Tax Considerations for Expats in Portugal and Lisbon
Tax is a topic that we all prefer to ignore. However, as an ex-pat, it’s necessary to understand how the tax laws affect you. We recommend that you talk to an expat tax advisor, such as one of those mentioned in our expat tax directory, but here’s some basic information that may assist you.
What taxes apply to ex-pats?
State and local taxes are calculated on income, property ownership, and expenditures. If you are residing in Portugal for more than 183 days, you are a resident, and you must register as a taxpayer. As a taxpayer, you will receive a tax number. You can do that here. You’ll need to pay tax on your worldwide income.
In Portugal, the tax year runs from 1 January to 31 December.
The state taxes include income tax for employees and self-employed persons, capital gains tax, inheritance tax, and business taxes.
Local taxes are community taxes and include council fees, garbage collection, recycling, etc.
Goods and Services taxes in Portugal
VAT in Portugal is as follows:
23% on taxable goods and services
13% on food and drinks and services
6% on certain essentials such as meat, fruit, vegetables, medicines, books, hotel bookings.
Non-Habitual Residency Tax (NHR)
Under this ruling, some ex-pats are exempt from tax payments for ten years. It means that one will pay a flat 20% on earnings made in Portugal but not on one’s worldwide income. You can learn more about NHR status here.
Income tax rates
If you are a Portuguese resident, you must pay tax on your earnings as of 2021 – note that these figures change may not be updated.
|
Annual Taxable Income in Euro |
Portugal Income Tax rate |
|
Up to 7,112 |
14.5% |
|
7,113 -10, 732 |
23% |
|
10,733 – 20,322 |
28.5% |
|
20,323 – 25,075 |
35% |
|
25,076 – 39,967 |
37% |
|
39,968 – 80,882 |
45% |
|
80,883 and above |
48% |
You can find more information about taxes in Portugal, how to lodge a claim, and the required forms here.
Capital gains tax
If you sell a property, you will be charged 28% capital gains tax. There are exemptions if you are selling your primary home to buy another property in Portugal or elsewhere in the EU. If you are selling a property that you purchased before 1989, you are also entitled to an exemption.
Rental Income Tax
If you own a property that you rent, you will pay a flat rate of 15% tax on the income from this property.
Tax Advice in Portugal
For advice and assistance in filing a tax return, some agents and accountants can help you. The Institute of Chartered Accountants in England and Wales has a directory of English-speaking chartered accountants to help you.
