Portugal Taxes 2026: Income, Companies, NHR and IFICI at a Glance
With its NHR regime, Portugal was for years Europe's tax destination for retirees and entrepreneurs. New rules apply since 2024: classic NHR is closed to newcomers and has been replaced by the IFICI regime for certain professions. This guide to Portugal taxes shows which rates apply in 2026, who still benefits from special regimes and where the "tax paradise" narrative no longer holds.
- ✛You are tax resident if you spend more than 183 days in Portugal or have a home there as your habitual residence.
- ✛Income tax (IRS): progressive from 12.5% to 48%, plus a 2.5% or 5% solidarity surcharge above EUR 80,000.
- ✛Corporate tax (IRC) 2026: 19%, 15% for SMEs on the first EUR 50,000. Plus municipal and state surcharges.
- ✛Classic NHR is closed to newcomers. Its successor IFICI taxes qualifying activities at 20% and exempts much foreign income.
- ✛Dividends, interest and capital gains: 28% flat tax.
The Portuguese tax system at a glance
The tax authority Autoridade Tributária e Aduaneira (AT) collects taxes centrally. The main taxes:
- ✛IRS: personal income tax
- ✛IRC: corporate tax
- ✛IVA: VAT
- ✛IMI: annual property tax
- ✛IMT: property transfer tax
- ✛Imposto do Selo: stamp duty, including on inheritances and property purchases
Tax residency and its consequences
The Portal das Finanças defines who is tax resident: anyone staying in Portugal more than 183 days in any 12-month period, or having a home there suggesting habitual residence.
| Criterion | Resident | Non-resident |
|---|---|---|
| Presence | > 183 days or habitual residence | less |
| Taxation | worldwide income | Portuguese-source income only |
| Rate on employment | progressive up to 48% | flat 25% |
| Special regimes | IFICI, IRS Jovem possible | no |
Since 2015 split-year residence applies: newcomers are resident from the first day of their stay, not retroactively for the whole year.
Income tax (IRS) 2026
The IRS tariff is progressive with nine brackets. For 2026 the thresholds were indexed and the middle-bracket rates slightly reduced. The table shows the order of magnitude:
| Taxable income (approx.) | Marginal rate |
|---|---|
| up to EUR 8,300 | 12.5% |
| up to EUR 12,600 | approx. 16% |
| up to EUR 17,800 | approx. 21% |
| up to EUR 23,100 | approx. 24% |
| up to EUR 29,400 | approx. 31% |
| up to EUR 43,100 | approx. 35% |
| up to EUR 46,600 | approx. 43% |
| up to EUR 86,600 | approx. 44.5% |
| above | 48% |
Above EUR 80,000 taxable income a solidarity surcharge (taxa adicional de solidariedade) of 2.5% applies, and 5% above EUR 250,000. There is no municipal income surtax, but municipalities can refund their share of IRS (up to 5%) to taxpayers.
Types of income
- ✛Employment: progressive tariff, monthly withholding
- ✛Self-employed: simplified regime with a deemed cost ratio (e.g. 75% of fees taxable) or organised accounting
- ✛Investment income: 28% on dividends, interest and securities gains, 35% from tax havens
- ✛Property gains: 50% included in the progressive tariff for residents
IRS Jovem
People up to 35 pay partly no IRS in the first ten years of their working life: 100% exempt in year 1, 75% in years 2–4, 50% in years 5–7 and 25% in years 8–10. The exemption is capped and also applies to newcomers.
NHR and IFICI: status 2026
The classic NHR regime closed to new applications at the end of 2023. Those who obtained it keep it for the rest of their ten years. Under a transitional rule, people meeting certain conditions by the end of 2023 could still register until 31 March 2025.
Since 2024 there is the IFICI regime (Incentivo Fiscal à Investigação Científica e Inovação), often called "NHR 2.0". It is tied to specific activities. Registration is via the AT.
| Aspect | NHR (until 2023) | IFICI (from 2024) |
|---|---|---|
| Target group | all newcomers not resident in the previous 5 years | research, start-ups, qualified professionals in favoured sectors |
| Rate on Portuguese employment | 20% (high-value professions) | 20% |
| Foreign pensions | 10% (since 2020), previously mostly exempt | taxed normally |
| Foreign dividends and interest | mostly exempt | mostly exempt (except tax havens) |
| Duration | 10 years | 10 years |
Important: with IFICI, Portugal has become much less attractive for retirees. Foreign pensions are taxed progressively up to 48%. Alternatives are compared in our article on Turkey's tax exemption on foreign income or under residency abroad.
Corporate tax (IRC) and companies
The IRC rate is falling gradually: 21% until 2024, 20% in 2025, 19% in 2026. A further cut to 17% is planned by 2028. SMEs pay 15% on the first EUR 50,000 of profit in 2026.
- ✛Derrama Municipal: up to 1.5% of taxable profit
- ✛Derrama Estadual: 3% on profits of EUR 1.5–7.5m, 5% up to EUR 35m, 9% above
The maximum burden in 2026 is therefore around 29.5%. In a European comparison Portugal is in the upper middle, as the Tax Foundation shows.
Tax incentives
- ✛SIFIDE II: tax credit of up to 82.5% of R&D spending (32.5% base plus 50% incremental)
- ✛IP box: 50% of income from self-developed patents and software is IRC-exempt – effectively around 9.5%
- ✛Madeira (IBC): 5% IRC for licensed companies with local jobs and investment; not for Pillar Two groups
- ✛Participation exemption: dividends and gains on stakes of 10%+ held for 1 year are tax-free
The VdA analysis of Portuguese corporate tax trends offers more detail. For EU structures with lower rates, consider company formation in Cyprus or Malta.
Withholding taxes and double tax treaties
Portugal has more than 80 double tax treaties, including with Germany, Austria, Switzerland and the USA.
- ✛Dividends: 25% to companies, 28% to individuals; under treaties mostly 10–15%, EU parent-subsidiary 0%
- ✛Interest: 25% or 28%; under treaties mostly 10–15%
- ✛Royalties: 25%; under treaties mostly 5–10%
- ✛Payments to tax havens: 35%
Treaty relief requires a form with a certificate of residence in advance.
VAT (IVA)
| Territory | Standard | Intermediate | Reduced |
|---|---|---|---|
| Mainland | 23% | 13% | 6% |
| Madeira | 22% | 12% | 4% |
| Azores | 16% | 9% | 4% |
Since 2025 small businesses with annual turnover up to EUR 15,000 are exempt from IVA. Foreign businesses without an establishment usually need a tax representative. For digital services to EU consumers, the One-Stop-Shop (OSS) applies.
Property: IMT, IMI, stamp duty and AIMI
- ✛IMT (transfer tax): residential property progressive from 0% to 6%, flat 7.5% above about EUR 1.1m; commercial 6.5%; buyers from tax havens 10%
- ✛Stamp duty: 0.8% of the purchase price
- ✛IMI (property tax): 0.3–0.45% of the cadastral value per year
- ✛AIMI (additional IMI): 0.7% above EUR 600,000 (couples EUR 1.2m), 1% above EUR 1m, 1.5% above EUR 2m; companies 0.4%
Gains on the sale of a main home are tax-free if reinvested in a new main home in the EU/EEA within 36 months. Since October 2023 property purchases no longer qualify for the golden visa.
Inheritance and gifts
Portugal has no classic inheritance tax. Instead, 10% stamp duty applies to inheritances and gifts. Spouses, descendants and parents are exempt. For real estate, 0.8% is added.
Pillar Two and minimum tax
Portugal transposed the EU minimum tax directive with Law 41/2024, effective for fiscal years from 2024. Groups with revenue of EUR 750m or more are affected. The implementation of the Pillar II rules covers IIR, UTPR and a domestic top-up tax (QDMTT). For such groups the 5% Madeira rate is effectively no longer usable.
Compliance and deadlines
- 1IRS return: 1 April to 30 June for the previous year
- 2IRC return (Modelo 22): by 31 May
- 3IVA: monthly or quarterly
- 4Foreign assets: foreign accounts and income are declared in the IRS return (Annex J)
There is no separate asset register like Spain's Modelo 720. Through the automatic exchange of information, however, the AT receives account data from over 100 countries. Delays and errors are fined; tax evasion is a criminal offence.
Comparison with other countries
| Country | Top income tax | Corporate tax | VAT |
|---|---|---|---|
| Portugal | 48% + 5% surcharge | 19% (up to approx. 29.5%) | 23% |
| Spain | approx. 45–54% by region | 25% | 21% |
| France | 45% + surcharges | 25% | 20% |
| Switzerland | approx. 22–44% by canton | approx. 11.7–20.5% | 8.1% |
| Ireland | 40% + USC/PRSI | 12.5% (15% for large groups) | 23% |
Portugal does not score with low standard rates but with regimes for specific groups: IFICI, IRS Jovem, the participation exemption and Madeira. How the Swiss cantons compare is shown in Swiss taxes by canton.
Digital nomads and remote work
The digital nomad visa (D8) has existed since October 2022. It requires income of at least four times the minimum wage, around EUR 3,680 per month in 2026. Anyone staying more than 183 days becomes tax resident and is taxed on worldwide income. IFICI is usually not available for typical remote work.
Structuring and optimisation
- ✛Holding in Portugal: participation exemption from 10% and 1 year holding
- ✛IP box for own patents and software
- ✛Timing of the move due to split-year residence
- ✛Plan your exit from your home country, e.g. because of the German exit tax
To diversify outside the EU, a bank account in Georgia can be part of your financial structure; foreign accounts must be declared in Portugal. More on international tax planning is available on relevant specialist portals and under tax optimisation.
Portugal or an alternative? We compare countries of residence for your profile.
Residency abroad →Frequently asked questions
Does the NHR regime still exist?
Not for newcomers. Existing NHR beneficiaries keep it until the end of their ten years. The successor is IFICI for specific activities.
How high is income tax in Portugal?
Progressive from 12.5% to 48%, plus a 2.5% or 5% solidarity surcharge above EUR 80,000.
How are dividends taxed in Portugal?
At a 28% flat rate, 35% from tax havens. Under IFICI, foreign dividends are mostly exempt.
How high is corporate tax in 2026?
19%, 15% for SMEs on the first EUR 50,000, plus municipal and state surcharges.
Are foreign pensions taxed in Portugal?
Yes. Without the old NHR they are taxed progressively up to 48%.
Considering residency in Portugal?
We compare Portugal with alternatives such as Switzerland, Cyprus or Georgia, plan your exit and structure company and accounts – OECD-compliant and remote.
This article is a general analysis and does not replace individual tax or legal advice. Regulations change; the information reflects the status at the date of publication.
Social security
Employees pay 11%, employers 23.75% of gross salary. The self-employed pay 21.4% on 70% of relevant income. Within the EU the coordination regulation applies: with an A1 certificate, posted workers remain insured in their home country.