Barbara Queiróz Updated: November 3, 2025
Planning to move to Portugal? Perhaps you are there for work, family, or have investment interests. If you earn money or are a tax resident there, you should know how taxes in Portugal work and how they apply to you.
Taxes on salaries are progressive and depend on your total income. Taxes on assets, such as real estate, crypto, and shares, are often subject to separate or specific tax rules and rates.
Compared to other countries, Portugal ranked 33rd in the International Tax Competitiveness Index in 2025, outranking Spain, Poland, Italy, and France. It has favorable tax incentives for new residents, foreign investors, and startups.
In this guide, you can find everything you need to know about the Portuguese tax system for foreigners, how to calculate the income tax, various tax liabilities, and the tax advantages you can expect.
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Quick Summary
- Portugal has various types of taxes, including personal income tax (IRS), corporate income tax (CIT), property taxes, and Value-Added Tax (VAT).
- Residents from countries with double taxation agreements can avoid getting taxed twice in Portugal.
- Autonomous regions, such as Madeira and the Azores, have different tax rates from mainland Portugal.
Overview of the Portuguese Tax System
Portugal taxes residents on their worldwide income and non-residents on income earned within Portugal. This is known as a territorial tax system for non-residents and a worldwide tax system for residents.
The system includes income tax (IRS), corporate tax rate (IRC), social security, and property and consumption taxes. There are progressive rates, ranging from 12.5 percent to 48 percent, plus a solidarity surcharge for higher incomes. However, some categories, such as investment income, are subject to a flat rate.
According to the Global Foundation Tax Index for 2025, the Portuguese tax system ranked 33rd in international competitiveness. The country offers more favorable tax policies for businesses and investors than France, Italy, Colombia, Poland, and Spain.
Portugal Tax Regimes for Expats & Non-Habitual Residents
Portugal’s NHR 2.0 (Non-Habitual Residency Regime) is a temporary, special tax advantage that encourages some foreigners to move there. If you’re a new resident and a highly qualified professional (like a scientist, top manager, or professor), NHR 2.0 offers a flat tax rate of 20 percent on your Portuguese income for 10 years.
Most of your foreign income earned outside Portugal, such as dividends, interest, or certain job income, can be tax-free in Portugal during those 10 years. Portugal also has Double Tax Treaties with many other countries, so foreigners don’t get taxed twice on the same income.
Unlike the old NHR program, foreign pension income is no longer exempt and is now taxed at the normal, progressive personal income tax (IRS) rates in Portugal, up to the top marginal rate of approximately 53 percent.
Who needs to pay taxes in Portugal?
In Portugal, you must pay taxes if you:
- Have a permanent residence in Portugal
- Spend more than 183 days in Portugal during any 12-month period
- Have an investment or business in Portugal
- Receive an annual income in Portugal (from self-employment, salaries, pensions, agricultural activities, or alimony)
- Own property in Portugal
- Earn passive income by renting property or land in Portugal
- Own a boat or aircraft in Portugal
In Portugal, both residents and non-residents pay taxes. Taxes are imposed on personal income based on your residency status.
The income comes in different categories, such as:
- Employment income (salaries or wages)
- Business and professional income (self-employment or freelancing)
- Investment income (interest or dividends)
- Rental income (Portugal real estate)
- Capital gains (profit you get from the sale of assets, like properties, shares, and crypto).
Are you interested in how crypto taxes work? Read our complete guide for crypto traders in Portugal.
How to register for taxes in Portugal?
To register for taxes in Portugal, begin by acquiring your NIF number (Número de Identificação Fiscal), which serves as your tax identification number. You can apply in person at a local tax office (Finanças) or Citizens’ Shop (Loja do Cidadão), or through an authorized representative if you’re abroad.
Once you have your NIF, you can fill out a form with the Portuguese Tax and Customs Authority (AT). If you are working or living in Portugal, you also need to register separately for social security. You can carry out the payments via the Portal das Finanças website.
Note: You must pay your personal income tax (IRS) by the deadline set in your tax assessment, usually by 31 August or 31 December. If you miss it, there is a late payment interest of around 4 percent to 6 percent per year, plus other penalties.
Consumption Taxes in Portugal
Portugal has a Value-Added Tax (VAT) that affects most goods and services. These tax rates apply to the Portuguese Mainland.
Rate type | Rate | Applies to |
Standard | 23 percent | General goods or services |
Intermediate | 13 percent | Some foods, catering services, cultural events, wine, or specific agricultural products |
Reduced | 6 percent | Essentials, healthcare, books, transportation services, or hotels |
Zero-rated | 0 percent | International or intra-EU exports and transport |
Source: Avalara
However, the Value-Added Tax (VAT) is not the same across the entire country. Autonomous regions, like Madeira and the Azores, have lower VAT. For example, Madeira has a standard of 22 percent, intermediate of 12 percent, and reduced of 5 percent. In the Azores, the VAT for standard is 18 percent, intermediate is 9 percent, and reduced is 4 percent.
Portugal Income Tax
Portugal uses a personal income tax rate (IRS or Imposto sobre o Rendimento das Pessoas Singulares). The rate is often progressive, plus a solidarity surcharge for higher incomes. However, some categories, such as investment income, are subject to a flat rate.
If you are a resident in Portugal, you pay taxes on your worldwide income. The progressive rates increase with earnings, ranging from 12.5 percent to 48 percent as of 2025. If you are not a resident, you pay a flat rate of 25 percent on your income from Portuguese sources, such as work or pensions.
High-income earners also pay a solidarity surcharge. For example, if you earn between €80,000 and €250,000, you pay 2.5 percent on the portion of taxable income. If you earn more than €250,000, the rate is 5.0 percent.
Here are the Portugal mainland income tax brackets for 2025:
Taxable income (€) | Tax rate (in percentage) | Deductible Amount (€) |
Up to 8,059 | 12.50 | 0 |
8,059 to 12,160 | 16.00 | 282.07 |
12,160 to 17,233 | 21.50 | 950.91 |
17,233 to 22,306 | 24.40 | 1,450.67 |
22,306 to 28,400 | 31.40 | 3,011.98 |
28,400 to 41,629 | 34.90 | 4,006.10 |
41,629 to 44,987 | 43.10 | 7,419.54 |
44,987 to 83,696 | 44.60 | 8,094.51 |
Over 83,696 | 48.00 | 10,939.90 |
Source: PWC Portugal
Income tax for self-employed workers
Most entrepreneurs, freelancers, and self-proprietors fall under Portugal’s Simplified Regime or Regime Simplificado. To qualify, you must earn less than €200,000 per fiscal year.
The Portuguese tax authority applies a fixed coefficient to your gross income and calculates the total taxable income.
Type of income | Fixed coefficient | Taxable income percentage |
Services (e.g., consulting, IT, design) | 75 percent | 75 percent of your gross income is considered taxable |
Product sales (e.g., manufacturing, trade) | 15 percent | 15 percent of your gross income is considered taxable |
High value-added activities (for those with NHR status) | 20 percent | 20 percent of your gross income is taxable |
For example, if you earn €40,000 from services, your taxable income is:
€40,000 x 75% = €30,000
Property Taxes in Portugal
Portugal has several property taxes that apply when you buy, own, or sell real estate. Foreigners face no restrictions when buying property in Portugal. However, they are expected to pay property taxes regardless if they live in the country or abroad.
Here is a quick look at the four main property taxes in Portugal for foreigners.
IMT – Property Transfer Tax
Property Transfer Tax also known as IMT or Imposto Municipal sobre as Transmissões Onerosas de Imóveis, is a one-time tax that a property buyer pays after transferring property ownership. You must pay it before you sign the final deed (Escritura).
The rate is progressive and depends on how you use the property and where it is located. For example, mainland Portugal and the autonomous regions have different tax rates. To calculate IMT taxes, you can use our Goldcrest Portugal tax calculator.
The table below provides the IMT rates based on the type of property.
Property type | Rate |
Rural property | 5 percent |
Urban property (not including residential) and other acquisitions | 6.5 percent |
Rural or urban properties (including housing) bought by companies based in offshore jurisdictions or entities controlled directly or indirectly by offshore companies: 10 percent | 10 percent |
Source: PWC Portugal
Additional rates, exemptions, and reductions to real estate taxes for a permanent place of residence may also apply. You can check our ultimate guide on property taxes in Portugal to learn more.
IMI – Annual Municipal Property Tax
IMI is a local property tax that the property owner pays every year based on the taxable value of their rural, urban, or commercial real estate in Portugal. The proceeds go directly to the municipality (Câmara Municipal).
The IMI rates for 2025 include:
- Urban property: 0.3 to 0.45 percent
- Rural property: 0.8 percent
- Property owned by a company set up in a tax haven: 7.5 percent
If you buy an urban property to live in permanently, you may be exempt from paying IMI (Municipal Property Tax) for up to three years. To qualify, the property’s taxable value must be below €125,000, and your annual household taxable income must not exceed €153,300.
Here is how the IMI payment schedule works:
- Up to €100: paid once, in June.
- €100 to €500: paid in two parts, in June and November.
- Over €500: paid in three parts, in June, August, and November.
Note: Since the IMI (Annual Municipal Property Tax) includes many other factors and regional differences, it is best to consult with a professional tax advisor.
AIMI – Additional Municipal Property Tax
The AIMI is an extra property tax, often called a wealth tax. It applies to the total value of residential real estate owned in Portugal. It is charged in addition to the regular IMI (Municipal Property Tax), and you pay it every year to the Portuguese Tax Authority.
So, who pays AIMI in Portugal? Here’s how it works:
- You pay AIMI only if the combined taxable value of your residential properties exceeds €600,000.
- Married couples or civil partners pay AIMI if jointly taxed with the taxable value of residential properties exceeding €1.2 million.
- Companies or other legal entities owning residential or building land pay AIMI on the entire property value, with no exemption threshold.
The table below offers the rates for AIMI (Additional Municipal Property Tax) in Portugal for 2025.
Tax-payer type | Tax rate (available after deductions) |
Individuals and undivided inheritances | 0.7 to 1.5 percent (progressive rate) |
Urban properties held by entities based in tax havens | 7.5 percent |
Corporation | 0.4 percent |
Source: PWC Portugal
Note: The AIMI applies only to urban properties classified as residential or building plots for residential construction. It does not apply to commercial, industrial, or service-related properties, according to Aixa Geral de Depósitos, Portugal’s largest state-owned bank.
Capital gains on property sales
When you sell a property in Portugal, you pay capital gains tax on the profit you earn. Residents are taxed 50 percent of the profit at normal income tax rates, while non-residents pay 28 percent. There are also exemptions if you reinvest in another main home in the European Union (EU) or EEA. You can learn more about the capital gains tax in Portugal in our detailed guide.
Read more about the different type of property ownership in Portugal
Company and Business Taxes in Portugal
Portugal’s business taxation combines direct taxes (like corporate income tax), indirect taxes (like VAT), and mandatory social security contributions. Here’s how they work.
Corporate income tax (IRC)
When you look at corporate income tax in Portugal, the standard rate is 21 percent for most companies on the mainland. However, there’s an incentive for Small and Medium-sized Enterprises (SMEs). Your first €50,000 of taxable profit is only taxed at 14.7 percent. That’s a huge break for smaller businesses.
But, that’s not the final tax rate. You should also consider the surcharges, such as the Municipal Surcharge (Derrama) and the State Surcharge (Derrama Estadual). They are different according to where your business is and the amount of profit it makes.
Check our article for more information if you are starting a business in Portugal as a foreigner.
VAT registration and compliance for businesses
Companies and self-employed individuals must register for VAT (Value-Added Tax) with the Portuguese Tax and Customs Authority if they exceed the compulsory turnover threshold or perform specific commercial activities. As of 2025, the threshold is €15,000 for resident businesses. You will need a NIF number in Portugal to register for VAT.
Social security and employer contributions
Portuguese employers and employees offer mandatory contributions to fund the public social security system and cover benefits, like pensions, unemployment, and healthcare. The standard employer’s contribution is about 23.75 percent of the employee’s gross salary.
Other Types of Taxes in Portugal
Here are other types of taxes in Portugal you should consider.
Local taxes
Local taxes are primarily focused on real estate and are a significant part of property ownership in Portugal. The tax rates are different for each municipality, ranging from 0.3 percent to 0.45 percent for urban properties and 0.8 percent for rural properties.
Value-Added Tax (VAT) in Portugal
Value-Added Tax (VAT) is a consumption tax charged on the sale of goods and services. The standard VAT rate in mainland Portugal is 23 percent. There are also 13 percent and 6 percent reduced rates for specific goods and services. Different rates apply in the autonomous regions of Madeira and the Azores.
Inheritance tax
Portugal doesn’t have an inheritance tax since 2004. Instead, it was replaced with the Stamp Duty (Imposto do Selo). The stamp tax applies to contracts, deeds, titles, books, loans, documents, and bank mortgages that take place in the country. Since the tax rates vary and exemptions apply, it’s best to consult with a professional tax advisor.
If you are planning to take out a mortgage in Portugal, you can estimate the monthly payments with our Goldrest mortgage calculator.
What are the tax rates for expats in Portugal?
Tax rates for expats in Portugal depend on their residency status. For example, if you live in Portugal for more than 183 days in one calendar year or maintain a habitual residence there, you are a tax resident and must pay a personal income tax on your worldwide income.
The tax rate for expats in Portugal is 25 percent on certain types of their annual income from a Portuguese source. This includes employment, pensions, or self-employment. Non-residents also pay a flat 28 percent on income from dividends, royalties, or interest.
For example, if you are a non-resident and earn €80,000 in Portugal, you would pay €20,000 in tax at the 25 percent flat rate.
Taxes in Portugal for US Citizens
American citizens must pay taxes in Portugal just like anyone else. Portuguese authorities don’t discriminate against nationality.
Here is how it works:
- US citizens must report all global income to the IRS, even if they live abroad.
- US citizens who are residents in Portugal pay personal income tax (IRS) on worldwide income; non-residents pay tax only on Portuguese-source income.
- Since Portugal has a tax treaty with the US, American citizens are exempt from double taxation. They can also claim foreign tax credits or exemptions.
- US citizens must report Portuguese bank accounts and foreign financial assets to the IRS under the Foreign Account Tax Compliance Act (FATCA)
Ready to invest? Discover the best places to buy property in Portugal
Practical Tax Tips for Expats in Portugal
When making capital investments, such as property investments with an interest in earning rental income, or selling a property, it may trigger capital gains tax. So, seeking professional help can make all the difference. For tax advice, you can work with a tax advisor. They can simplify your tax liability in Portugal, explain dividend income, interest income, and consumption taxes, and provide guidance on tax-related matters.
To buy property, a buyer’s agent can guide you through the process and ensure your investment aligns with local regulations. If you want to research the property market or sell real estate, a real estate agent in Lisbon can provide valuable insights.
If you plan on moving there for the long-term, you can obtain a Portugal residency visa through various pathways. For example, if you are a qualified professional with the right skills and experience, you can apply for the D3 Visa. But, as an entrepreneur, you can immigrate with the D2 Visa. Meanwhile, investors seeking to boost economic growth can find the Portugal Golden Visa as a viable alternative.
Goldcrest: How Our Expertise Can Help
Taxes are just one part of buying property in Portugal. If you need a property search service, market analyses, or property management for long-term rentals, then a buyer’s agent can help.
At Goldcrest, we offer professional advice in the local real estate market, including Lisbon, Porto, and the Algarve. Our services are tailored toward property buyers. We can connect you to a tax advisor to manage the tax revenue, a contractor, or a real estate lawyer in Portugal to help with due diligence and legal contracts.
We can also negotiate prices on your behalf and source outstanding investment opportunities in some of the country’s finest locations. Contact us today and let us help you find the right strategies for your next investment.
Frequently Asked Questions about Taxes in Portugal
Are taxes high in Portugal?
If you earn more than €85,000 annually or are in the upper class, then taxes can be high. But, for the average earner, Portugal’s taxes are quite manageable compared to some other Western European countries.
How much tax do you pay in Portugal?
As a resident in Portugal, you pay a progressive rate of 12.5 percent to 48 percent on your worldwide income for 2025. However, these rates are subject to change and vary based on your resident status.
Is Portugal a tax-friendly country?
Portugal is not a low-tax country. However, it offers favorable tax regimes for expatriates and investors, including the Non-Habitual Resident (NHR) 2.0, startup incentives, and property investment benefits. Compared to countries like France, Spain, and Italy, Portugal’s system can be more beneficial for newcomers.
Is Portugal a tax haven?
No. Portugal doesn’t fall into the category of a tax haven like Singapore, Switzerland, or the United Arab Emirates (UAE).
Do US citizens pay taxes in Portugal?
Yes. American expats pay taxes in Portugal, but are exempt from double taxation due to the tax treaty agreement between the two countries.
Do investors from the EU pay taxes in Portugal?
Yes, foreign investors from the EU pay taxes in Portugal on their income and gains sourced in the country. But the tax rates vary based on their residency status and the type of investment under EU regulations. Foreigners can invest in Portugal with no restrictions.
Do investors from the UK pay taxes in Portugal?
Yes, UK investors pay taxes in Portugal on Portuguese-source income. Residents are taxed on worldwide income at progressive rates, while non-residents are taxed on Portuguese-source income, generally at flat rates, according to the official Portuguese government portal.
Does Portugal have tax treaties with US?
Yes, Portugal has tax treaties with 78 countries, including the United States, Canada, China, and almost all EU member states. New residents are eligible for tax benefits under the new NHR 2.0 program, including a flat 20 percent tax rate on qualifying Portuguese income for 10 years and tax exemptions on most foreign-sourced income.
