A common question among expatriates, entrepreneurs, and international investors considering relocation is straightforward: Are taxes high in Portugal? The short answer is that it depends on income type, residency status, and, critically, where in Portugal you live or incorporate.
Portugal is not a uniform tax jurisdiction. National headlines often focus on mainland tax rates, but these do not tell the full story. When analysed properly, especially including the Autonomous Region of Madeira, Portugal can be one of the most competitive tax environments in the European Union.
This article breaks down the reality behind the question “Are taxes high in Portugal?” using current and proposed 2026 tax rules.
Are Taxes High in Portugal Compared to Other EU Countries?
At first glance, Portugal’s mainland tax rates appear relatively high by European standards:
Progressive personal income tax (IRS) rates reaching 48%
Standard corporate income tax (CIT) rate of 20%
Municipal and state surtaxes may apply
However, these figures do not apply uniformly across the country. Portugal’s Constitution allows autonomous regions to apply differentiated tax policies — and Madeira uses this power extensively.
Corporate Taxes in Portugal: Mainland vs Madeira
Mainland Portugal
Standard corporate tax rate: 20%
Additional municipal surtax (up to 1.5%)
State surtax for large profits
Madeira (Autonomous Region)
2025 general corporate tax rate: 14%
Proposed 2026 rate: 13.3% (subject to approval of the Regional Budget – ORAM)
No additional municipal surtax
If approved, Madeira would become:
The lowest general corporate tax jurisdiction in Portugal
One of the most competitive corporate tax locations in the EU
This is particularly relevant for:
Expats incorporating a company when relocating
International service providers
Digital businesses, consulting firms, and holding structures
EU and non-EU founders seeking a compliant EU base
Are Taxes High in Portugal for Companies? The MIBC Exception
For qualifying companies, the answer is clearly no.
The Madeira International Business Centre (MIBC) offers one of the most attractive corporate tax regimes in Europe, fully approved by the European Union.
MIBC Key Features
5% corporate income tax rate
Participation exemption on dividends and capital gains
0% withholding tax on dividends to non-residents (subject to conditions)
80% reduction on IMT, IMI, stamp duty, and regional surtaxes
Regime extended until 31 December 2033
Companies must meet economic substance requirements, but for international groups, the MIBC remains a best-in-class EU solution.
Personal Income Taxes in Portugal: Are They High for Individuals?
Again, the answer depends on location.
Mainland Portugal – 2026 (Indicative)
Top marginal IRS rate: 48%
Steep progression at mid-income levels
Madeira – Proposed 2026 IRS Rates
Madeira applies systematically lower IRS rates across all income brackets:
Lower entry-level taxation
Softer progression
Top marginal rate: 33.6%
This creates material tax savings for:
Relocating professionals
Families
Entrepreneurs paying themselves salaries or management fees
For many expats, these regional differences are overlooked, often with costly consequences.
Are Taxes High in Portugal for Expats?
Portugal’s tax reputation is often misunderstood.
While the Non-Habitual Resident (NHR) regime has changed, Portugal continues to offer:
Regional tax differentiation (notably Madeira)
Corporate-friendly environments
Moderate effective taxation when properly structured
For expats who plan correctly, Portugal is not a high-tax country, particularly when Madeira is part of the equation.
Key Takeaways: Are Taxes High in Portugal?
Portugal is not a single tax reality.
On the mainland, taxes can be high for certain profiles
In Madeira, both corporate and personal taxation are significantly lower
The MIBC offers a 5% corporate tax rate until 2033
Proposed 2026 reforms further enhance Madeira’s competitiveness
For globally mobile individuals and international businesses, Portugal, and especially Madeira, remains one of Europe’s most tax-efficient jurisdictions when approached correctly.
How Madeira Corporate Services Can Assist
Madeira Corporate Services (MCS) has over 25 years of experience advising international clients on:
Corporate and personal tax planning
MIBC eligibility and compliance
Relocation and residency structuring
Ongoing accounting, reporting, and governance
Our approach ensures that clients benefit from Portugal’s tax framework legally, efficiently, and with long-term certainty.
This article is provided for general informational purposes only and does not constitute legal, tax, or investment advice. Tax rates, incentives, and regimes referred to herein, including the proposed 13.3% corporate tax rate in Madeira and the extension of the MIBC, are subject to legislative approval and may change. Professional advice should be obtained before making any tax or relocation decisions.
Miguel Pinto-Correia holds a Master Degree in International Economics and European Studies from ISEG – Lisbon School of Economics & Management and a Bachelor Degree in Economics from Nova School of Business and Economics. He is a permanent member of the Order of the Economists (Ordem dos Economistas)… Read more
