The main taxes in Portugal are the personal and corporate income taxes and the value-added tax ("VAT"), which is levied on transactions in goods and services. There are also real estate transfer taxes and property ownership taxes, customs duties and some excise duties, such as the car tax and the tobacco tax.

The largest source of state revenue comes from VAT, income taxes and social security contributions.

Tax rates in Portugal are, to a great extent, in line with the rates of most EU countries seeks to attract foreign investors by offering some tax incentives, such as the Non-Habitual Resident Tax Regime and the free remittance of funds, which demonstrate Portugal’s commitment to attracting international talent, along with other incentives.

In 2026, the corporate income tax rate is 19%. A municipal surcharge of up to 1.5% and a State surcharge ranging from 3% to 9% also apply to companies with a taxable income of more than €1.5 million.

Personal income tax rates range from 13% to 48%, plus an additional solidarity rate of 2.5% and 5% on income above €80,000 and €250,000 respectively. In addition, employers and employees are required to make social security contributions at a rate of 34.75% of the employee's income, with 23.75% borne by the employer and 11% deducted from the employee's salary.

VAT rates range from 6% to 23% in the Portuguese mainland, 4% to 22% in the region of Madeira and 4% to 16% in the region of the Azores.

Income obtained abroad by Portuguese residents and in Portugal by non-residents might be taxed in Portugal.

To avoid double taxation, Portugal has double taxation agreements with more than 85 countries, such as the United States of America, China, Canada, India, Brazil, Japan, and the United Kingdom, as well as all the European Union member-states.

Additionally, Portugal has signed more than 50 bilateral agreements for the promotion and reciprocal protection of investments, alongside over 15 tax information exchange agreements.

The tax system in Portugal is monitored by the Tax and Customs Authority (Autoridade Tributária e Aduaneira), which is responsible for the management of taxes according to the rates defined by the tax legislation approved by the Parliament.

General tax rules are applied nationwide, but the autonomous regions of the Azores and Madeira enjoy fiscal autonomy, which is why the rates of some taxes are lower in these regions than the rates applicable in mainland Portugal. Municipalities can obtain their own revenues through municipal taxes regarding the provision of certain municipal services or for the use of municipal assets.

To register as taxpayer in Portugal it is necessary to fill in a registration form (ficha de inscrição) in local tax office. The tax registration should be done before any activity is carried out in Portugal. The annual income tax return must be completed and delivered to the Portuguese Tax Authority.

The Portuguese tax system is managed by the Portuguese Tax Authority (Direcção-Geral dos Impostos). The tax year follows the calendar year, ending on 31 December.

Self-employed workers must declare the beginning of their activity to the Portuguese Tax Authority.

The annual personal income tax return (Modelo 3) must be filed between 1 April and 30 June of the following year, exclusively via the official online portal.

If a person does not comply with their tax obligations to complete the annual income tax return will be subject to a penalty, which amount ranges from €150 to €3.750.

PERSONAL INCOME TAX

Personal income tax is levied on the annual value of the income of the following categories after the corresponding deductions have been made:

• Category A: dependent work income.
• Category B: business and professional income.
• Category E: capital income.
• Category F: property income.
• Category G: assets increase.
• Category H: pensions.

In general, income is subject to progressive rates, ranging between 13% and 48% in mainland Portugal, between 9.1% and 46.56% in the region of Madeira and between 9.1% and 33.6% in the region of the Azores.

To taxable income over €80,000, the following additional solidarity charges are applied:

• From €80,000 to €250,000: 2.5%.
• Over €250,000: 5%.

Work income is subject to withholding taxes, which are different according to the income and employee’s family situation. Some benefits may be exempt from income tax up to certain limits (e.g., meal allowances, subsidies).

In general, the determination of business and professional income is based on the taxpayer’s accounts.When the amount of income does not exceed €200,000, taxpayers may apply for the simplified tax scheme under which taxable income is determined by the application of coefficients.

Capital gains derived from the transfer of real estate or shares, or other investments, are also considered as income and taxed as personal income tax.

Health expenses, education and training expenses, household expenses and real estate expenses can be deducted, up to certain thresholds, from the taxpayer’s taxable income.

Certain incomes are subject to a flat rate of 28%, such as:

• capital income (e.g., dividends, interest, royalties);
• positive balance of capital gains and losses resulting from the sale of shares;
• positive balance of capital gains and losses resulting from the sale of real estate; and
• property income (e.g., rents).

Withholding tax might be applied to capital and property income. In any case, taxpayers may opt for the inclusion of such income.

Gains obtained from the transfer of real estate are not taxed when the permanent residence is sold, and the product of the sale is reinvested (after deducting the repayment amount of any loan for acquisition) in the acquisition of another permanent residence in Portugal or in any other EU Member-State between the 24 months before the sale and the 36 months following the sale.

Unlike residents who are taxed on their overall income obtained in Portugal and abroad, non-residents are taxed only on their income obtained in Portugal when such taxation is allowed under applicable double taxation treaties.

NON-HABITUAL RESIDENTS TAX BENEFITS

Portugal offers non-residents a more favourable tax regime over certain Portuguese and foreign source income without the need to make any investments a special tax regime for non-habitual residents (Residentes Não Habituais, "NHR") approved in 2009 and significantly changed in 2024.

Under the 2024 NHR rules, income derived from employment or self-employment in Portugal, within a now more restricted list of "high value-added" activities, is taxed at a flat rate of 20%, compared to the standard progressive rates, which can reach up to 48%.

To qualify for the NHR regime as of 2024, the applicants must:

• work in a profession included in a narrow list of "high value-added" activities, which prioritizes roles critical to economic development (e.g., certain scientific, technological, or academic positions). Applicants must provide documentation proving their professional qualifications and activities align with these categories;
• establish tax residency in Portugal, either residing in Portugal for at least 183 days per year, or maintaining a primary residence in Portugal, defined as a habitual place of residence with the intention of permanent or long-term stay, as recognised under Portuguese tax law; and
• not have been a tax resident in Portugal during the preceding five years before the application.

The NHR status grants tax benefits for a period of 10 consecutive years, provided the individual maintains tax residency in Portugal throughout this period. Failure to meet residency requirements in any given year may result in the suspension or loss of benefits for that year.

Existing NHR beneficiaries under the 2009 NHR rules who registered before 1 January 2024 will continue to benefit from the reduced income tax rate until the end of the 10-year period initially granted.

SOCIAL SECURITY CONTRIBUTIONS

Income from employees, self-employed workers and members of corporate bodies are also subject to social security contributions, with the following rates being applied:

• Employees: 11% paid by the employee and 23.75% paid by the company;
• Self-employed workers: 21.4% paid by the worker and 10% paid by the client when the economic dependence exceeds 80%, and 7% when the economic dependence is lower than 80% but exceeds 50%; and
• Members of corporate bodies: 11% paid by directors and managers, 9.3% in the remaining situations and 20.3% or 23.75% paid by the company, respectively.

Some benefits are excluded from contributions, such as:

• allowances up to the limits established for personal income tax purposes;
• the compensation for termination of the employment contract in case of collective dismissal; and
• possible subsidies for medical care and medicine for employees and their families.

Portugal has entered into several social security conventions, establishing exemptions for workers who are temporarily working in Portugal, such as from the United States of America and Canada.

OVERVIEW

Buying a property in Portugal requires registration with the Portuguese Tax Authority to obtain a taxpayer identification number. This process involves several taxes and related costs. Typically, the buyer’s costs include the property transfer tax, stamp duty, property and land registry fees, municipal property ownership tax, and legal and notary fees.

PROPERTY TRANSFER TAX

The municipal real estate transfer tax is a municipal tax that taxes the onerous transfers of property rights over real estate assets located in Portugal. As a rule, IMT is levied on the value of the contract through which the asset was transferred or on its tax value, whichever is higher.

The acquisition of more than 75% of the share capital of a real estate company may also be subject to real estate transfer tax if certain conditions are met (e.g. real estate represents more than 50% of the assets and is not allocated to a business activity).

Normally, IMT is paid prior to the transfer of the property. Before executing the deed of sale, the notary will require proof of the IMT payment, which must be done through the Tax Authority’s official website at Portal das Finanças.

The real estate transfer tax rates vary according to the type of asset:

• Land: 5%.
• Urban buildings used as primary residence: between 0 and 7.5%.
• Urban buildings used as secondary residence: between 1% and 7.5%.
• Other urban buildings and other onerous acquisitions: 6.5%.
• Buildings (urban or land) or other acquisitions where the purchaser is resident in a territory subject to a clearly more favourable tax regime: 10%.

The real estate transfer tax rates applicable to residential urban properties are structured on a progressive scale as detailed below:

• up to €106,346: exempt (0%);
• over €106,346 and up to €145,470: 2%, with a deductible amount of €2,909.4.
• over €145,470 and up to €198,347: 5%.
• over €198,347 and up to €330,539: 7%.
• over €330,539 and up to €660,982: 8%.
• over €600,982 and up to €1,150,853: flat rate of 6%; and
• above €1,150,853: flat rate of 7.5%.

For individuals under 35 years of age purchasing their first home, the initial €330.539 of the property value or price is exempt from taxation, provided that the total value or price of the property does not exceed €648,022. To qualify, buyers must: (i) not be considered dependents for tax purposes in the year they buy – even if they still live with their parents – and (ii) not have owned any residential property at the time of purchase or in the previous three years.

Certain transactions are exempt from real estate transfer tax, such as the acquisition of real estate by investment funds for rental housing, as well as the acquisition of buildings for resale by real estate companies.

The real estate transfer tax rate will be 10%, irrespective of the value, in the case of properties owned or controlled, directly or indirectly, by legal entities resident in a state, territory or region with a clearly more favourable tax regime.

Typically, real estate transactions are exempt from VAT. Notwithstanding, under certain conditions, the seller or the lessor may opt to renounce such exemption to be able to deduct the input VAT.

PROPERTY TAX

The municipal property tax, IMI, is a real estate ownership tax levied annually on the taxable value of buildings located in Portugal. IMI is calculated based on the sum of the property tax values (Valor Patrimonial Tributável, "VPT") of the properties held by each taxpayer as of December 31 of the year to which the tax relates.

The municipal property tax rates are different according to the type of real estate:

• Urban buildings: 0.3% to 0.45%.
• Land: 0.8%.
• Buildings owned by entities incorporated in offshore financial centres: 7,5%.

The applicable rate within these ranges will be determined by the municipalities on a yearly basis and will increase threefold in the case of urban property left vacant for more than a year or of buildings in a state of ruin.

The urban buildings and apartments will be deemed not to be in use if the owner has no contracts with utilities or there has been no consumption of water, electricity, gas, and telecommunications for a period of one year.

In addition to municipal property tax, an additional property tax (Adicional ao Imposto Municipal sobre Imóveis, "AIMI") is levied as follows:

• for individuals 0.7% for properties with a total tax value up to €1 million, 1% if between that value and €2 million, and 1.5% if it exceeds €2 million (for married couples all the values are doubled);
• 0.4% for corporations; and
• 7.5% for entities resident or domiciled in tax havens, regardless of the value of the property.

Urban buildings used for commerce, industry or services are not subject to AIMI.

The municipal property tax is paid in a single instalment in May when the tax amount is equal to or less than €100, in two instalments paid in May and in November when the tax amount is over €100 and equal to or less than €500 or three instalments paid in May, August and November when the tax amount exceeds €500. AIMI is paid in a single instalment in September.

Certain exemptions or reductions may apply to specific cases, including urban buildings used as personal and permanent residences, buildings owned by taxpayers with dependents, and urban buildings designated for touristic purposes.

The exemption for personal residence buildings is applicable only if the tax value of the property does not exceed €125,000 and the owner’s taxable income in the year prior to acquisition is below €153,300.

When these conditions are met, the exemption is valid for a period of three years. Buildings incorporated into enterprises with a touristic purpose are exempt from tax for seven years.

Municipalities may reduce the municipal property tax rate applicable to urban buildings used as the primary and permanent residence of taxpayers or their household, based on the number of dependents the taxpayer's responsibility.

Stamp duty is levied on various legal acts, documents, contracts and other transactions that are exempt from VAT, which are described in the General Stamp Tax Table, such as:

• Onerous acquisition of real estate: 0.8%.
• Donations: 10%.
• Lease and sublease: 10%.
• Business acquisition: 5%.
• Health insurance contracts: 5%.

Stamp duty is imposed on these facts even when they occur outside of Portugal if they are presented for legal purposes in Portugal.

There are certain facts that may benefit from stamp duty exemption under special conditions, such as:

• premiums and commissions related to life insurance;
• acquisition of a first permanent residence by an individual aged 35 or younger, provided that the property value does not exceed €330,539;
• transactions between financial institutions;
• shareholders’ loans, including the respective interest;
• business restructuring or cooperation operations
• loans, up to 1 year, granted by companies in a control or group relation for treasury needs;
• cash pooling agreements, with a duration not exceeding one year, involving companies in a control or group relationship; and
• interest charged on loans for the acquisition, construction, reconstruction or improvement of one’s own housing.

Relevant legislation

Personal Income Code [Portuguese Only]

Corporate Income Code [Portuguese Only]

Value Added Tax Code [Portuguese Only]

Forms

Personal Income Tax Return – Form 3 [Portuguese Only]

Corporate Income Tax Return – Form 22 [Portuguese Only]

Vaue Added Tax Periodic Declaration [Portuguese Only]

Other documents

Tax and Customs Authority: «2018 Tax payment Obligations Calendar» [Portuguese Only]

Tax and Customs Authority: «Tax Periodic Declarations Calendar» [Portuguese Only]

List of Double Taxation Treaties [Portuguese] [English]

Macedo Vitorino's briefings

«Taxation in Portugal made easy» (2019)

«2022 Portuguese State Budget Proposal»

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