Who pays Portuguese IRS
- Tax residents - typically anyone who spends 183+ days in Portugal in a calendar year, or has their habitual residence there. Tax residents pay IRS on worldwide income, with treaty relief for foreign-taxed income.
- Non-residents - taxed only on Portuguese-source income, typically at flat rates (often 25% on employment income, 28% on most investment income).
- NHR holders (legacy) - reduced rates on certain categories of income for 10 years from registration. Closed to new applicants from 2024.
- IFICI participants - the post-NHR regime, available for specific qualifying activities and employment categories.
The income categories (A-H)
| Category | What it covers | Treatment |
|---|---|---|
| A | Employment income | Progressive IRS, with category-specific deductions |
| B | Self-employment / recibos verdes | Simplified or organised regime, plus social security |
| E | Investment income (interest, dividends) | Typically 28% flat or progressive |
| F | Rental income (Portuguese property) | 28% flat or progressive, with deductions |
| G | Capital gains | Various rates depending on asset type |
| H | Pensions | Progressive IRS for residents, NHR/IFICI variations |
The annual filing process
- April-June each year - file Modelo 3 covering the previous calendar year.
- NIF (tax number) and certified accountant required for most expats.
- Pre-filled returns for Portuguese-source income are usually visible in the Portal das Financas in March-April.
- Worldwide income must be added by the taxpayer for residents.
- Deductions for dependants, health expenses, education, housing, donations, retirement contributions.
- Refund or payment usually settled by July-August.
Common deductions
- Health expenses: 15% deductible up to limits
- Education: 30% deductible up to limits
- Charitable donations: variable
- Housing rent: deductible up to limits for resident family home
- Mortgage interest (limited applicability for new contracts)
- VAT on certain receipts (e-fatura) - small but real benefits
- Retirement contributions to PPR products
Deduction limits scale with household income and number of dependants. A specialist accountant maximises legitimate deductions which can save EUR 500-3,000+ annually.
Frequently asked questions
What's e-fatura?+
Portugal's electronic invoicing system. When merchants record receipts against your NIF, certain VAT amounts become deductible from your IRS. Small individually (typically EUR 10-50/year per category), worth registering NIF on receipts.
Can I file IRS without an accountant?+
Technically yes - the Portal das Financas is in Portuguese and English (partial). For simple resident salary cases with pre-filled returns, possible. For self-employed, expat-with-foreign-income, capital gains, or anyone with complexity, a certified Portuguese accountant is strongly recommended.
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