🇵🇹 Portugal

Highlights

Residency Programs (3)

Cost of Life

💰 Cost of Living Index

52.88

🏡 Rent Index

22.31

🛒 Groceries Index

42.01

🍽 Restaurant Index

43.24

🤑 Local Purchasing Power Index

44.96

Taxation overview

Tax system

Residence-based taxation

Countries with a residence-based taxation levy tax from your worldwide income for as long as you're a tax resident of that country. This is the most common taxation system.

Tax residence definition varies from country to country. General rule is you're a tax resident of a country if you spend 183 days or more in it in a year.

Tax summary

New tax residents who have not been taxed in Portugal as tax residents in the previous five years may qualify for the Non-Habitual Resident Regime. Under this regime, foreign-source pensions, dividends, royalties, interest income and other investment income is exempted from taxation during a 10-year period.

Personal income tax (PIT)

• Resident: Progressive tax up to 53% above €250,000 ($297,588). Those rates include a solidarity surtax of 2.5% on the amount of taxable income exceeding €80,000 ($95,228) and 5% on the amount of taxable income exceeding €250,000 ($297,588)
• Non-resident: 25%

For the purpose of applying the tax rate, the taxable income is divided by two if the taxpayers are married and not judicially separated, as well as in the case of de facto marriages, whatever the circumstances, should they opt for joint taxation.

Corporate income tax (CIT)

21%

Value-added tax (VAT)

23%

Social security contributions

Contributions are due on the employee’s gross remuneration at rates of 11% and 23.75% by the employee and the employer, respectively. These contributions cover family, pension, and unemployment benefits. In addition, employers must buy an insurance premium to cover occupational accidents. The premium varies according to work and risk classification. The contributions rate applicable to self-employees is 21.4%. A additional 10% contribution rate is due by employers if 80% or more of the fees earned by the self-employee come from services for the same company, for the same person with a business activity, or to the same group.

Withholding tax (WHT)

• Resident WHT rates: 25% on Dividends, Interests and Royalties
• Non-resident WHT rates: 25% on Dividends, Interests and Royalties

Capital gains tax (CGT)

• As Corporation: subject to standard Corporate income tax (CIT) rate
• As Individual: 28%

Net wealth/worth tax

Not taxable

Inheritance and Gift tax

Free acquisition of goods by individuals (inheritance and gifts) is taxed under the stamp tax at 10%. Donation of property is taxed under the stamp tax at 0.8%.

Controlled foreign companies (CFCs)

• Controlled by Corporation: Yes
• Controlled by Individual: Yes

Profits or income derived by an entity resident in a black-listed jurisdiction, or in a jurisdiction where it is subject to an effective taxation below 50% of the taxation that would have been applied if such entity was resident for tax purposes in Portugal, are imputed to the Portuguese taxpayer, provided it holds, directly or indirectly, at least 25% of the share capital, voting rights, or rights on income or assets of that entity. CFC rules do not apply if the CFC is resident in another EU country or in an EEA member state, provided that there are valid economic reasons underlying the incorporation and running of such company.

Disclaimer: This tax summary is for information only and shall not be construed as tax advice. Every situation is different. Should you consider moving to Portugal, we highly recommend you liaise with a local tax advisor to confirm your future tax regime.

Year of Assessment

YA 2021