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How Taxes Work in Portugal

Researched and written with AI tools from official sources. How we make our guides

The taxes you pay in Portugal: income tax rates, special regimes, investment and rent rates, property taxes, social security, VAT, and the tax calendar.

The Portugal Brief 12 min read

Last verified: October 2026.

Who this is for

  • You are moving to Portugal, or have just arrived, and want to know which taxes you will pay.
  • You are employed, self-employed, retired, or living on savings, from the EU or elsewhere.
  • You own or plan to buy property here, as a resident or from abroad.

Not for you if: you are ready to file this year's return. Read Filing Your Annual Income Tax Return (IRS) in Portugal instead.

Updated October 2026. A housing law from May 2026 brought a 10% rate on moderate rents and a flat 7.5% transfer tax for buyers who are not tax resident.

Once you are tax resident in Portugal, you pay income tax (IRS) on your income from every country. For 2026 the rates run from 12.5% to 48%, with flat rates for investments and rent. You file one return a year, between 1 April and 30 June. If you work, you also pay social security. If you own property, you pay a one-off tax when you buy and a yearly tax after that. Most spending carries VAT at up to 23%.

This guide explains each tax and links to the detailed guides.

When Portugal starts taxing you

You become tax resident in Portugal for a year if either of these is true:

  • you spend more than 183 days here in any 12-month period that starts or ends in that year (any day you sleep here counts); or
  • you have a home here that you seem to intend to keep as your usual home.

In the year you arrive, you are normally resident from your first day here. Before that, you are not resident, and Portugal taxes only your Portuguese income.

As a resident, you declare your worldwide income: salary, pensions, rent, interest, dividends, and gains, wherever they arise. Tax treaties with other countries stop you paying full tax twice on the same income. See Becoming a Tax Resident in Portugal for the tests in detail.

You need a tax number (NIF) for almost everything, including renting, banking, and utilities. See Getting a NIF (Tax Number) in Portugal.

Income tax (IRS) and the 2026 rates

IRS is Portugal's personal income tax. Salary, pensions, and self-employed income are added together and taxed on a sliding scale. Each rate applies only to the slice of income inside its band.

These are the rates for income earned in 2026:

Taxable income (€)Rate on that slice
Up to 8,34212.5%
8,342 to 12,58715.7%
12,587 to 17,83821.2%
17,838 to 23,08924.1%
23,089 to 29,39731.1%
29,397 to 43,09034.9%
43,090 to 46,56643.1%
46,566 to 86,63444.6%
Over 86,63448%

A solidarity surcharge adds 2.5% on taxable income between €80,000 and €250,000, and 5% above that.

Before the rates apply, each person deducts a fixed allowance from salary and pensions: €4,587.09 for 2026. If your social security contributions are higher, you deduct those instead. Very low incomes are protected by a minimum income rule and may pay no IRS.

Example. You are single and earn a €35,000 salary in 2026. Your social security is €3,850, less than the allowance, so your taxable income is €30,412.91. The scale gives about €6,404 of tax. Deductions, such as €250 for general family expenses, then reduce it. You pay roughly 18% of your gross pay.

Married couples and partners in a de facto union can choose to file jointly. Your incomes are added, halved, taxed, and the tax doubled. It usually helps when one partner earns much more than the other.

Your tax bill then falls by deductions for health, education, rent, dependants, and everyday spending. Most come from invoices issued with your NIF. The filing guide lists each one and its limit.

Special regimes: IRS Jovem, IFICI, and NHR

IRS Jovem. If you are 35 or under and not someone's dependant, part of your salary or self-employed income is tax free for up to 10 years. It is 100% in the first year, falling to 25% in years 8 to 10, up to €29,542.15 a year in 2026. You cannot use it if you have, or had, NHR or IFICI. See Claiming the Young Worker Tax Relief (IRS Jovem) in Portugal.

IFICI. This regime replaced NHR for people who become resident from 2024. If you qualify, your salary or self-employed income from a qualifying job is taxed at a flat 20% for 10 years. Most foreign income is exempt, including foreign salary, dividends, interest, rent, and gains. Foreign pensions are not exempt.

The qualifying jobs are in research, higher education, startups, and skilled roles at certain companies. You must not have been resident in Portugal in the previous five years, and you register by 15 January of the year after you arrive. You cannot use it if you ever had NHR, and you can use it only once. See Qualifying for the IFICI Tax Regime That Replaced NHR.

NHR (non-habitual resident). The old regime closed on 1 January 2024. A transition rule lets some people who became resident in 2024 still register. If you are already in it, you keep it until your 10 years end. For people registered from 2020, foreign pensions under NHR are taxed at 10%.

If you are retiring here, plan on your foreign pension being taxed at the normal rates above, unless you already hold NHR. See Retiring in Portugal.

Filing and paying income tax

You file one return a year, for the year before, on the Portal das Finanças, between 1 April and 30 June. Many employees and pensioners can simply confirm a pre-filled return (IRS Automático). Tax due is paid by 31 August, and refunds are due by the same date.

Your employer or pension payer withholds tax from each payment during the year. The return squares the account. If you are self-employed, you may also have to make advance payments by the 20th of July, September, and December.

The filing guide covers who must file, the steps, the annexes, the deductions, refunds, and late filing.

Tax on investments, gains, and crypto

These flat rates apply unless you choose to add the income to your other income and pay the scale rates:

  • Interest and dividends: 28%, usually taken at source by Portuguese banks. Foreign interest and dividends go on your return.
  • Gains on shares and funds: 28% on the gain. If you held the shares for less than 365 days and your income reaches the top band, the gain must be taxed on the scale instead.
  • Crypto: gains on crypto held for less than 365 days are taxed at 28%. Gains on crypto held for 365 days or more are generally exempt, but you still report them.
  • Property you sell in Portugal: half of the gain is added to your other income and taxed on the scale. This applies to non-residents too. A gain on your own home can be tax free if you reinvest in another own home, under strict conditions. See Property Taxes in Portugal for Residents and Foreign Owners.

Investment income from a country on Portugal's tax haven list is taxed at 35%.

Tax on rent you receive

If you let a home in Portugal, the rent is taxed at a flat 25% after allowable costs. Long leases for a permanent home pay less: 15% for leases of 5 to 10 years, 10% for 10 to 20 years, and 5% for 20 years or more.

For rent received from 1 January 2026 to 31 December 2029, housing rent of €2,300 a month or less is taxed at 10%, unless a lower rate applies. Other rent, such as on shops, is taxed at 28%. You can instead choose to add rent to your other income. See Declaring Rental Income as a Landlord in Portugal.

Property taxes

You pay up to four taxes on property. The property taxes guide covers them in full.

  • When you buy: property transfer tax (IMT) and stamp duty. Stamp duty is 0.8% of the price or the tax value, whichever is higher. For a permanent home in 2026, IMT is nothing on the first €106,346, then rises in bands to 8%. Above €660,982 a single rate of 6% applies to the whole value, and above €1,150,853 it is 7.5%. Second homes pay more.
  • If you are not tax resident when you buy: since May 2026, you pay a flat 7.5% IMT on a home, with no reductions. You can claim the difference back if you become resident within two years, or let the home at a moderate rent.
  • If you are 35 or under: your first own home can be free of IMT and stamp duty up to €330,539. See Claiming the Under-35 IMT and Stamp Duty Exemption in Portugal.
  • Every year you own it: municipal property tax (IMI). Each town hall sets 0.3% to 0.45% of the property's tax value for urban property. Rural land pays 0.8%. See Paying IMI Property Tax in Portugal.
  • If your homes are worth a lot: an extra tax (AIMI) applies when the homes and building land you own have a total tax value over €600,000. The rate is 0.7%, rising to 1% above €1 million and 1.5% above €2 million.

Portugal has no separate inheritance tax. Gifts and inheritances pay 10% stamp duty instead, unless they go to a spouse, de facto partner, child or other descendant, or parent or other ascendant. See Making a Will and Handling an Inheritance in Portugal.

Social security contributions

If you work in Portugal, you pay into social security (Segurança Social) as well as income tax.

  • Employees pay 11% of gross pay. Your employer adds 23.75%.
  • Self-employed people pay 21.4% on 70% of their income from services. You declare your income every three months. In your first 12 months of self-employment, you normally pay nothing.

EU rules and agreements with some other countries decide where you pay if you work across borders. See Understanding Portugal's Social Security System and Registering as Self-Employed (Recibos Verdes) in Portugal.

VAT and other everyday taxes

  • VAT (IVA): 23% on most goods and services, 13% on the items in the intermediate list (including some food and drink), and 6% on the reduced list (including basic food, books, and medicines). The Azores and Madeira set lower rates. If you are self-employed, you may have to charge VAT.
  • Cars: a one-off vehicle tax (ISV) when a car is first registered in Portugal, and a yearly road tax (IUC). See Importing a Car to Portugal and Paying Road Tax (IUC) and Passing Vehicle Inspection in Portugal.
  • Companies: corporate tax (IRC) is 19% for periods starting in 2026, 18% in 2027, and 17% from 2028. Small and medium firms pay 15% on the first €50,000 of profit. Local and state surcharges can add more. See Starting a Company in Portugal.

Avoiding double tax

Portugal has tax treaties with most countries its residents come from. A treaty decides which country may tax each type of income. Where both may, Portugal usually gives a credit for the foreign tax, up to the Portuguese tax on the same income. You claim it on your return.

A new UK and Portugal treaty came into force on 29 December 2025. In Portugal it applies from 1 January 2026. Under it, UK private and workplace pensions paid to a Portuguese resident are taxed only in Portugal. US citizens stay taxable in the US wherever they live. See Avoiding Double Taxation in Portugal.

The tax year at a glance

  • 1 January to 31 December: the tax year.
  • By 15 January: register for IFICI if you became resident the year before and qualify.
  • By the end of February: check invoices on e-Fatura and update your household on the Portal das Finanças.
  • 1 April to 30 June: file your IRS return for last year.
  • May, plus August and November for larger bills: pay IMI.
  • By the 20th of July, September, and December: advance tax payments, if you are self-employed and they apply.
  • By 31 August: pay any IRS due.
  • September: pay AIMI, if it applies.

Mistakes new residents make

  • Assuming NHR still exists. It is closed to new arrivals. IFICI is narrower and does not cover pensions.
  • Leaving out foreign income or accounts. Portugal receives data from other countries' tax authorities. Missing income leads to back tax, interest, and fines.
  • Not asking for invoices with your NIF. You lose deductions.
  • Ignoring the pre-filled return. If you do nothing, IRS Automático becomes final at the end of 30 June, even if it is wrong.
  • Counting days wrongly. The 183-day test uses any 12-month period, and a home here can make you resident sooner.
  • Missing the IFICI registration deadline. Late registration costs you the years before you register.

When to get help

You can handle a salary or a single pension yourself. Consider a certified accountant (contabilista certificado) if you have income from several countries, self-employed income, rental property, a property sale, or IFICI or NHR status. Fees are not set by law, so ask for a written quote.

This guide is general information, not tax advice. Rules change; check the official source, or ask a certified accountant, before you act.

Sources

This guide is written from official sources and, where relevant, organisations' own websites.

Last verified October 2026. Rules and fees change; check the official source before acting.

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