Taxation for Expats in Portugal: What You Need to Know

Relocating to Portugal is attractive for its climate, lifestyle, and real estate market, but understanding the country’s taxation system is equally essential. For expats—whether retirees, remote workers, or investors—Portugal offers both opportunities and challenges in taxation. This guide provides a comprehensive overview of the Portuguese tax system in 2025, with a focus on expats, and shows how Vasco Invest can help you navigate these rules.

1. Understanding Portugal’s Tax Residency

Becoming a tax resident in Portugal depends on two main criteria:

• Spending more than 183 days in Portugal during a fiscal year.
• Having a permanent home in Portugal as your main residence.

Once classified as a resident, you are taxed on worldwide income. Non-residents are only taxed on Portuguese-sourced income, usually at flat rates.

Worldwide Income and Double Taxation Treaties

Portugal has signed over 70 double taxation treaties, preventing expats from being taxed twice on the same income. These treaties make Portugal an attractive destination for retirees with pensions or professionals with international income.

2. The Non-Habitual Resident (NHR) Regime

For many years, Portugal’s NHR regime was a cornerstone for attracting foreign residents. While reforms have changed its scope, it still provides benefits:

• Flat 20% tax on specific Portuguese-sourced professional income.
• Exemptions or reduced rates on foreign pensions, depending on the treaty country.
• Special treatment for passive income (dividends, interest, royalties).

Note: Reforms from 2024 onwards reduced some benefits, especially on pensions, which are now taxed at 10%. Still, Portugal remains highly competitive compared to other European destinations.

3. Property Taxation in Portugal

IMT – Property Transfer Tax

Paid when buying a property, IMT rates vary from 1% to 7.5%, depending on property value and type (primary residence vs secondary).

IMI – Municipal Property Tax

An annual tax based on property value. Rates range from 0.3% to 0.8%, depending on municipality.

Stamp Duty

Payable on certain transactions, such as property purchases (0.8%) or mortgage contracts (0.6%).

4. Income Taxation for Expats

Portuguese income tax (IRS) is progressive, ranging from 14.5% to 48%. Categories include:

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

Expats with rental income from properties in Lisbon, Comporta, or the Algarve must declare it in Portugal. Expenses (repairs, maintenance, insurance) can usually be deducted.

5. Inheritance and Wealth Taxes

Portugal has no wealth tax. Inheritance and gift tax only apply to non-direct heirs at 10%. Transfers between spouses, children, and parents are exempt, making Portugal favorable for estate planning.

6. Regional Differences: Lisbon, Comporta, Algarve

• Lisbon: Higher property values and IMI rates but strong rental demand.
• Comporta: Luxury properties with limited supply; ideal for long-term appreciation.
• Algarve: Popular with retirees, offering lower property costs outside prime zones.

7. Common Mistakes Expats Make

• Assuming NHR covers all types of income.
• Ignoring double taxation agreements.
• Underestimating IMT and IMI costs when buying property.
• Failing to declare rental income properly.

8. How Vasco Invest Supports Expats

At Vasco Invest, we guide clients through each step of relocation and investment. Our services include:

• Property sourcing and investment strategy.
• Tax and legal coordination with local experts.
• Concierge services for expats.
• Support in Lisbon, Comporta, and Algarve.

Visit our blog for more insights into expat life and investment in Portugal.

Conclusion

Portugal offers expats a favorable taxation environment, especially with the NHR regime, property tax structure, and estate planning advantages. However, success requires preparation and the right guidance. With Vasco Invest, you can maximize opportunities while avoiding pitfalls.

📩 Contact us today for a personalized consultation: vascoinvest.eu/contact