Portugal's IRS Filing Season Opens Today with Expanded Automatic Returns — What You Need to Know

Portugal's annual tax filing season officially opened on April 1, giving residents three months to settle their accounts with the Tax Authority for the 2025 fiscal year.

This year's campaign runs through June 30, and officials say a growing number of taxpayers will be eligible for the automatic IRS (Imposto sobre o Rendimento das Pessoas Singulares) — a pre-filled return that requires no action if you agree with the calculations.

But even if you qualify for the automatic option, there are important decisions to make — including which organizations receive your voluntary 1% donation.

Who Qualifies for Automatic IRS?

The automatic return is available to taxpayers whose income and deductions are fully reported to the Tax Authority by third parties. That typically includes:

• Employees with income reported by employers via payroll systems
• Pensioners receiving payments from the Social Security system or private pension funds
• Taxpayers with straightforward deductions already captured in the system (mortgage interest, health expenses, education)

If you had freelance income, foreign earnings, capital gains, or claimed deductions not automatically reported (such as certain professional expenses), you'll need to file manually through the Tax Authority's online portal.

What Happens If You Miss the Deadline?

Late filers face automatic penalties starting at €25, with the amount increasing depending on how late you file and whether you owe additional taxes.

If you're owed a refund, there's no penalty — but you forfeit your right to claim it if you don't file within four years.

The 1% Donation: A Choice You Can't Skip

Even if you qualify for the automatic return, you still need to log in to the Tax Authority portal to designate which registered nonprofit organization or religious institution will receive 1% of your total IRS liability.

This is not optional — the 1% is redirected from what you've already paid, not added to your bill. But if you don't make a selection, the Tax Authority allocates it to a general fund rather than a specific cause.

Many foreign residents overlook this step, assuming the automatic return handles everything. It doesn't. You have until June 30 to make your choice.

What Foreign Residents Need to Know

For immigrants and expats, Portugal's IRS system can be confusing, especially if you're accustomed to simpler tax regimes in other countries. Here's what to watch out for:

1. Non-Habitual Resident (NHR) Status

If you were granted NHR status before it was phased out in 2024, you may still benefit from reduced tax rates on certain foreign income. Check your eligibility carefully — the regime is being replaced by a new framework for tax incentives, but legacy NHR holders retain their benefits for the full 10-year period.

2. Foreign Income Reporting

Even if you're covered by a double taxation treaty, you must still report foreign income to the Portuguese Tax Authority. Whether it's taxed in Portugal depends on the treaty and the type of income, but failing to report it can trigger penalties.

3. Deductions You Might Miss

Portugal allows deductions for health expenses (including private insurance premiums), education costs, mortgage interest on primary residences, and retirement contributions. If these weren't automatically captured, you'll need to enter them manually — and keep receipts for at least four years in case of an audit.

4. Joint vs. Individual Filing

Married couples and registered domestic partners can choose to file jointly or separately. The Tax Authority will calculate both scenarios and recommend the option that results in the lowest tax liability, but you're free to choose either.

How to File

All filings are done through the Portal das Finanças at portaldasfinancas.gov.pt. You'll need:

• Your NIF (tax identification number)
• Your password (or activate it if this is your first time)
• Details of any income or deductions not already in the system

The portal is available in Portuguese only, though some browser extensions can provide rough translations. If you're not confident navigating it yourself, consider hiring a certified accountant (contabilista certificado) — fees typically range from €50 to €150 for straightforward returns.

Key Dates

• April 1: Filing opens
• June 30: Deadline to file and select your 1% donation
• July–September: Refunds typically processed
• Late filings after June 30: Subject to penalties

Why This Matters

Portugal's move toward automatic IRS filings is part of a broader push to simplify tax compliance and reduce errors. But "automatic" doesn't mean "invisible" — you still need to review the calculations, verify your deductions, and make active choices about donations.

For foreign residents especially, this is a good moment to double-check that all your income sources are properly registered with the Tax Authority. If something's missing, it's better to correct it now than to face an audit later.

And if you're eligible for a refund, filing early means you'll see it sooner. The Tax Authority processes returns on a rolling basis, so those who submit in April typically receive refunds by July.

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