Moving to Portugal is an exciting step. But once you settle in, one question comes up quickly: how do taxes actually work here?

If you have come from a country like the UK, the US, or Australia, the Portuguese tax system can feel unfamiliar at first. The names are different, the deadlines are different, and the rules around foreign income can catch people off guard.

Whether you have just arrived or have been living in Portugal for a few years, it will help you understand the basics of how taxes work in Portugal for foreign residents, before you sit down with a professional. That is where accounting and tax services in Portugal can make a real difference, helping you navigate the system with confidence from day one.

Who Has to Pay Tax in Portugal?

Portugal taxes two groups of people:

Tax residents

They pay tax on their income from anywhere in the world, including salaries, rental income, pensions, dividends, and other earnings, whether earned in Portugal or abroad.

Non-residents 

They only pay income tax that comes from Portuguese sources, for example, rental income from a property in Lisbon, or a salary paid by a Portuguese company.

So even if you do not live in Portugal full-time, you may still owe Portuguese tax if you earn money here.

Tax Resident vs Non-Resident in Portugal

Tax Residents in Portugal

People who are considered tax residents in Portugal are generally subject to Portuguese tax rules on their income. Tax residency is typically based on factors such as the amount of time spent in the country and whether Portugal is considered a person’s usual place of residence.

For example, if Sarah moves to Lisbon and lives there on a long-term basis, she may be treated as a tax resident in Portugal.

Non-Residents in Portugal

Non-residents are people who live outside Portugal but receive income connected to the country. In many cases, they are taxed only on income that comes from Portuguese sources.

For example, John lives in the United Kingdom but owns a rental property in Porto. Although he does not live in Portugal, he may still have Portuguese tax obligations related to that rental income.

Understanding whether you qualify as a tax resident in Portugal is important because it affects which income may be subject to tax and what reporting requirements may apply.

What Income Is Taxed in Portugal?

The type of income taxed in Portugal depends on whether you are considered a tax resident or a non-resident. This distinction is important for understanding foreign residents in Portugal tax obligations.

Income Taxed for Residents

People who are tax residents in Portugal are generally subject to tax on their worldwide income. This means that income earned both inside and outside Portugal may need to be considered under Portuguese tax rules.

Examples of income that may be taxable include:

• Employment income and salaries.
• Self-employment or freelance income.
• Rental income from property.
• Pension income.
• Investment income and dividends.

For example, an expat living permanently in Portugal who receives rental income from another country may still need to report that income in Portugal.

Income Taxed for Non-Residents

Non-residents are generally taxed only on income that originates in Portugal. This is often referred to as Portugal-source income.

Examples may include:

• Salary from a Portuguese employer.
• Rental income from Portuguese property.
• Business income connected to Portugal.
• Certain investments or capital gains earned in Portugal.

Because each person’s circumstances are different, the exact tax treatment may vary. Portugal also has tax agreements with many countries that can help prevent double taxation in some situations.

Understanding which income may be taxable is an important step for expats and newcomers who want to manage their finances correctly in Portugal.

How the Portuguese IRS Tax Works

Portugal’s personal income tax is officially called IRS, which stands for Imposto sobre o Rendimento das Pessoas Singulares. Think of it as the Portuguese equivalent of income tax or a personal tax return.

The IRS uses a progressive tax rate system, meaning the more you earn, the higher the percentage you pay. Rates start at around 13% for lower income levels and can rise to 48% (or higher with a solidarity surcharge) for the highest earners. The exact rates and brackets are updated annually, so it is worth checking the official Portuguese Tax and Customs Authority website for the current figures.

Filing your IRS return

Tax residents file their annual IRS return between April and June for the previous tax year. So if you were a tax resident in 2024, you would file your return in the spring of 2025.

Filing is done through the Portal das Finanças, the official online portal of the Portuguese tax authority. You will need a NIF (your Portuguese tax identification number) and a password to access it.

The portal is partly in Portuguese, which is one of the reasons many expats work with an English-speaking accountant in Portugal to handle the filing process.

Documents Foreign Residents May Need

Before filing your IRS return, it helps to have the right paperwork ready. Here are the documents most foreign residents will need:

• NIF (Número de Identificação Fiscal): your Portuguese tax number. You need this for almost everything in Portugal

• Proof of residency: a rental contract, utility bill, or official registration at your local parish council (Junta de Freguesia)

• Employment contract or payslips: if you work for a Portuguese employer

• Foreign income statements:  bank statements, pension letters, dividend summaries, or other documentation of income earned outside Portugal

• Property documents:  if you own or rent out property

• Capital gains records: if you sold shares, property, or other investments during the year

• Tax residency certificate from your home country: this may be needed to apply any double taxation treaty benefits

If you have income from multiple countries, gathering all of this in advance will save you a lot of stress come filing time.

Common Tax Mistakes Expats Make

Moving to a new country means learning a new system. These are some of the most common mistakes foreign residents make with Portuguese taxes:

1. Not registering as a tax resident

Some expats assume that because they pay taxes in their home country, they do not need to do anything in Portugal. If you spend more than 183 days here, you are a tax resident. So, now you have to pay tax without any argument. 

2. Forgetting to declare foreign income

 Portugal taxes residents on worldwide income. Many people forget to declare their pension, rental income from abroad, or investment returns from a foreign bank account.

3. Missing the filing deadline

 The IRS return window runs from April to June each year. Missing it can result in late penalties.

4. Not using available tax treaties

 Portugal has double taxation agreements with many countries. These treaties prevent you from paying full tax twice on the same income. Not claiming these benefits or not knowing they exist can mean paying more than you owe.

5. Confusing NHR or other special regimes

Portugal has had special tax regimes for new residents (such as NHR, Non-Habitual Resident status), which offered tax advantages on certain types of income. These regimes have rules, conditions, and expiry periods. Assuming you qualify or that the regime still applies to you, without checking can cause problems.

When to Speak With an English-Speaking Accountant

While many people can handle basic tax matters on their own, some situations may require additional guidance. This is especially true for foreign residents who are still becoming familiar with Portuguese tax rules.

Speaking with an English-speaking accountant in Portugal may be helpful if you:

• Have income from more than one country.
• Recently moved to Portugal and are unsure about your tax residency status.
• Work as a freelancer or run a business.
• Receive rental income or investment income.
• Need assistance understanding filing requirements or supporting documents.

Professional support can also help reduce confusion and ensure that your records and reporting obligations are managed correctly.

Need help understanding your tax position in Portugal? Speak with an English-speaking accountant.

If you are looking for personalised support, an Accountant in Portugal for foreign residents can help you understand your obligations and navigate the Portuguese tax system with greater confidence.

FAQs About Taxes in Portugal for Foreign Residents

Do I have to pay tax in Portugal if I still pay tax in my home country?

Possibly, yes. Portugal has double taxation treaties with many countries, which are designed to prevent you from paying full tax twice on the same income. But you may still need to file in Portugal even if you pay tax elsewhere. Your specific situation, including which country you come from and what type of income you have, will determine exactly what you owe.

What is a NIF, and do I need one?

Yes. A NIF (Número de Identificação Fiscal) is your Portuguese tax number, and it is essential for almost every financial or legal step in Portugal, including opening a bank account, signing a lease, buying property, or filing a tax return. You can get one at a local tax office or through a fiscal representative.

When is the Portuguese IRS tax deadline? 

The annual IRS return covers the previous calendar year and must be submitted between 1 April and 30 June. So for income earned in 2025, your return is due by 30 June 2026.

What happens if I do not file an IRS return?

If you are required to file and do not, you may face late filing penalties and interest on any tax owed. In some cases, the tax authority can issue a default assessment. It is always better to file on time, even if you are unsure of some details.

Is pension income from abroad taxed in Portugal?

Generally, yes. If you are a tax resident in Portugal, your foreign pension is part of your worldwide income and may be subject to Portuguese IRS. However, the tax treatment depends on the type of pension and any applicable tax treaty between Portugal and your home country. This is an area where professional advice is especially useful.