For expats seeking a lifestyle upgrade combined with tax efficiency and long-term stability, few options are as compelling as a move to Portugal 2025. Backed by insights from the European Commission’s 2025 Annual Report on Taxation, Portugal, and especially the island of Madeira, is proving to be the most balanced and future-ready destination when compared to Spain, Italy, and Greece.
1. Portugal Offers Lower and More Predictable Taxes
Portugal’s overall tax burden is lighter than that of its southern neighbours. In 2023, Portugal’s tax-to-GDP ratio stood at around 36.5%, whereas Spain hovered at 37.1%, Greece at nearly 39%, and Italy soared to over 42%. This means Portugal takes a smaller bite out of your income.
Just as important, Portugal’s fiscal policies are more stable. With a government budget on track to reach surplus by 2026, Portugal is less likely to raise taxes unpredictably. By contrast, Italy and Greece still face persistent deficits and high debt levels, often leading to sudden tax hikes or reductions in public services.
2. Madeira Means Even Lower Personal Income Taxes
Portugal already offers attractive personal income tax (PIT) rates compared to its neighbours, but Madeira goes even further. As an autonomous region, Madeira applies reduced PIT rates across most income levels. This can translate to up to 30% less income tax than on the mainland.
For example, someone earning a moderate income in Madeira could face a tax rate of just under 20%, compared to over 28% for the same income on the mainland. For higher income brackets, the savings grow even more substantial.
When combined with Portugal’s old Non-Habitual Resident (NHR) regime, which provides reduced or zero tax on certain foreign income for 10 years, Madeira becomes one of Europe’s most efficient locations for personal taxation.
3. Portugal’s Tax System Is Modern and Efficient
If you’re used to the bureaucratic hurdles of the Greek or Italian tax systems, Portugal will be a breath of fresh air. Tax filing in Portugal is digital, efficient, and increasingly automated. Most taxpayers benefit from pre-filled returns for personal income tax, with VAT and corporate tax filings also managed online.
The Portuguese government is also embracing AI and digital tools to streamline tax compliance and reduce fraud. This results in fewer audits, faster resolutions, and a smoother taxpayer experience, which is significant for expats settling into a new country.
In contrast, Italy continues to suffer from tax complexity, and while Greece has made progress, compliance gaps and administrative inefficiencies remain a concern.
4. Entrepreneurs and Investors Thrive in Madeira
If you’re an entrepreneur considering a move to Portugal 2025, Madeira offers unique advantages. Through its International Business Centre (IBC), eligible businesses can benefit from a reduced 5% corporate tax rate. Additional incentives include exemptions or reductions in capital gains, dividends, and royalties.
Compared to Italy and Spain, where standard corporate tax rates exceed 25%, Madeira’s tax framework is streamlined, internationally compliant, and designed to attract long-term business investment. The local administration is responsive and business-friendly, making it an ideal base for startups, consultancies, holding companies, and remote operations.
5. Safer Long-Term Outlook for Public Finances
The European Commission report highlights serious fiscal pressure building across Europe due to ageing populations. Italy and Greece face especially sharp increases in pension-related spending, expected to consume as much as 20% of GDP by 2050. This puts upward pressure on future taxes.
Portugal’s pension costs are expected to rise more moderately, and the country is actively reforming its tax mix to maintain balance and growth. This includes shifting from taxing labour to more sustainable sources like capital and environmental taxes.
For expats planning to retire or live in Portugal long-term, this creates a more secure and predictable financial environment.
Conclusion: A Strategic Move to Portugal in 2025
Lower income and business taxes, a forward-thinking tax system, and a stable fiscal outlook make Portugal stand out in Southern Europe. And when you factor in Madeira’s regional tax advantages, high quality of life, and EU connectivity, the case becomes even stronger.
So there’s no contest if you weigh your options between Portugal, Spain, Italy, or Greece. For professionals, retirees, digital nomads, and investors alike, looking for life under the sun, a move to Portugal 2025 offers the best blend of opportunity, simplicity, and security.
The founding of Madeira Corporate Services dates back to 1996. MCS started as a corporate service provider in the Madeira International Business Center and rapidly became a leading management company… Read more
