Taxes in Portugal for foreign residents: What to expect

Written by Sílvia Biscaia

Moving to Portugal is not only a lifestyle choice — it’s also a fiscal decision. For those planning to live, invest, or retire in our  country, understanding the Portuguese tax system is essential.

Below, we outline the key aspects every foreign resident should be aware:

1 – When Do You Become a Tax Resident in Portugal?

You are considered a Portuguese tax resident if you:

  • Spend more than 183 days per year in Portugal, or
  • Maintain a permanent home in the country, or
  • Declare Portugal as your country of tax residence

As a tax resident, your worldwide income is subject to taxation in Portugal, unless an exemption applies under a double tax treaty or a special regime such as the NHR.

Personal Income Tax (IRS)

Portugal applies a progressive tax rate system, ranging from 14.5% to 48%, with an additional solidarity surcharge on high incomes.

The taxable income categories include:

  • Employment and self-employment income
  • Rental income
  • Pensions
  • Dividends and interest
  • Capital gains

1.1 The Non-Habitual Resident (NHR) Regime

The NHR regime granted tax benefits for 10 years, including:

  • A 20% flat tax rate on specific Portuguese-sourced income
  • Exemptions or reductions on foreign-sourced income

Please be aware that since 2024, the NHR regime has been restricted. Only those who relocated or initiated the process before December 31, 2023 are still eligible.
New incentives were introduced for highly skilled professionals, aiming to attract highly qualified professionals, researchers, innovators, and employees in specific strategic sectors — specialized legal advice is strongly recommended.

2. Property Taxes in Portugal

When buying/owning/selling a property in Portugal, the investor should consider:

  • For the acquisition: IMT (Property Transfer Tax) – up to 7.5% and Stamp Duty – 0.8%
  • For owning: IMI (Municipal Property Tax) – 0.3% to 0.8% annually
  • When selling: capital gains will imply rental income tax – Since January 1, 2023, non-residents selling real estate in Portugal are taxed on only 50% of the capital gain. This taxable amount is subject to progressive income tax rates, ranging from 14.5% to 48%, depending on the taxpayer’s total worldwide income. This aligns non-resident taxation with that of residents, replacing the previous flat 28% tax on the full gain. To determine the tax rate, non-residents must disclose their global income to the Portuguese tax authorities.

3. Inheritance and Donations

Portugal does not levy inheritance tax, but:

  • A 10% Stamp Duty applies to free transfers outside the immediate family
  • Transfers between spouses, children, and parents are exempt

At BVA – Advogados, we support our clients in:

  • Assessing their tax residency status
  • Structuring global income and assets
  • Applying double tax treaty protections
  • Aligning real estate with tax and succession planning