Portugal Tax Guide
Everything you need to know about taxes as an expat in Portugal.
Disclaimer
This guide is for informational purposes only and does not constitute tax advice. Always consult with a qualified tax professional for your specific situation.
Overview
Portugal taxes residents on worldwide income at progressive rates up to 48% (effective 53% with solidarity surcharge). Non-residents pay 25% flat rate on Portuguese-source income only. The tax system underwent significant changes in 2024 with the end of the popular NHR regime for new applicants.
Tax Residency Rules
Portugal considers you a tax resident if you: spend 183+ days in Portugal during a calendar year, OR maintain a habitual residence with intent to stay long-term. Tax year runs January 1 – December 31.
Income Tax Rates
| Income Range | Tax Rate |
|---|---|
| 0 - 8,059 | 12.5% |
| 8,059 - 12,160 | 16% |
| 12,160 - 17,233 | 21.5% |
| 17,233 - 22,306 | 24.4% |
| 22,306 - 28,400 | 31.4% |
| 28,400 - 41,629 | 34.9% |
| 41,629 - 44,987 | 43.1% |
| 44,987 - 83,696 | 44.6% |
| 83,696+ | 48% |
Capital Gains Tax
Property (residents): 50% of gain taxed at progressive rates. Securities: 28% flat. Dividends/Interest: 28% flat. Crypto held less than 365 days: 28%. Crypto held 365+ days: 0% (tax-free). Primary residence exemption if proceeds reinvested in new primary home within 24 months before or 36 months after sale.
Property Tax
IMI (annual property tax): 0.3-0.45% of taxable value (urban). IMT (transfer tax): 0% up to €104,261 for primary residence; progressive rates to 7.5%. Young buyers (under 35): Full IMT exemption up to €324,058 for first home.
VAT / Sales Tax
Standard VAT: 23%. Reduced rates: 13% and 6%. Azores lower VAT: 18%. Madeira VAT: 22%.
Special Tax Regimes
NHR (Non-Habitual Resident)
IFICI (Replacement Regime)
For US Expats
US-Portugal Tax Treaty prevents double taxation but US "saving clause" means Americans cannot use treaty alone to avoid US taxation. Key considerations: FBAR requirement if total foreign accounts exceed $10,000 at any time (severe penalties for non-compliance). FATCA thresholds for expats: Single $200,000 end of year OR $300,000 at any time; Married filing jointly $400,000 end of year OR $600,000 at any time. US-Portugal Totalization Agreement: Less than 5 years in Portugal continue paying US Social Security; 5+ years pay Portuguese social security, exempt from US. Common mistakes: Not filing US taxes (citizens must file regardless of residence), missing FBAR deadline, wrong FEIE/FTC choice, ignoring state taxes (some US states tax expats), missing IFICI registration deadline (January 15), not reporting Portuguese bank accounts.
Foreign Earned Income Exclusion (FEIE)
FEIE (Foreign Earned Income Exclusion) 2025: Exclude up to $130,000 of foreign earned income. Requires Physical Presence Test (330 days abroad) or Bona Fide Residence Test. Only applies to earned income (NOT pensions, dividends, rental income). Often less beneficial than Foreign Tax Credit for those paying high Portuguese rates.
Tax Treaty Benefits
US-Portugal Tax Treaty prevents double taxation. Foreign Tax Credit (FTC) provides dollar-for-dollar credit for Portuguese taxes paid—often more beneficial than FEIE for higher earners paying Portuguese rates up to 48%.
Filing Deadlines
Filing period: April 1 – June 30. Payment deadline: August 31. IFICI registration deadline: January 15 of year following becoming resident.
Recommended Approach
Use US-Portugal specialist accountant. Costs €200-800/year basic; €1,000-3,000+ for complex coordination. Given high Portuguese rates (up to 48%) and US filing requirements, professional advice is essential to avoid double taxation and penalties.
Need Help with Your Taxes?
Use our tax calculator or find recommended expat tax preparers.