An Expat’s Guide to Portugal Tax Residency

Relocation to Portugal can change your tax circumstances significantly if you decide to become the country’s resident. Familiarizing yourself with the rights and obligations of Portugal tax residency before relocating can help you weigh your options and plan accordingly.

This guide will cover the most important aspects of Portugal tax residency, specifically:

• Residency rules
• Registration process
• Income, capital gains, and other notable taxes
• Tax incentives you should leverage

When Do You Become a Tax Resident in Portugal?

According to Portuguese tax law, you become a Portuguese tax resident if you meet either of the following criteria:

1. Sufficient physical presence: You’ve spent at least 183 days in Portugal during a 12-month period overlapping with the fiscal year (which is the same as the calendar year in Portugal)
2. Habitual residence: You maintain a rented or purchased home with the intent of living in Portugal at any point during the aforementioned 12-month period

The 183 days of physical presence may be consecutive or not. This means that even if you move in and out of Portugal throughout the fiscal year, you may be considered a resident if your time in the country surpasses this threshold.

Residency is typically considered effective from the first day you are present in the country during that year (once either criterion is met) and ends on the day you leave Portugal’s territory.

In some cases, you may be a Portuguese resident without being a tax resident. For example, Golden Visa holders must only be in the country for seven days in the first calendar year and a total of 14 days in the following two years to be considered residents.

Fulfilling these requirements doesn’t automatically make you a tax resident; you must still reside in Portugal for at least 183 days or buy/rent a home to be considered one. 

How To Become a Portuguese Tax Resident

After meeting the residency criteria, you must formally register as a Portuguese tax resident with the Tax Authority (Autoridade Tributária e Aduaneira or AT). To do so, you must first obtain a Número de Identificação Fiscal (NIF), a Portuguese Tax ID.

Obtaining a NIF can be done in two ways:

1. In person at one of the local tax offices
2. Online through a fiscal representative

The latter option is typically favorable for future expats who haven’t already moved to Portugal but have started the relocation process (e.g., by obtaining a visa). A representative can significantly simplify various tax and residency-related processes, such as:

• Collecting the necessary documentation
• Managing all correspondence with the tax authorities
• Updating your address to a Portuguese residence and notifying the authorities

After the AT has been notified of your tax residency, you will officially enter the Portuguese tax system and be required to pay any applicable tax for the given year. The filing deadline is June 30 of the following year, and the income tax return is filed through the Modelo 3.

When completing the Modelo 3, you’ll need to declare your worldwide income. This is in contrast to non-residents, who must only declare Portuguese-sourced income.

How Will You Be Taxed as a Tax Resident in Portugal?

Portuguese tax residents pay income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) according to the country’s progressive system. As of 2025, there are nine tax brackets defined by a resident’s annual income:

Annual Income (EUR)	Tax Rate
0–8,059	12.5%
8,059–12,160	16%
12,160–17,233	21.5%
17,233–22,306	24.4%
22,306–28,400	31.4%
28,400–41,629	34.9%
41,629–44,987	43.1%
44,987–83,696	44.6%
83,696+	48%

If you’re a high-net-worth individual, you should also expect a so-called “solidarity surcharge,” which depends on your taxable income:

Annual Income (EUR)	Solidarity Surcharge Rate
80,000–250,000	2.5%
250,000+	5%

Combined with the IRS, your total income tax might be up to 53%. 

Note that, if you are a U.S. expat residing in Portugal, you can claim a U.S. tax credit for the income taxes paid in Portugal due to the double-tax treaty between the two countries.

Additional Obligations of Portuguese Tax Residents

Investment income and capital gains are subject to different tax treatment than regular income. For instance, income from dividends and interest is taxed at a flat rate of 28%, although you can also choose to add it to your regular income so it’s taxed at progressive rates.

Still, most high-net-worth individuals decide not to do so because the flat 28% rate is most likely lower than their marginal rate.

Other notable forms of income and their taxation are as follows:

• Capital gains from securities: Profits from the sales of stocks, bonds, or other securities are subject to a flat tax rate of 28%. The only exception is if you sell shares in small private companies, in which case only 50% of the gains will be taxed at this rate
• Capital gains from real estate: If you sell Portuguese property, 50% of the gains will be added to your annual taxable income and taxed at your marginal rate. Still, if you sell your primary residence and reinvest the gains in another Portuguese or EU/EEA property within 36 months, the gains may be exempt from taxation
• Rental income: You can choose whether to pay a flat 28% rate on rental income or add it to your regular income and have it taxed at your marginal rate
• Crypto: Crypto assets held for less than 365 days are taxed at 28%. Assets held longer than a year are tax-exempt as long as they’re not classified as securities

Portugal Exit Tax for Individuals in 2025

The Portuguese exit tax is often a point of confusion because it doesn’t work the same as in other countries. Specifically, Portugal doesn’t levy a blanket exit tax on all assets, but there are specific circumstances and taxable events when it may need to be paid.

For instance, you may need to pay tax on any capital gains from transactions that occurred while you were a Portuguese tax resident but were not taxed at the time of the event.

Similarly, if you move to a tax haven while being a Portuguese tax resident, you may face additional scrutiny and be considered a tax resident for up to four years after relocation. This is a special anti-avoidance rule that the Portuguese government enforces to prevent relocations to tax-advantaged countries purely for fiscal purposes.

Portugal Tax Advantages: From NHR to IFICI

Up until 2024, Portugal had the Non-Habitual Resident (NHR) regime in place to incentivize foreign nationals to relocate and become Portuguese tax residents. The regime offered various incentives, most notably:

• Exemption of most foreign income
• A flat 20% tax rate on local income
• Reduced tax on pensions

Due to domestic criticism, the NHR regime was abolished and replaced with the Tax Incentive for Scientific Research and Innovation, abbreviated “IFICI” (Incentivo Fiscal à Investigação Científica e Inovação).

IFICI is often referred to as “NHR 2.0” because it retains some of the original program’s key incentives. A clear understanding of the regime’s eligibility requirements, tax incentives, and limitations can help you determine whether IFICI aligns with your needs and objectives. 

Eligibility Criteria

To become eligible for IFICI, you must meet the following criteria:

• Proven experience and high qualifications (Level 6/8 of the European Qualifications Framework)
• No history of Portuguese tax residence in the five years prior to application
• Employment or self-employment in qualifying sectors (science, research, tech, or innovation)
• Ability to perform activities for eligible entities (e.g., research centers, universities, or tech companies)

If you meet the above criteria, you can apply for IFICI by January 15 of the year following the one in which you became a resident. Failure to meet this deadline leads to the loss of benefits for the year of your relocation, although you may still apply later for the remaining years.

Tax Benefits

If you qualify for IFICI, you can enjoy similar tax breaks to the original NHR, but they will be tied to your profession. Only Portuguese employment or business income from the qualifying activities is taxed at a flat 20% rate for a period of 10 years.

A notable advantage is that most categories of foreign-source income are exempt from Portuguese tax for those 10 years. This includes:

• Foreign salaries
• Business income
• Capital gains
• Rental income

Still, all this income is counted in determining the tax rate for any other taxable income you have in Portugal. This rule is in place to prevent foreign nationals from abusing the low 20% rate to leave large foreign income untaxed.

Notable Limitations of IFICI

The main limitation of IFICI is the narrow scope. If you don’t wish to work in research-related fields, you most likely won’t be eligible for the program’s tax advantages. Even if you do, your current financial position and portfolio may prevent you from fully leveraging the program’s benefits.

This is particularly true if you hold assets in any of the established tax havens, including:

• Cayman Islands
• Isle of Man
• Hong Kong
• United Arab Emirates (UAE)

Any income you receive from a tax haven jurisdiction is taxed at a higher 35% rate, which is another anti-abuse measure that prevents wealthy individuals from using IFICI to avoid taxes.

Finally, IFICI cannot be combined with any previous regimes. This rule was mainly imposed to prevent those who were a part of the original NHR program from enjoying perpetual tax breaks. Still, this won’t be an issue if you haven’t leveraged any of Portugal’s previous programs, which is the case with many expats.

Portugal Tax Residency Requirements for Companies

If you’re a business owner, you need to make various considerations beyond individual tax residency. In Portugal, a legal entity is considered a tax resident if it meets at least one of the following two conditions:

1. Having a head office or effective management in Portugal
2. Deriving income from the Portuguese territory

If you own a resident legal entity, it will be subject to a base corporate income tax (IRC) rate of 21% in mainland Portugal (20% in the Autonomous Region of Madeira, and 16.8% in the Autonomous Region of Azores), as well as additional marginal rates in case of high profits (5% on profits over €7.5M and 9% beyond €35M).

Owning foreign companies while being a Portuguese resident may further complicate your tax position due to Controlled Foreign Companies (CFC) rules. Specifically, Portugal can tax a shareholder on the profits of a foreign company if:

• A Portuguese tax resident (individual or company) owns at least 25% of that company
• They own at least 10% of the company through a joint ownership with other Portuguese shareholders, which amounts to over 50% of total ownership
• The company is in a low-tax jurisdiction (paying less than 50% of the tax it would in Portugal)

Considering that many expats are investors or business owners, the enforcement of the above rules and tax specifics is common after relocation to Portugal. Without adequate tax planning, you may expose your assets to the risk of excessive taxation.

To prevent this, plan your tax residency with a reliable advisor like Nomad Capitalist. 

Get the Most Out of Portuguese Tax Residency With Nomad Capitalist

Nomad Capitalist has helped over 1,500 high-net-worth individuals obtain residency in countries across the globe. We provide personalized, structured strategies that accommodate your unique circumstances and help meet your financial goals.

If you wish to relocate to a new country and preserve as much of your wealth as possible, our Action Plan can help. Here’s how it works:

1. You complete a short questionnaire to determine if we’re a good fit
2. We schedule and conduct an onboarding call to understand the details of your relocation and your financial goals
3. We research and prepare a step-by-step Action Plan that reflects your objectives
4. We present and implement the Plan over a 12-month period
5. You get lifelong support for any changes and updates to the Action Plan

With Nomad Capitalist, you can relocate confidently and without administrative burden. More importantly, you can obtain a complete understanding of Portugal’s tax environment so that you can explore its opportunities while optimizing your tax burden.

Let us handle the legwork while you focus on the rewarding aspects of your relocation—get your Action Plan today.