Tax Law

Practising tax law allows us to provide comprehensive assistance on legal matters in Portugal.

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You must pay taxes. But there is no law that says you must leave a tip.
– Morgan Stanley

Individuals deemed as residents for tax purposes in Portugal are subject to taxation on their worldwide income. It is important that they fully comply with all Portuguese tax rules and the applicable international rules, so as to avoid a situation of double taxation, as well as to explore the applicability of potential exemptions under the NHR (Non-Habitual Resident) tax regime.

Consultancy and professional advice regarding the new challenges and tax rules applicable to situations of mobility within a context of globalisation.

TAX CONSULTANCY

Tax consultancy takes on a crucial role in all processes of change. Identifying risks and opportunities will be decisive for success.

TAX SYSTEM

The Portuguese tax system lays down that residents for tax purposes in Portugal shall be taxed on their worldwide income, i.e., regardless of whether the income sources are Portuguese or foreign, unless an exception applies.

RESIDENCE FOR TAX PURPOSES

Portugal has a tax system based on residence for tax purposes. Residents in Portugal for tax purposes are taxed at progressive rates ranging from 14.5% to 48%, to which an additional solidarity levy of between 2.5% and 5% is added in the case of taxpayers whose taxable income exceeds 80,000 euros. Special tax rates may apply to specific types of income, such as income from equity investments, annuities and capital gains.

Portugal has no wealth tax or inheritance tax and recognises tax exemption on donations to close family members.

Benefits of NHR status

The benefits of NHR status depend on the requirements set out in Portuguese law. Most depend on the specific taxation rules determined in the double taxation agreements signed by Portugal and are related to tax exemptions, royalties, dividends and interest, capital gains from the sale of securities, real estate income and pension income.

Tax exemption

Tax exemption in Portugal for income from employed work should be applied to income from a foreign source effectively taxed at source (considered the country of source of the income under the Portuguese rules and double tax agreement rules), regardless of the rate and whether the country of origin is a country or territory subject to more favourable taxation arrangements, when considered obtained outside Portugal, under Portuguese law. It may be necessary to analyse the applicable Social Security rules, in particular when working remotely.

The tax exemption in Portugal for income from self-employment should apply to income considered to be from foreign sources in accordance with Portuguese legislation, provided that it is related to a high value added activity and provided that it can be taxed at source under a double taxation agreement or, in the absence of the latter, under the OECD model tax convention, namely because they are obtained through the fixed establishment of the natural person in the other country. When the country of origin is included on the Portuguese list of countries, territories or regions with privileged and more favourable tax arrangements, the NHR tax benefits may not be applicable.

When the conditions for exemption are not met, or when the income is considered earned in Portugal, under the terms of national law, income from employed and self-employed work may be taxed at a fixed rate of 20%, if derived from an eligible professional occupation.

Royalties, Dividends and Interest / Capital Gains on the Sale of Securities / Real Estate Income and Capital Gains

The tax exemption should apply to income deemed to be of foreign origin that may be taxed at source under a DTA or under the rules of the OECD model convention.

When the country of origin is included on the Portuguese list of countries, territories or regions with privileged and more favourable tax arrangements, the NHR tax benefits may not apply, and the income may be subject to an increased tax rate in Portugal.

Pension income

Taxation at a reduced tax rate of 10% shall apply to pension income that is not considered earned in Portugal, in accordance with national law. The same taxation rules may apply to pre-retirement income, income from pension funds and retirement savings funds, advance payments or principal repayments, and a case-by-case analysis is advisable.

TAXES IN PORTUGAL

Like any tax resident in Portugal, non-habitual residents must submit annual tax returns. Within a single income category, the country of origin of the income and the specific conditions of the beneficiary, or his or her income structure, may determine different taxation rules.

RESIDENCE PERMITS

There are different types of residence permit, namely:

Golden Visa;
Family reunification;
“D7 Visa”
“D2 Visa”
Long-term residence permit issued by another EU member state;
Residence permit for study, unpaid internship and voluntary work;
EU Blue Card;
Residence permit for work;
Residence permit for activities in higher education and research and highly qualified;
“Startup” Visa.

Find out more

INSIGHTS

Insights ABOUT TAX LAW

Corporate Income Tax

Portuguese corporate income tax applies in general to companies but may also be applied to non-legal entities whose effective headquarters or place of direction is in Portugal, as well to other entities that simply obtain income in Portuguese territory.

State Budget Proposal – Taxation on Crypto Assets (PIT)

The State Budget proposal for 2023 submitted by the Portuguese Government includes the long-waited specific rules on crypto assets taxation in Portugal.

The Patent Box Regime: tax benefits for Companies

Portugal has adopted a tax incentive regime, known as Patent Box regime for patents, industrial designs or models and software copyrights.

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