Moving to Portugal means getting familiar with a new tax system. Whether you’re retiring here, working remotely, or starting a business, understanding your tax obligations is crucial.
The good news? While Portuguese taxes aren’t the lowest in Europe, they’re often more manageable than many assume. Plus, with Portugal’s lower living costs and various tax deductions available, many newcomers find their overall expenses quite reasonable – especially compared to countries like the US, where healthcare and property taxes can take a bigger bite out of your income.
Ready to dive into Portugal’s tax system? Let’s break it down.
Portuguese income tax bands
Portugal uses progressive tax rates. Here’s what that means: your income is divided into bands, with each band taxed at a different rate.
For example, if you earn €10,000:
- First €8,059: taxed at 13%
- Next €1,941: taxed at 16.5%
This means you’ll never pay the higher rate on your entire income – just the portion that falls within that band.
| Income Tax Bracket | Tax rate |
|---|---|
| €0-8,059 | 13% |
| €8,060-12,160 | 16.50% |
| €12,161-17,233 | 22% |
| €17,234-22,306 | 25% |
| €22,307-28,400 | 32% |
| €28,401-41,629 | 35.50% |
| €41,630-44,987 | 43.50% |
| €44,988-83,696 | 45% |
| €83,697 and above | 48% |
An additional solidarity tax ranging from 2.5% to 5% applies for taxpayers earning more than €80,000 a year.
Social Security
If you’re working, either employed or self-employed, you’ll also have social security to pay. Employees pay 11% (and their employer pays 23.75%) while those who are self-employed pay 21.4%.
Those on retirement income (e.g. pension or US social security) typically do not pay social security in Portugal.
The NHR tax regime
The original NHR regime was a major draw for many moving to Portugal. It offered retirees a sweet deal: just 10% tax on foreign pensions and US social security (and at one point, even 0%). For remote workers and digital nomads, it meant a flat 20% tax rate on most income – and qualifying was relatively straightforward.
But as of 2025, that’s changed.
The Portuguese government has replaced NHR with the Scientific Research and Innovation Regime (often called NHR 2.0). While it still offers that attractive 20% flat tax rate, qualifying is much tougher now.
The new regime targets specific professionals:
- University professors and researchers
- Tech workers
- Startup founders
- Other highly qualified roles in specific sectors
Notable changes:
- No more tax benefits for pensioners
- Stricter qualification criteria
- Still lasts 10 years if you qualify
Planning to move to Portugal? Make sure to speak with a tax professional to understand how these changes affect your situation.
A more in-depth article about NHR can be found here
Taxes for non-residents
If you’re not a resident in Portugal, typically only income that’s earned in Portugal will be eligible for Portuguese taxes. Example income would include rental income from a property in Portugal or the sale of a property here.
Submitting tax returns
The Portuguese tax year runs from January 1st until December 31st. Tax returns are submitted between April 1st and June 30th in the calendar year following the previous tax year.
Have a question about moving to Portugal?
Comments are closed.