This Portugal tax guide covers the rules in force from 1 January 2026. Residents pay progressive IRS at 12.5–48% plus a solidarity surcharge of up to 5%, while dividends, interest and most capital gains face a flat 28%. Companies pay 19% IRC, falling to 17% by 2028. The NHR regime is closed; its successor, IFICI, offers a 20% rate and broad foreign-income exemptions to qualifying professionals. There is no wealth tax, and close-family inheritances are exempt. Since 25 May 2026, non-resident buyers of homes pay a flat 7.5% IMT.
Introduction
Portugal occupies the western edge of the Iberian Peninsula, with a long Atlantic coastline and two autonomous island regions, Madeira and the Azores, that set their own lower tax rates. An EU member since 1986, it belongs to the eurozone, Schengen, NATO and the OECD, with a civil-law system and a wide treaty network. Politics are stable in substance but fragmented: Luís Montenegro leads a minority centre-right government, and the centre-left António José Seguro has been President since 9 March 2026, after three general elections since 2022. The climate is Mediterranean-Atlantic, English is widely spoken in Lisbon, Porto and the Algarve, and living costs sit below northern Europe — although city housing is now expensive by local standards.
For a decade, any Portugal tax guide was mostly about the Non-Habitual Resident (NHR) regime. NHR closed to new entrants in 2024, and this Portugal tax guide matters now because of what replaced it and a broad tax-cutting agenda: IRS bands cut again by the 2026 State Budget (Law 73-A/2025, in force from 1 January 2026), corporate tax down to 19% with 17% legislated for 2028 (Law 64/2025), the IFICI 20% regime for qualified newcomers, and the 5% Madeira Free Trade Zone rate extended to 2033. Pulling the other way, Decree-Law 97/2026 makes Portugal deliberately more expensive for non-resident property buyers.
Direct Taxes
Residents are taxed on worldwide income; non-residents only on Portuguese-source income, with employment and pensions taxed at a flat 25%. IRS (personal income tax) is progressive by bands, and couples filing jointly split their income before the bands apply. Investment income sits outside the bands at flat rates unless the taxpayer opts to aggregate it. A company is resident if its registered office or effective management is in Portugal. For internationally-mobile individuals, the key concept is IFICI (Article 58-A of the Tax Benefits Statute), widely called “NHR 2.0”.
Personal income tax (2026 bands)
| Taxable income (EUR, USD) | Rate |
|---|---|
| Up to €8,342 (~$9,350) | 12.5% |
| €8,342–€12,587 (~$9,350–$14,100) | 15.7% |
| €12,587–€17,838 (~$14,100–$19,990) | 21.2% |
| €17,838–€23,089 (~$19,990–$25,870) | 24.1% |
| €23,089–€29,397 (~$25,870–$32,940) | 31.1% |
| €29,397–€43,090 (~$32,940–$48,290) | 34.9% |
| €43,090–€46,566 (~$48,290–$52,180) | 43.1% |
| €46,566–€86,634 (~$52,180–$97,080) | 44.6% |
| Over €86,634 (~$97,080) | 48% |
These bands apply to 2026 income under Law 73-A/2025, which indexed the thresholds by about 3.5% and cut the 2nd to 5th band rates by 0.3 points (from 16%, 21.5%, 24.4% and 31.4% in 2025). A solidarity surcharge adds 2.5% on taxable income between €80,000 (~$89,650) and €250,000 (~$280,150), and 5% above that. Under IRS Jovem, taxpayers aged 35 or under get a partial exemption on earned income for their first ten years of work — 100% in year one, tapering to 25% in years eight to ten — capped at 55 × IAS (about €29,542 / ~$33,100 in 2026). Returning emigrants exempt 50% of earned income for five years, capped at €250,000 (~$280,150). IFICI taxes qualifying earned income at a flat 20% for ten years and exempts most foreign-source income (see FAQ).
Corporate income tax
| Item | Rate |
|---|---|
| Standard IRC, mainland (from 1 January 2026) | 19% |
| Standard IRC (2025) | 20% |
| Legislated cuts: 2027 / 2028 | 18% / 17% |
| SMEs and small mid-caps — first €50,000 (~$56,000) of taxable profit | 15% |
| Inland-territory SMEs — first €50,000 (~$56,000) | 12.5% |
| Madeira and Azores standard rate | 13% (confirm against regional budgets) |
| Madeira Free Trade Zone (IBC) — entities licensed by 31 December 2026 | 5% until 2033 |
| Municipal surtax (derrama) | up to 1.5% |
| State surtax on profit above €1.5m / €7.5m / €35m (~$1.68m / $8.4m / $39.2m) | 3% / 5% / 9% |
Law 64/2025 set the path to 17% by 2028; with surtaxes, a large mainland company’s top marginal rate is still around 29.5% in 2026. Law 41/2024 transposed Pillar Two, applying a 15% minimum tax to groups with revenue of €750m (~$840m) or more from 2024. Companies enjoy a participation exemption on dividends and gains from holdings of at least 10% held for 12 months, subject to anti-abuse and minimum-taxation tests. Withholding tax is 25% on dividends, interest and royalties paid to non-resident companies, 28% to non-resident individuals and 35% to blacklisted jurisdictions, reduced by treaties and EU directives. Losses carry forward indefinitely but offset at most 65% of a year’s profit, and autonomous taxation hits company cars and entertainment.
Social security and health contributions
| Contribution | Employee | Employer | Self-employed |
|---|---|---|---|
| General regime (pension, unemployment, family, sickness) | 11% | 23.75% | — |
| Managers and administrators on statutory boards | 11% | 23.75% | — |
| Self-employed (trabalhador independente) | — | — | 21.4% on 70% of service income (20% of goods sales) |
| Company contracting an economically dependent self-employed worker | — | 7% (50–80% dependence) / 10% (80%+) | — |
Employee and employer contributions are uncapped, which makes Portugal expensive for high salaries. The self-employed base is capped at 12 × IAS a month — about €6,445.56 (~$7,220) — and assessed quarterly. There is no separate health levy: the national health service (SNS) is funded from general taxation. The 2026 minimum wage is €920 (~$1,030) a month.
Indirect Taxes
VAT (IVA) follows the EU VAT Directive and is the main indirect tax, with three rates on the mainland and lower rates in Madeira and the Azores. An optional VAT group regime, allowing related companies to consolidate their VAT balances, applies from 1 July 2026 under Law 62/2025.
Value-added tax (VAT)
| Rate | Applies to (examples) |
|---|---|
| 23% (standard; 22% Madeira, 16% Azores) | Most goods and services |
| 13% (intermediate; 12% Madeira, 9% Azores) | Restaurant and take-away meals, some foods, agricultural tools |
| 6% (reduced; 4% Madeira and Azores) | Essential foods, books, medicines, hotel stays, passenger transport, solar equipment |
| 0% (zero) | Exports, intra-EU supplies of goods, international transport |
Filing follows standard EU rules, including the One-Stop Shop for cross-border B2C sales. Decree-Law 97/2026 also extended the 6% rate to certain residential construction works — check the conditions.
Excise and other indirect taxes
| Tax | Notes |
|---|---|
| Excise duties | Fuels (diesel about €497.52 / ~$560 per 1,000 litres), alcohol, tobacco, sugary drinks, electricity |
| Vehicle taxes | ISV on first registration (CO2 and engine size) plus annual IUC circulation tax |
| IMT (property transfer tax) | Housing: progressive up to 7.5% (lower bands for an own permanent home); 6.5% other urban property; 5% rural; 10% for blacklisted entities; flat 7.5% for non-resident buyers of housing from 25 May 2026 |
| Stamp duty (Imposto do Selo) | 0.8% on property purchases; 0.04–0.6% on loans; 4% on bank interest and commissions; 10% on gifts and inheritances |
| Carbon tax | €2 (~$2.24) per passenger on flights and cruise landings |
The non-resident 7.5% IMT rate does not apply if the buyer was previously tax resident, becomes resident within two years, or lets the home at a moderate rent of up to €2,300 (~$2,580) a month, signed within six months and running for at least 36 months in the first five years. Buyers aged 35 or under purchasing a first permanent home are exempt from IMT and stamp duty up to €330,539 (~$370,400).
Other Taxes Worth Knowing
| Tax | Portugal treatment |
|---|---|
| Capital gains tax | 28% flat on shares and securities (option to aggregate); short-term gains (under 365 days) must be aggregated if taxable income reaches €86,634 (~$97,080); 10% / 20% / 30% of gains on listed securities and fund units excluded after 2 / 5 / 8 years; real estate: 50% of the gain taxed at progressive rates |
| Crypto-assets | 28% on gains held under 365 days; exempt if held 365 days or more (confirm current rules) |
| Dividends (resident individual) | 28% flat, or aggregate (only 50% taxed for qualifying EU dividends) |
| Interest (resident individual) | 28% flat; 35% if paid from a blacklisted jurisdiction |
| Rental income | 25% on residential lets, 28% otherwise; 10% on moderate rents up to €2,300 (~$2,580) a month until 2029 |
| Pensions | Progressive bands; €4,587.09 (~$5,140) deduction; not covered by IFICI |
| Wealth / net worth tax | None |
| Inheritance / estate tax | No separate tax — 10% stamp duty; spouse, partner, descendants and ascendants: exempt |
| Gift tax | 10% stamp duty; close family exempt (0.8% stamp duty still applies to gifts of real estate) |
| Immovable property tax (IMI, annual) | 0.3–0.45% of tax value for urban property (set by each municipality); 0.8% rural; 7.5% for blacklisted entities |
| Additional IMI (AIMI, annual) | Individuals: 0.7% on residential tax value above €600,000 (~$672,400), 1% above €1m (~$1.12m), 1.5% above €2m (~$2.24m), thresholds doubled for joint filers; companies 0.4% |
The 28% flat rate is the number that matters for most investors, but the details soften it: long-held listed securities get partial exclusions, crypto held a year is tax-free, and only half of a resident’s real-estate gain is taxed (with relief when main-home proceeds are reinvested in the EU). AIMI is Portugal’s closest thing to a wealth tax, but it covers only residential property and land above the threshold, and both IMI and AIMI use the tax registration value (VPT), usually below market price.
Disadvantages & Risks
Headline rates are high at modest incomes: the 48% top band starts at €86,634 (~$97,080), the surcharge lifts the marginal rate to 53% above €250,000 (~$280,150), and employee social security is uncapped. Regime volatility is the bigger risk — NHR was shut after a decade, IFICI is far narrower, and the 7.5% non-resident IMT shows a housing crisis driving policy against foreign buyers. Lei Orgânica 1/2026, in force since 19 May 2026, lengthened the path to citizenship to 10 years of residence for most nationalities. Politics are fragmented: three general elections since 2022 and a minority government.
AIMA residence-permit backlogs are notorious. Portugal keeps its own tax-haven blacklist, triggering 35% rates on related income, 10% IMT and 7.5% IMI and AIMI — a trap for offshore holding structures. Portugal is not on the EU list of non-cooperative jurisdictions or the FATF grey list and applies full CRS and DAC6 reporting. The economy is small and tourism-dependent, and the Madeira Free Trade Zone carries substance requirements, EU state-aid scrutiny and a 31 December 2026 cut-off for new licences.
Strategy & Ideal Profile
The structures that work best are targeted. IFICI gives qualifying professionals a 20% flat rate on Portuguese earned income for ten years, with most foreign income exempt — but a shareholder cannot qualify merely as a shareholder, so the eligible activity must run through an employment or service relationship. A mainland company at 19% with the participation exemption works as a holding vehicle; a Madeira Free Trade Zone company licensed by 31 December 2026 pays 5% until 2033, with dividends to non-resident shareholders outside blacklisted jurisdictions potentially exempt. For residence without living full-time, the golden visa (ARI) requires a €500,000 (~$560,300) fund investment or a €250,000 (~$280,150) cultural contribution; real-estate routes ended in October 2023.
Portugal suits highly qualified professionals and researchers (IFICI), startup founders and tech employees in certified startups, young professionals under 35 (IRS Jovem), long-term investors and crypto holders who benefit from holding-period exclusions, and company owners willing to build real substance. In practice, you become resident by spending more than 183 days in Portugal in any 12-month period, or by keeping a home there that you appear to use as your habitual residence; the year of arrival is split.
It does not suit retirees with large foreign pensions — pensions are taxed at up to 48% and IFICI excludes them; legacy NHR holders keep their remaining years, but nobody new can join. Passive dividend earners, active traders caught by short-term aggregation and non-resident property buyers facing 7.5% IMT and AIMI also do better elsewhere. IFICI itself lasts ten years, cannot be renewed and requires a certified activity throughout.
FAQ
Is Portugal a tax haven?
No. Portugal is a full EU and OECD member with income tax up to 48% plus surcharges and automatic information exchange. Its appeal comes from targeted regimes — IFICI, IRS Jovem, the Madeira Free Trade Zone — and the absence of a wealth tax, not low headline rates.
What is the corporate tax rate in Portugal in 2026?
The standard IRC rate is 19% on the mainland from 1 January 2026 (20% in 2025), falling to 18% in 2027 and 17% in 2028. SMEs pay 15% on the first €50,000 (~$56,000) of profit. Surtaxes of up to 1.5% (municipal) and 3–9% (state, on profit above €1.5m / ~$1.68m) can apply; Madeira Free Trade Zone companies pay 5%.
How does the IFICI regime (NHR 2.0) work?
IFICI applies to people who become tax resident, were not resident in any of the previous five years, never used NHR or the former-residents regime, and carry out an eligible activity — teaching and research, qualified jobs in certified startups or incentivised companies, R&D roles, or highly qualified professions in eligible sectors. That income is taxed at 20% for ten consecutive years, and most foreign-source income is exempt, except pensions and blacklisted-source income. Eligibility is certified by the relevant body (FCT, ANI, Startup Portugal, AICEP or IAPMEI) and registered with the tax authority, with tight deadlines after arrival.
What is the 183-day rule in Portugal?
You become tax resident if you spend more than 183 days in Portugal in any 12-month period beginning or ending in the tax year, or if you have accommodation there on any day of that period suggesting you intend to keep it as your habitual residence. Residence runs from the first day of presence, so the year you move is split.
Does Portugal tax capital gains?
Yes. Residents pay a flat 28% on gains from securities, with partial exclusions after two, five or eight years for listed securities and fund units. Short-term gains must be aggregated if taxable income reaches €86,634 (~$97,080). Only 50% of a resident’s real estate gain is taxed, at progressive rates, and crypto held at least 365 days is exempt.
Is there inheritance or wealth tax in Portugal?
There is no wealth tax and no separate inheritance tax. Inheritances and gifts bear 10% stamp duty, but transfers to a spouse or partner, descendants and ascendants are exempt (gifts of real estate still pay 0.8%). AIMI acts as a partial wealth tax on residential property worth more than €600,000 (~$672,400) of tax value per individual.
How are dividends taxed for an IFICI holder or a non-resident investor?
An IFICI holder pays nothing in Portugal on foreign dividends unless they come from a blacklisted jurisdiction; Portuguese dividends are taxed at 28%. Non-resident individuals suffer 28% withholding and non-resident companies 25%, usually reduced by treaty; EU parents holding at least 10% for a year receive them tax-free, and blacklisted recipients pay 35%.
Sources
All figures should be checked against the primary government sources below.
- Autoridade Tributária e Aduaneira (Portal das Finanças) — IFICI regime, Article 58-A of the Tax Benefits Statute — portaldasfinancas.gov.pt
- Autoridade Tributária e Aduaneira (Portal das Finanças) — IFICI FAQ: eligible activities and sectors — portaldasfinancas.gov.pt
- Autoridade Tributária e Aduaneira (Portal das Finanças) — IMT rates, including the 7.5% non-resident rate (Article 17 CIMT) — portaldasfinancas.gov.pt
- Diário da República (official gazette) — Law 73-A/2025 (2026 State Budget and IRS bands), Law 55-A/2025, Law 64/2025 (IRC cuts), Law 41/2024 (Pillar Two), Law 62/2025 (VAT groups), Decree-Law 97/2026 (housing package), Lei Orgânica 1/2026 (nationality) — diariodarepublica.pt
- Instituto da Segurança Social — contribution rates and the self-employed regime — seg-social.pt
- AICEP Portugal Global — tax system overview, IMI and AIMI — portugalglobal.pt
- AIMA (Agency for Integration, Migration and Asylum) — residence permit for investment (golden visa) — aima.gov.pt
- European Central Bank — EUR/USD reference rate used for conversions — ecb.europa.eu
USD figures are indicative conversions at ~1 EUR = 1.12 USD (ECB reference rate, 9 October 2026) and rounded.
Last verified: 10 October 2026.
This is general information, not personal tax or legal advice. Tax outcomes depend on your specific facts; consult a qualified Portugal tax adviser before acting.
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