making tax payments to the Portuguese tax authorities.

Social security number (NISS)

The NISS is a unique social security and health insurance identification number assigned to individuals working in Portugal. Getting a social security number in Portugal (NISS) is crucial for managing your social security contributions and accessing social benefits. Some of the primary purposes of a NISS include:

• Registering with the social security system: The NISS must enroll in Portugal's social security system, ensuring the authorities correctly identify you.
• Paying social security contributions: Your NISS tracks your social security contributions, which are mandatory for employees, self-employed individuals, and business owners.
• Accessing social benefits: The NISS is necessary for claiming social benefits, such as healthcare services, unemployment benefits, and pensions.

Tax Responsibilities for Foreigners in Portugal

As a tax resident in Portugal, your taxes will depend on factors such as your assets, your residence status in the country, and whether you've registered for the NHR program. However, almost every expat in Portugal with a regular "active" source of income will have to pay income taxes.

Essential Tax-Related Tips for Foreigners

Navigating the complexities of tax obligations as a foreigner in Portugal can seem overwhelming at first. However, by understanding the key aspects of the Portuguese tax system, you can simplify the process significantly. This knowledge will help you take advantage of beneficial tax regimes and avoid common pitfalls.

Tax residency status: If you spend more than 183 days a year in Portugal or have your primary home there, you will be considered a tax resident, subject to Portuguese tax on your worldwide income. Navigating the nuances of Portuguese tax for expats requires careful planning and a clear understanding of the legal obligations to avoid costly errors.

Foreign income obligations: Even if income is earned abroad, tax residents must declare it in Portugal. Double taxation agreements often help avoid paying taxes twice on the same income. Expats can benefit from a Portugal income tax calculator, which allows foreigners to estimate taxes owed accurately based on their residency status and earnings.

Dual Citizenship: Dual citizens may be liable for taxes in both countries of citizenship. However, tax treaties between Portugal and other countries typically help mitigate double taxation.

Inheritance tax implications: Portugal levies Stamp Duty (10%) on inheritance and gifts. This tax applies primarily to property and can vary depending on the relationship between the donor and the recipient. Certain family members, like spouses and children, might be exempt from inheritance tax.

Property-related taxes: Foreigners owning property in Portugal are liable for property taxes, including Municipal Property Tax (IMI) and Property Transfer Tax (IMT) upon purchase.

Exemptions and Tax Treaties

Portugal has established double taxation treaties with many countries to avoid double income taxation, including capital gains. Therefore, depending on your country of tax residency, you might not have to pay CGT in Portugal or be credited for the tax paid in Portugal against your tax liability in your home country.

Before making any significant asset sale or purchase, it's always recommended to consult with a tax advisor or professional familiar with the tax laws of Portugal and your home country to understand the potential tax implications and planning opportunities.

How We Can Help

We offer services that help foreigners navigate the Portuguese tax system. For example, we offer tax representation and can help you get a NIF online. Simply apply online, and we'll deliver your NIF number to your email, helping you get set up and registered on the Portuguese tax system.

We can also help you open a Portuguese bank account with one of Portugal's leading banks. This allows you to pay income tax more easily, pay social security contributions, and make financial transactions in the country.

Get in touch today.

Frequently Asked Questions about Portugal Taxes for Expats

Is Portugal still a tax haven?

Portugal does not qualify as a formal tax haven. It enforces OECD transparency standards, exchanges information, and levies standard corporate and personal taxes. It offers favorable NHR benefits but remains compliant with EU and OECD regulations, so it is not listed on any EU or OECD blacklist.

Is Portugal tax-free for foreigners?

Foreigners living in Portugal must pay taxes on their Portuguese-sourced income. If they qualify for the NHR regime, they may receive tax exemptions on most foreign income. Residents staying over 183 days per year are considered tax residents and must declare global income, subject to double taxation agreements.

How do I register for tax in Portugal as a foreigner?

Register for tax in Portugal as a foreigner by obtaining a Portuguese tax identification number (NIF) at a local tax office or via a legal representative. Submit proof of ID, address, and residency status. This NIF is required for opening bank accounts, signing contracts, and filing taxes.

What types of taxes do foreigners in Portugal have to pay?

Foreigners in Portugal must pay income tax (IRS), value-added tax (IVA) on purchases, municipal property tax (IMI) if they own real estate, and stamp duty on certain contracts. Tax residents must also declare global income. NHR status can reduce or exempt some taxes on foreign income.

What is the income tax rate for non-resident foreigners in Portugal?

Non-resident foreigners in Portugal pay a flat income tax rate of 25% on Portuguese-sourced income. This includes wages, rental income, and self-employment earnings earned within Portugal. Non-residents are not taxed on foreign income unless they become tax residents by staying over 183 days in a year.

How is personal income tax calculated for foreigners in Portugal?

Personal income tax for foreigners in Portugal is calculated based on residency status. Tax residents pay progressive rates from 14.5% to 48% on worldwide income. Non-residents pay a flat 25% on Portuguese-sourced income. NHR residents may benefit from a 20% flat rate on certain professional income and exemptions on foreign income.

Can I hire a tax professional to help me file taxes as a foreigner?

Yes, you can hire a tax professional or a legal representative to assist you with your taxes. They can guide you on the tax system, help you with your tax forms and tax filings, and ensure you take advantage of any available tax benefits.