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Expat Taxes in Portugal

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Expats living in Portugal are subject to tax regulations that differ according to their residence status and the sources of their income.

Resident expats are taxed on their income from anywhere in the globe, while non-residents are taxed exclusively on income with Portuguese origins.

While planning their finances, it is essential for expats to have a firm grasp of the taxes in Portugal so that they can maximize solutions while satisfying their obligations.

If you want to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or use WhatsApp (+44-7393-450-837).

Not intended as formal tax, legal, or financial advice; strictly for informative purposes only.

This page will talk about the following particulars:

  • Law on Portugal Taxes
    • Residency Based Taxation
      • Non-Habitual Resident (NHR) Program Benefits
      • Criteria for Tax Residency in Portugal
    • Portugal Income Tax for Expats
  • Changes in Taxes in Portugal for Expats 2024
    • Updated Brackets and Tax Rates in Portugal

Law on Portugal Taxes

The Portuguese tax system is a pivotal step for expats aiming to optimize their financial affairs in Portugal.

This section delves into the essential components of the tax system, residency status, types of taxable income tax in Portugal, and the benefits of the Non-Habitual Resident (NHR) program.

Tax Residency in Portugal

Residency Based Taxation

The Portugal tax rate hinges on your residency status. Portugal distinguishes between tax residents and non-residents, with varying tax implications for each.

Non-Habitual Resident (NHR) Program Benefits

The NHR program stands out as a beacon for expats, offering a ten-year tax relief on foreign income and a flat rate for certain Portuguese incomes. This program not only makes Portugal an attractive destination for expats but also offers significant tax advantages for those who qualify.

Criteria for Tax Residency in Portugal

Becoming a tax resident typically involves spending more than 183 days in Portugal within a calendar year or having a primary residence here.

Types of Taxable Portugal Income Tax for Expats

Portugal Income Tax for Expats

Employment Income

For expats working in Portugal, employment income is subject to progressive tax rates.

Investment Income and Capital Gains

Investment income and capital gains from assets like stocks, bonds, and real estate can also be taxable. The NHR program may offer favorable rates for these income types, highlighting the importance of tax planning.

Rental Income

If you own property in Portugal and rent it out, this income must be reported and is subject to taxation. However, certain expenses related to rental can be deducted, potentially lowering your property tax liability.

Changes in Taxes in Portugal for Expats 2024

Updated Brackets and Tax Rates in Portugal

For 2024, Portugal personal income tax rates and brackets were updated to better align with inflation, allowing taxpayers to earn more before moving to a higher tax bracket.

The first five income bands have seen a reduction in tax rates, providing relief to lower and middle-income earners. For instance, where previously income between €11,284 to €15,992 was taxed at 26.5%, in 2024, income from €11,623 to €16,472 is now taxed at 23%.

The top rate for taxes in Portugal remains at 48%, but now applies to income over €81,199. These changes mean that individuals earning €20,000 will pay €790 less in taxes, while those earning €70,000 will save €527​​.

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