Taxation in Portugal

Part of a series on
Taxation
An aspect of fiscal policy
Policies Government revenue Property tax equalization Tax revenue Non-tax revenue Tax law Tax bracket Flat tax Tax threshold Exemption Credit Deduction Tax shift Tax cut Tax holiday Tax amnesty Tax advantage Tax incentive Tax reform Tax harmonization Tax competition Tax withholding Double taxation Representation Unions Medical savings account
Economics General Theory Price effect Excess burden Tax incidence Laffer curve Optimal tax Theories Optimal capital income taxation Distribution of Tax Tax rate Flat Progressive Regressive Proportional
Collection Revenue service Revenue stamp Tax assessment Taxable income Tax lien Tax refund Tax shield Tax residence Tax preparation Tax investigation Tax shelter Tax collector Private tax collection Tax farming
Noncompliance General Tax avoidance Repatriation tax avoidance Tax evasion Tax resistance Tax shelter Debtors' prison Smuggling Black market Unreported employment Corporate Tax inversion Transfer mispricing Base erosion and profit shifting (BEPS) Double Irish Dutch Sandwich Single Malt CAIA Locations Tax havens Corporate havens Offshore financial centres (OFCs) Offshore magic circle Conduit and sink OFCs Financial centres Financial Secrecy Index Major examples Ireland as a tax haven Ireland v. Commission Leprechaun economics Liechtenstein tax affair Luxembourg Leaks Offshore Leaks Paradise Papers Panama Papers Swiss Leaks United States as a tax haven Panama as a tax haven
Types Direct Indirect Per unit Ad valorem Aviation Airport improvement Landing Solidarity Capital gains Expatriation Consumption Departure Hotel Sales Stamp Television Tourist Value-added Dividend Environmental tax Carbon Eco-tariff Landfill Natural resources consumption Severance Steering Stumpage Excise Alcohol Cigarette Fat Meat Sin Sugary drink Tobacco General Georgist Gift Gross receipts Hypothecated Income Inheritance (estate) Land value Luxury Payroll Pigouvian Property Resource rent Single Surtax Turnover Use User charge/fee Congestion Fuel Road/GNSS Toll Vehicle miles traveled Corporate profit Excess profits Windfall Negative (income) Wealth
International Financial transaction tax ATTAC Currency transaction tax European Union Common Consolidated Corporate Tax Base (CCCTB) Global minimum corporate tax rate Robin Hood tax Tobin tax Spahn tax Tax equalization Tax treaty Exchange of Information Permanent establishment Transfer pricing European Union FTT Foreign revenue rule
Trade Custom Duty Tariff Import Export Tariff war Free trade Free-trade zone Trade agreement ATA Carnet
Research Academic Mihir A. Desai Dhammika Dharmapala James R. Hines Jr. Ronen Palan Joel Slemrod Gabriel Zucman Advocacy groups Institute on Taxation and Economic Policy (ITEP) Oxfam (UK) Tax Foundation (US) Tax Justice Network (TJN) Tax Policy Center (US)
Religious Church tax Eight per thousand Teind Tithe Fiscus Judaicus Leibzoll Temple tax Tolerance tax Jizya Kharaj Khums Nisab Zakat
By country All Countries List of countries by tax rates Tax revenue to GDP ratio Tax rates in Europe Individual Countries Albania Algeria Argentina Armenia Australia Azerbaijan Bangladesh Bhutan Brazil Bulgaria BVI Canada China Colombia Croatia Denmark Finland France Germany Greece Hong Kong Iceland India Indonesia Iran Ireland Israel Italy Japan Kazakhstan Lithuania Malta Morocco Namibia Netherlands New Zealand Norway Pakistan Palestine Peru Philippines Poland Portugal Russia South Africa Sri Lanka Sweden Switzerland Taiwan Tanzania United Arab Emirates United Kingdom United States Uruguay
Business portal Money portal
v t e

Taxes in Portugal are levied by both the national and regional governments of Portugal. Tax revenue in Portugal stood at 34.9% of GDP in 2018.^[1] The most important revenue sources include the income tax, social security contributions, corporate tax and the value added tax, which are all applied at the national level.

Employment income earned is subject to a progressive income tax, which applies to all who are in the workforce. Furthermore, a long list of tax allowances can be deducted, including a general deduction, health expenses, life and health insurance, and education expenses. The personal income taxation system is as follows:^[2]

Taxable income	Applicable Tax Rate
	Portuguese mainland	Autonomous Region of Madeira	Autonomous Region of Azores
Up to €7,703	13%	10.15%	10.15%
€7,703 to €11,623	18%	14.7%	14.7%
€11,623 to €16,472	23%	18.55%	18.55%
€16,472 to €21,321	26%	19.95%	19.95%
€21,321 to €27,146	32.75%	29.75%	24.5%
€27,146 to €39,791	37%	33.67%	25,9%
€39,791 to €51,997	43.5%	42.2%	30.45%
€51,997 to €81,199	45%	43.65%	31.5%
Above €81,199	48%	47.52%	33.6%

Under the Investment Tax Code, approved on September 23 2009,^[3] a new type of residency, for tax purposes was created under the Personal Income Tax Code, called non-habitual residency (NHR). This new tax residency type was created in order to attract to Portugal high-skilled professionals and pensioners obtaining foreign income.^[4]

A person, regardless of their nationality, may apply for registration as a non-habitual resident if the following conditions are fulfilled:^[3][4][5]

• The person is considered, for tax purposes, to be resident in Portuguese territory, in accordance with any of the criteria set out in Personal Income Tax Code in the year for which that person wishes to be taxed as NHR;
• That person as not been considered to be resident in Portuguese territory in any of the five calendar years preceding the year for which that person wishes to be taxed as a non-habitual resident.

Taxation for NHR status holders^{[3][4][5][6][7]}

Type of Income	Source of Income	Taxation
		Portuguese mainland	Autonomous Region of Madeira	Autonomous Region of Azores
Employment Income	Foreign	Taxation exemption on employment income is granted if the income is subject to taxation in the source country, in accordance with the applicable Double Taxation Agreement, or are considered not to be derived from a Portuguese source.
	High-Added Value Job performed in Portugal	Flat tax of 20%		Flat tax of 16%
	Any other job performed in Portugal	Normal progressive tax rates
Pensions	Foreign	Pension income obtained by non habitual residents abroad, which is, for the same portion which was considered taxable, not considered tax deductible in Portugal, is taxed at a 10% flat rate.
	Portugal	Normal progressive tax rates
Self employment, obtained through high added value activities of a scientific, artistic or technical nature (see below), or from intellectual or industrial property, as well as, from providing information regarding an experiment carried out in the commercial, industrial or scientific areas	Foreign	Exempt from taxation if alternatively: It can be taxed by the source State, according to the double taxation treaty signed between Portugal and the source State; or It can be taxed in another country, in cases where the double tax treaty has not been entered into under the terms defined by the OECD Model Tax Convention on Income and Capital, as long as (i) it is not a territory subject to privileged tax systems (defined by an ordinance) and (ii), as long as the corresponding income, cannot be considered to have been obtained on Portuguese territory, as per the Personal Income Tax Code.
	Portugal	Flat tax of 20%		Flat tax of 16%
Capital Income	Foreign	Exempt from taxation if alternatively: It can be taxed by the source State, according to the double taxation treaty signed between Portugal and the source State; or It can be taxed in another country, in cases where the double tax treaty has not been entered into under the terms defined by the OECD Model Tax Convention on Income and Capital, as long as (i) it is not a territory subject to privileged tax systems (defined by an ordinance) and (ii), as long as the corresponding income, cannot be considered to have been obtained on Portuguese territory, as per the Personal Income Tax Code.
	Portugal	Flat 28%
Real Estate Income	Foreign	Exempt from taxation if alternatively: It can be taxed by the source State, according to the double taxation treaty signed between Portugal and the source State; or It can be taxed in another country, in cases where the double tax treaty has not been entered into under the terms defined by the OECD Model Tax Convention on Income and Capital, as long as (i) it is not a territory subject to privileged tax systems (defined by an ordinance) and (ii), as long as the corresponding income, cannot be considered to have been obtained on Portuguese territory, as per the Personal Income Tax Code.
	Portugal	Flat 28%
Capital Gains	Foreign	Exempt from taxation if alternatively: It can be taxed by the source State, according to the double taxation treaty signed between Portugal and the source State; or It can be taxed in another country, in cases where the double tax treaty has not been entered into under the terms defined by the OECD Model Tax Convention on Income and Capital, as long as (i) it is not a territory subject to privileged tax systems (defined by an ordinance) and (ii), as long as the corresponding income, cannot be considered to have been obtained on Portuguese territory, as per the Personal Income Tax Code.
	Portugal	Normal progressive tax rates

Under Ministerial Order issued by the Ministry of Finance, the follow jobs are subject to flat personal income tax of 20%:^[5][8][9]

The corporate tax rate applicable to companies in Portugal may vary, depending on which part of the Portuguese territory said companies are incorporated and domiciled.^[10]

Type of entity	Portuguese mainland	Autonomous Region of Madeira	Autonomous Region of Azores
Resident entities and permanent establishments of non-resident entities	21%	14.7%	14.7%
Resident entities characterized as a small or medium enterprises, on the first € 25 000 of taxable profit	17%	11.9%	11.9%

Companies incorporated and headquartered in Madeira can apply for an International Business Centre (MIBC) license and, granted that they comply with substance requirements, benefit from a corporate tax rate of 5% on the taxable profit derived from economic activities engaged with non-resident entities or entities duly licensed within the MIBC.^[11][12]

Three different VAT rates apply: normal, intermediate and reduced. There is a general rate of 23% (normal rate) for luxury goods, decorative plants, cut flowers, utensils and other equipment for firefighting and fire prevention,^[13] followed by a reduced rate of 13% for ordinary wine, spring, mineral, medicinal and carbonated water, and tickets for cultural events. This is followed by a further reduced rate of 6% on cereals, meat, shellfish, fruit, vegetables, and other essential foods, books, newspapers, medicines, passenger transport and hotel accommodation.^[14] In 2014, the government introduced the fatura da sorte ("Lucky bill"), a lottery of tax-free cash and luxury cars awarded among consumers with VAT bills. The goal is to bring into the formal economy the many unregistered and untaxed purchases.^{[citation needed]}

The VAT rates in Madeira are 22% (normal rate), 12% (intermediate rate) and 5% (reduced rate).^[15][16]

The Azores has lower applicable VAT rates of 16%, 9% and 4%.^[17] Businesses with revenue of less than 10,000 Euros per year are exempt from VAT.

All employment income is subject to social security contributions.^[18]

• Economy of Portugal
• List of taxes in Portugal
• Portugal's List of Tax Havens