Do Expats Pay Taxes in Portugal? Learn Why you Should Care!

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Do Expats Pay Taxes in Portugal? Learn Why you Should Care!

by | Wednesday, 1 June 2022 | Immigration, Personal Income Tax

Do Expats Pay Taxes in Portugal? This is a question many expats moving to the country ask themselves and their tax advisors when relocating to the country or its Autonomous Region of Madeira.

The answer to the question “Do Expats Pay Taxes in Portugal?”, couldn’t be more simple: if you are a resident, for tax purposes, in the country, you are liable to personal income tax on your worldwide income. An individual is considered to be resident for tax purposes in Portugal if:

  • Living more than 183 (consecutive or not) days in Portugal in any period of 12 months starting or ending in the relevant year;

  • When herein living for an inferior period, having, in any day of the 12 months threshold, a house in such conditions that allow presuming the intention to hold and occupy it as his habitual place of residence;

  • Is a crew member of a ship or aircraft on December 31, provided he is in the service of entities with residence, headquarters or effective direction in Portugal;

  • Performs abroad functions or commissions of a public nature at the service of the Portuguese State.

Should one comply with one of the above requirements, they need to register themselves with the  Portuguese Tax and Customs Authority as such.

Notwithstanding the possibility of being taxed at progressive tax rates that can go up to 48%, expats relocating to Portugal for the first time in the five previous years are granted numerous tax advantages under the NHR scheme. This appealing tax program gives tax-free benefits for up to 10 years, depending on one’s income type.

Should you not qualify as a resident, for tax purposes in Portuguese territory, you are still liable to taxation in the country should you earn an income of Portuguese source, as defined under the Law and international taxation treaties, or should you own real estate property or a vehicle located in the country.

In case you need assistance with your compliance and reporting obligations in Portuguese territory, please do not hesitate to contact our team of board-certified accountants.

This article is provided for general information purposes only and is not intended to be, nor should it be construed as, legal or professional advice of any kind.

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Tax advisors or a tale as old as time

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As tax advisors since 1995, we have heard our fair share of tales as old as the time of expats relocating to Portuguese territory for immigration and tax purposes, ending up not complying with Portuguese tax law and therefore facing unpleasant surprises (penalties,...

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