Taxes in Portugal

Written by Luis Minvielle Moderated by Oleksandra Dosii

Luis Minvielle

Luis is a writer with over 5 years of experience in B2B software. Even though he has always worked in tech, a sector he regularly publishes about, his initial incursions into writing were, curiously enough, music essays discussing scenes from different parts of the world—most likely to deal with his unfulfilled ambition of becoming a neo-soul crooner.

Oleksandra Dosii

Oleksandra is a dedicated marketer with a passion for growing HR-tech products. She believes content marketing is about delivering high-quality content that provides value—not just generating leads. Since 2016, Oleksandra has been involved in tech talent relocation.

Last update: March 25, 2025

Next update: Scheduled for January 25, 2026

Portugal has federal and local taxes, which are calculated according to the income, expenses, and properties of each taxpayer. Income tax is the most important tax in Portugal, and it has progressive rates that go between 13% and 48%.

Compared to other countries in Europe, brackets in Portugal are very permissive if you’re in the lower tiers, but start to get very stringent once you surpass the country’s average salary of almost €25,000 a year. For example, the lowest taxable bracket in Portugal is 6% shy of what Spain demands from workers in a similar bracket. But, conversely, taxes in Portugal are comparable to Belgium’s (one of Europe’s most brutal tax systems) once you start making around €80,000 a year.

Also, compared to other countries in Europe, Portugal has many, many brackets: 12 in 2025. Not even France has so many.

Let’s take a detailed look at the tax system in Portugal.

What is the income tax rate in Portugal?

All people earning money in Portugal must pay a personal income tax. This means that all residents and non-residents who earn an income in Portugal must pay taxes in the country. Additionally, if you spend over 182 days in Portugal over a period of 12 months, you will be considered a tax resident and be obligated to pay taxes there.

But, again: “All people earning money in Portugal must pay a personal income tax” is a half-truth because people earning under a minimum wage don’t have to pay any tax.

Most employed workers pay their taxes directly via their employer, but everyone has to submit an annual tax return. Married couples pay a joint tax income, but the joint income is split in half to make the relevant rate easier to calculate.

Brackets in Portugal are calculated based on a month’s salary. For comparison purposes with other nations, we’re listing them yearly, which in Portugal involves 14 salaries, not 12.

There is a progressive rate system in Portugal, where the percentage you pay depends on the total of your earnings. These rates range from 13% to 47.17% as of January 2025, which was the last time the percentages got an update along with the minimum wage. These are the brackets:

Tax categories in Portugal

The Portuguese tax system has six tax categories that determine the amount of income tax any person has to pay. Tax categories are determined by the source of the income being taxed.

• Tax category A: employment income
• Tax category B: self-employment income
• Tax category E: investment income
• Tax category F: rental income from properties
• Tax category G: capital gains from selling properties, assets, or shares
• Tax category H: pensions, including private pension plans.

Online tax calculator

Portugal has a complex taxing system, and it can be a little confusing to figure out the exact amount of money you need to pay in income taxes. It’s a good idea to get an estimate of your tax rate according to your income using an online tax calculator.

Social Security Contributions in Portugal

Several public services in Portugal, such as healthcare, are funded by Social Security Contributions. This is usually tied to employment, where employees pay 11% of their gross salary in social contributions, while employers pay 23.75%, resulting in a total of 34.75%.

Self-employed workers pay a rate of 21.4% of their total income in social security.

Other Portuguese taxes

These are some other Portuguese taxes you should consider if you plan to move into the country.

Property tax

Portugal has a municipal property tax based on the value of your property and the wealth of the area. In rural areas, it’s a rate of 0.8%; in urban areas, it ranges from 0.3% to 0.45.

Value added tax (VAT)

The Value Added Tax in Portugal comes in three rates depending on the type of product:

• General rate: 23%
• Intermediate rate: 13% (food, drink, and related services)
• Reduced rate: 6% (some essential necessities such as food, medicine, transport, etc.)

Some stores in Portugal have a “Tax-Free” sign that indicates you can ask for a VAT refund at the time of purchase, as long as you reach a minimum spending price.

Rental income tax

If you are a landowner in Portugal, you have to pay a tax of 15% on the rental income you make.

Inheritance

There is no inheritance tax in Portugal, but a stamp tax of 10% may apply in some cases.

The annual tax return: Income tax declaration

In Portugal, you have to fill out your tax return online on the Tax Office website between April 1 and June 30 of the year after you have earned the income you are declaring. To do so, you need to have your Financial Identification Number and introduce a password.

If you need help filling out your income tax return, you can contact a Citizen Spot, go in person to a Tax Office, or talk to a professional who understands the Portuguese tax system well.

How to pay less taxes

Portugal offers various tax benefits and mechanisms that can help offset your tax liability, so you can have less money deducted from your income. Let’s have a look at some of these benefits and deductions:

Personal allowance

The personal allowance in Portugal is €12,180. If you check the tax brackets, you’ll notice the amount corresponds to the first tier. It’s also the sole exempt bracket. This is called the mínimo de existência, which more or less means “the bare minimum.” The mínimo de existência is a rule in the IRS code that guarantees that some taxpayers have a certain amount of disposable income on which they don't pay tax. Accordingly, these taxpayers are left with a net disposable income that is considered indispensable for a decent life.

Additionally, there are a couple of quite confusing formulas you can use for tax rebates if you’re in the second or third tier. You can check them here or connect with a tax expert instead.

Family deductions

If you have dependent family members, you are entitled to a deduction of €600. For the second and third dependents under 3 years old, you can deduct €726 and €900 respectively.

Charity Donations

Taxpayers can deduct 25% of any donation to a registered charity from their tax return, as long as the sum doesn’t exceed 15% of their total income tax in the given year.

Youth tax break

Portugal offers a tax break for people under 35 years of age who become non-dependant. This tax break lasts up to ten years and relieves you of 100% of your income tax during the first year, 75% from years 2 to 4, 50% from years 5 to 7, and 25% from years 8 to 10.

Tax treaties with Portugal

Portugal has established various Double Taxation Agreements with other countries to ensure taxpayers aren’t taxed for the same income in two different countries. Check out the list of treaties Portugal has and what they involve.

Talk to an advisor

Getting to know the Portuguese taxing system can be a bit overwhelming, especially if you don’t speak the language. Unfortunately, information in English is quite limited (even if Portugal has a very well-developed visa programme for expats). So make sure to speak with a professional tax advisor who has a good understanding of it so you can make the most out of your tax benefits when moving to Portugal.