Portugal Tax Guide

Who Has to File

Declaration of 2025 income (Modelo 3), filed in 2026

Portuguese tax residents generally file an annual IRS return (Modelo 3) covering worldwide income. Married couples and civil partners can opt for joint or separate taxation. Non-residents generally declare Portuguese-source income only.

Some situations with only Portuguese employment or pension income below set thresholds are dispensed from filing, but anyone with foreign income, business income, or capital gains generally files.

Residency Tests

A person is generally a Portuguese tax resident if either criterion applies:

• 183 days. More than 183 days, consecutive or not, spent in Portugal in any 12-month period starting or ending in the tax year.
• Habitual home. A home in Portugal at any time during that period, kept and occupied in a way that suggests it is the person's habitual residence.

Portugal applies partial-year residency: a person can be resident for only part of the year, from arrival or until departure. That often avoids the whole-year dual-residence puzzles seen in countries that treat residency as all or nothing.

Income Tax Rates (2025 income)

Employment, business, and pension income is taxed on a progressive scale with nine brackets. The 2025 scale for mainland Portugal is approximately:

These rates already reflect the reduction law passed in mid-2025; brackets are updated annually, so confirm the current scale with official sources when filing. A solidarity surcharge adds 2.5% on taxable income above 80,000 euro and 5% above 250,000 euro.

Flat rates on investment income

Interest and dividends are generally taxed at a flat 28%, with an option to include them in the progressive scale when that produces a better result. Gains on crypto assets held for more than 365 days are generally exempt, while shorter-term crypto gains are generally taxed at 28%.

Key 2026 Deadlines

IFICI, the Regime That Replaced NHR

The Non-Habitual Resident (NHR) regime closed to new entrants in 2024, with limited transition cases. People already registered keep their NHR benefits for the remainder of their 10-year period.

The successor regime, IFICI (often called NHR 2.0), offers a 20% flat rate on Portuguese employment and self-employment income from qualifying activities (research, innovation, certain qualified professions and certified companies) for up to 10 years, plus exemptions on most foreign-source income. Foreign pensions are generally not covered, unlike under the old NHR.

Non-Residents

Non-residents are generally taxed only on Portuguese-source income. Portuguese employment income is generally subject to a 25% flat withholding, and Portuguese rental income and gains on Portuguese property remain taxable in Portugal.

Residents of the EU and EEA can sometimes opt into resident-style taxation of their Portuguese income when most of their worldwide income is Portuguese, which can lower the bill compared with flat non-resident rates.

Common Deductions and Credits

• Standard employment deduction. A specific deduction of around 4,460 euro (2025) generally applies automatically against employment and pension income.
• Household expense credits. Percentages of health, education, housing, and general family expenses logged through e-fatura reduce the tax, subject to per-category caps.
• Young worker relief (IRS Jovem). Workers up to age 35 can benefit from a multi-year partial exemption on employment and business income, subject to caps.
• Foreign tax credit. Tax paid abroad on foreign income generally credits against Portuguese IRS up to the Portuguese tax on that income, and treaties may improve on this.

Tax Treaties

Portugal has around 80 double tax treaties in force. Treaties generally determine which country may tax employment income, pensions, dividends, and gains, and they include tie-breaker rules for dual residents.

Treaty tie-breakers

When a person qualifies as a tax resident of both Portugal and another country, the treaty tie-breaker typically checks: permanent home, center of vital interests, habitual abode, and nationality, in that order.

The year of the move

Because Portugal recognizes part-year residency, the arrival or departure date usually splits the year cleanly. The complexity tends to sit on the other country's side, and in how each income type is sourced during the transition, which is worth mapping with a professional.

Frequently Asked Questions

Is the NHR regime still available?

Not for new entrants: NHR closed in 2024, with limited transition cases. Existing holders keep it for the rest of their 10-year period. New arrivals may qualify for the IFICI regime instead, which targets specific activities and does not cover foreign pensions.

When do I become a Portuguese tax resident?

Generally after more than 183 days in Portugal in any 12-month period, or as soon as you keep a home in Portugal occupied as your habitual residence. Residency can start mid-year because Portugal applies partial-year residency.

How is foreign income taxed for residents?

Residents are taxed on worldwide income. Treaties and the foreign tax credit generally prevent double taxation, and IFICI beneficiaries can have most foreign-source income exempt. The mechanics depend on the income type, which is worth confirming with a professional.

When is the 2026 return due?

The Modelo 3 return for 2025 income is generally filed between April 1 and June 30, 2026, for all income categories, with any tax due typically payable by the end of August 2026.