Portugal individual taxation overview
Portugal offers favourable tax regime both for their residents and non-residents and a special regime for non-habitual residents. It is ideal for planning of income and wealth, especially for high- and ultra-high-net-worth individuals and their families.
Besides, Madeira offers a preferential taxation regime.
You are considered tax resident in Portugal if you spend more than 183 days (continuously or not) in any 12-month period, which begins or ends in the tax year in question; or, irrespective of whether you spend 183 days or not, you need to maintain a habitual accommodation in Portugal at any time of that 12-month period.
Married couples are taxed separately with an option to be taxed jointly.
Non-resident taxpayers are only required to file tax returns when earning Portuguese-sourced income not subject to withholding tax at the applicable flat rates.
Portugal introduced non-habitual residence regime in 2009 to attract foreign professionals from certain areas of high-value-added activities of scientific, artistic or technical character, as well as affluent individuals and their families. To be eligible to apply for a non-habitual resident status, you must demonstrate that you have not been deemed a tax resident in Portugal in the previous five years and register with the Portuguese tax authorities.
This regime will be applicable to you for 10 consecutive years if you qualify as a tax resident in Portugal in each year of the above mentioned 10-year period.
There are six categories of taxable income:
- Employment income
- Self-employment income
- Investment income
- Rental income
- Capital gains
|Income derived in Portugal||Foreign-source income*|
|High-value-added activities||Other income|
|Ordinary residents||Employment and self-employment income, and pensions, are taxed at graduated rates from 14.5% to 48%.
Certain types of interest and investment income, as well as rental income and capital gains on shares, are generally taxed at 28% flat rate but a taxpayer can opt to include them in an aggregate taxable amount to be taxed at progressive rates from 14.5% to 48%. In some case CGT can be 0%.
|Non-residents||25% on employment, pension, business and professional income; 28% on interest, dividends, capital gains on sale of real estate or shares, rental income (sale of shares can be exempt from tax)||0%|
|Non-habitual residents||Flat rate 20% on employment, business and professional income||Progressive rates from 14.5% to 48%, with 28% on interest, dividends, rental income and capital gains on sale of shares||0% if taxed in the country of origin and is not derived in Portugal|
* Including dividends, interest, capital gains, rental income, pensions and self-employment income if not deemed as arising in Portugal or a tax haven.
Net wealth tax
Social security contributions
Social security contributions are paid by both the employee (11%) and the employer (23.75%) on the gross salary. They are the only payroll taxes.
Foreign residents that pay these contributions in another EU state are exempt from contributing to the Portuguese social system.
Real estate taxes
Property tax on urban real estate – 0.3%–0.45%, on rural real estate – 0.8% and on real estate located in black-listed countries – 7.5%
Tax on the purchase of urban real estate – up to 6.5%, rural real estate – 5%. 10% is charged on the purchaser who is tax resident in a black-listed country.
Stamp duty is payable on various transactions and documents, including loans, insurance, lease, etc. Rates range from 0.0025% to 20%.
Inheritance and gift tax
0% for spouses, descendants and ascendants; all the rest – 0% or flat 10% stamp duty.
Standard rate is 23% (22% in Madeira; 18% in Azores), intermediate rate is 13% (12% in Madeira; 9% in Azores), the reduced rate is 6% (5% in Madeira; 4% in Azores).