✓ Selection of the best tax regimes and benefits in Portugal
✓ Comparison of taxes across different jurisdictions (EU, USA, and UK)
Portugal's Tax System
Portugal stands out among low-tax jurisdictions due to its competitive tax system, which attracts many foreigners, skilled professionals, and entrepreneurs.
The tax system in Portugal includes both national and local (municipal) taxes. It’s also important to note that tax rates and levies can vary between mainland Portugal and the island of Madeira, which should be considered when planning financial operations.
The tax year in Portugal coincides with the calendar year, running from January 1 to December 31.
A key aspect of the tax system is the residency-based taxation principle.
Tax Resident of Portugal
A tax resident is an individual or legal entity subject to taxation in a country based on their residence, permanent abode, or place of registration for a legal entity.
According to Portuguese tax law, an individual is considered a tax resident of Portugal if they meet one of the following conditions:
Spend more than 183 days (consecutive or not) in Portugal within a 12-month period.
Spend less time in Portugal, but have a permanent residence or the center of their life interests in Portugal.
What is the difference between tax resident and non-resident in Portugal?
⇒ By becoming a tax resident in Portugal, you will pay Portuguese tax on all your income from sources around the world. ⇒ Non-residents will be subject to Portuguese tax only on income derived from Portuguese sources.
Special Tax Status in Portugal: NHR Regime
For a long time, Portugal has offered a favorable tax program called the Non-Habitual Resident (NHR) regime, which was popular among new residents.
Under the NHR program, a fixed tax rate of 20% applies to certain income from Portuguese sources (specific professions and self-employment), compared to the progressive tax rate of up to 48% under the general income tax regime.
Additionally, new residents are exempt from taxes for 10 years on most types of personal income derived from foreign sources or income taxed in another country.
However, in November 2023, the Portuguese Parliament approved the termination of the Non-Habitual Residency (NHR) regime, effective January 2024.
Individuals who previously obtained NHR status will continue to benefit from the regime and can retain the 20% tax rate on their income until the end of the 10-year period.
NHR 2.0: Portugal’s New Tax Regime in 2024
The Portuguese government has announced the introduction of a new favorable tax regime. This regime is now available only to those working in specific sectors.
Replacing the previous NHR, the new regime applies to individuals employed or self-employed in roles such as higher education teaching, scientific research, technology, and startups:
Higher education teaching
Scientific research
Positions in technology or startups (including board members)
Highly qualified professions in companies with significant investment potential
Jobs in industries and service companies generating at least 50% of their turnover from exports
Activities of tax residents in Madeira and the Azores (subject to specific regional legislation)
If you meet the criteria, you will receive:
1. A fixed 20% tax rate on income from employment/self-employment
2. Exemption from taxes on foreign income, such as employment income, rental income, dividends, and more.
Contact our specialists for more detailed information and consultation!
Personal income tax in Portugal is known as Imposto sobre o Rendimento das Pessoas Singulares (IRS).
Portugal recognizes six categories of income:
Employment income (Category A)
Business/professional income (Category B)
Investment income (interest, dividends, and royalties) (Category E)
Rental income (Category F)
Capital gains (Category G)
Pensions (Category H)
Portuguese tax residents are taxed on their worldwide income at progressive rates ranging from 13.25% to 48%.
Non-residents are only liable for income tax on income earned in Portugal at a flat rate of 25% on their taxable compensation.
Income Tax Rates in Portugal for 2024
For 2024, the tax rates for the first five income categories have been reduced to assist low and middle-income earners.
For example, while income from €11,284 to €15,992 was taxed at a rate of 26.5% in 2023, in 2024, income from €11,623 to €16,472 will be taxed at 23%.
Personal Income Tax Rates in Portugal for 2024:
Up to €7,703 – 13.25%
€11,623 to €16,472 – 23%
€16,472 to €21,321 – 26%
€21,321 to €27,146 – 32.75%
€27,146 to €39,791 – 37%
€39,791 to €51,997 – 43.5%
€51,997 to €81,199 – 45%
Over €81,199 – 48%
Personal Tax Allowances and Deductions in Portugal
When calculating personal income tax in Portugal, certain deductions from taxable income are available up to specific limits. These include expenses related to healthcare, education, social security, and pension plans. Additionally, certain tax allowances apply depending on marital status, the number of dependents, and overall income level.
Social Security Contributions
Employers are required to make monthly contributions at a standard rate of 23.75% of their employees’ gross monthly salary. Employees contribute 11%.
Inheritance and Gift Tax
Inheritance and gift tax in Portugal is regulated based on the location of the property and the degree of kinship. Specifically, the tax rate is 0.8% for inheritances and gifts involving mainland Portugal. For the Madeira region, the inheritance and gift tax rate is set at 0%.
Our qualified lawyers and tax specialists provide expert knowledge and assistance in developing the most beneficial strategies for businesses and individuals!
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Property Taxes in Portugal
Property taxes in Portugal can vary depending on the type of property, its location, and its intended use. The main property taxes include:
Stamp Duty on Property Transfers (Imposto de Selo) – Ranges from 0.4% to 0.8% of the property’s value, depending on the type and value of the property.
Property Transfer Tax (IMT – Imposto Municipal sobre as Transmissões Onerosas de Imóveis)
This tax is applied each time a property is transferred. It must be paid by the buyer before signing the final purchase agreement.
The rate ranges from 0% to 6%, depending on various criteria:
Type of property: Urban or rural
Location of the property: Mainland Portugal or its autonomous regions
Purpose of purchase: Primary or secondary residence
Municipal Annual Property Tax (IMI – Imposto Municipal sobre Imóveis)
The tax rate ranges from 0.3% to 0.8%, depending on the municipality and the type of property. Portuguese municipalities set their own property tax rates.
Certain properties may be exempt from paying IMI. For example, properties used as a permanent residence or rented out can be exempt from property tax for up to three years. The specific conditions for exemption can vary by municipality.
Rental Income Tax
Rental income is taxed at a flat rate of 28% for both residents and non-residents of Portugal who own property.
Corporate Taxes in Portugal
Legal entities are considered tax residents of Portugal if they are registered in Portugal or if their management is conducted from Portuguese territory. All types of commercial companies fall under this residency classification.
Corporate Tax Rates
The rates of fees and taxes on mainland Portugal differ from those in the Madeira Free Trade Zone and the Autonomous Region of the Azores.
Mainland Portugal
For companies located on the mainland, the tax on the first €50,000 of income is 17%, and for income above this amount, the rate is 21%.
Madeira
For companies registered in Madeira, the tax rate is 11.9% for income up to €50,000 and 14.7% for income above this amount.
Companies participating in the Madeira International Business Center (MIBC) program are taxed at a rate of 5%. This rate applies to profits derived from operations exclusively with non-resident companies or with other companies operating under the MIBC framework.
Special Rates
The corporate tax rate can be 12.5% in some low-density population regions.
Startups are taxed at a rate of 12.5% on the first €50,000 of taxable income.
Taxes for Sole Proprietors and Freelancers in Portugal
A sole proprietorship in Portugal is the simplest form of business organization, ideally suited for small businesses that do not require significant investments.
As a sole proprietor, you will be responsible for the following taxes:
🔸 Personal Income Tax for the Self-Employed
Sole proprietors and freelancers in Portugal consider their income as personal income and pay Portuguese personal income tax rather than corporate tax.
Category B: Income from self-employment from a profession or business in Portugal is taxed at rates ranging from 13.25% to 48%.
Various deductions and allowances are also permissible.
🔸 Social Security Contributions, including healthcare, unemployment benefits, and pension
Self-employed workers are responsible for making their own contributions to the social security system. Social security contributions vary, but the overall contribution rate for the self-employed in Portugal is 21.4%.
The monthly contribution is calculated based on the relevant income, which is 70% of the value of services provided in the previous quarter, divided by 3.
🔸 VAT
The general rate is 23% on taxable goods and services.
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Taxes in Portugal 2024 - FAQ
What does it mean to be a tax resident of Portugal?
Being a tax resident of Portugal entails that an individual is subject to taxation in this country. An individual is classified as a tax resident of Portugal if they: spend more than 183 days in Portugal during a calendar year; or spend a shorter period in Portugal but own property that is used as their personal residence.
What are the obligations after obtaining tax resident status in Portugal?
Being a tax resident in Portugal comes with several obligations, including the filing of annual tax returns. A tax resident is required to provide information on income earned both within Portugal and abroad. These declarations must encompass all sources of income, and the tax resident is obligated to pay the relevant taxes on their worldwide income.
What tax benefits are available in Portugal?
Portugal offers a range of tax benefits that can significantly reduce income tax obligations. When calculating income tax, various deductions from taxable income are taken into account within certain limits. These deductions can cover expenses related to healthcare, education, and social security. Additionally, tax benefits are applied based on the taxpayer’s marital status, number of dependents, and overall income level. For example, all residents are entitled to a general tax deduction of €4,104 per year + an additional deduction of €600 for each dependent.
What are the tax implications for cryptocurrency income in Portugal?
Portugal has made amendments to its legislation, under which income from cryptocurrencies is subject to taxation for individuals, but there is a specific threshold for exemption from taxation.
Feod Group Services
Assistance in obtaining a Portuguese residence permit (Golden Visa) through the D7 visa without investments (as a financially independent foreigner); Residency permit through investment (Golden Visa); Business immigration to Portugal; family reunification.
Consultations regarding the tax system in Portugal. Comparison of taxation in different EU countries.
Preparation of documents confirming the legality of the source of funds.
Obtaining a Portuguese tax number – NIF.
Assistance in the purchase or sale of real estate and providing legal support to clients after the transaction is completed.
Assistance in renting real estate in the chosen region, preparation of rental agreements, and their registration.
Opening personal and corporate bank accounts in Portugal.
Assistance in registering companies in Portugal (help with office rental, business plan development, necessary documentation, employment contract preparation).
Support in purchasing an existing business in Portugal.
Enrollment of children in schools, colleges, and universities in Portugal and other EU countries.
Submission of documents for Portuguese citizenship.
In 2013, she graduated in law from the National University «Odessa Law Academy» with honors and received a Master of Law degree. Anastasia Taran has experience in international and contract law, as well as corporate and tax law in Europe. Within the framework of Feod Group, she specializes i...
In 2013, she graduated in law from the National University «Odessa Law Academy» with honors and received a Master of Law degree. Anastasia Taran has experience in international and contract law, as well as corporate and tax law in Europe. Within the framework of Feod Group, she specializes in immigration and corporate law of European countries, particularly:
Since 1992, Feod Group has been providing a wide range of legal, business and immigration services in Europe, the USA and other countries of the world.
The company has accredited western lawyers, experts in various fields of law and jurisdictions of the world.
Having offices in Europe and the USA, Feod Group provides rapid paperwork and maximum customer comfort.
We provide our clients with related services, such as relocation and adaptation abroad, organizing family relocation abroad, enrollment of children in schools and many other services.
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