Tax Consultant

Navigating tax systems in a foreign country can be daunting, but our consultants are equipped with the expertise to assist you effectively. Whether you're a resident or not, our consultants offer invaluable support, especially for activities like renting out property.

Let us ensure compliance and optimize your financial strategy for a seamless experience in the Portuguese real estate market. With a deep understanding of both Portuguese tax laws and the intricacies of international taxation, our experts can offer personalized advice to optimize your financial strategy and ensure compliance.

Hiring a Tax Consultant in Portugal

Buying property in Portugal as an expat can be an exciting venture, but navigating the country's tax laws can be daunting. To ensure a smooth and successful transaction, it's crucial to consider hiring a tax consultant. Here's why:

Understanding Local Tax Laws

Portugal has its own set of tax regulations, which can vary significantly from those in your home country. A tax consultant specializing in Portuguese taxation can provide invaluable insights into the local laws, helping you understand your obligations as a property owner.

Navigating International Taxation

As an expat, you may have tax obligations in both Portugal and your home country. A tax consultant with expertise in international taxation can help you navigate the complexities of cross-border taxation, ensuring compliance with all relevant laws and avoiding double taxation.

Optimizing Tax Efficiency

A tax consultant can help you structure your property purchase in a tax-efficient manner. By exploring various options such as residency status, ownership structures, and tax incentives, they can help you minimize your tax liabilities and maximize your savings.

Ensuring Compliance

Failure to comply with local tax laws can result in penalties and legal issues. A tax consultant can ensure that you meet all regulatory requirements throughout the property buying process, from initial due diligence to finalizing the transaction, giving you peace of mind that everything is in order.

Tax Declaration Obligations in Portugal

As a resident or non-resident in Portugal, engaging in various activities such as renting out property on Airbnb or selling property can have tax implications. It's essential to understand your tax declaration obligations to ensure compliance with Portuguese tax laws. Here's a guide to help you navigate the process.

Resident Tax Declaration Obligations

IRS (Income Tax): Residents in Portugal are required to declare their worldwide income, including income from rental activities on platforms like Airbnb, in their annual IRS tax return. This includes both rental income and capital gains from property sales.

Rental Income: If you're renting out property on Airbnb or other platforms, you must declare the rental income received in your annual IRS tax return. Expenses related to the rental activity, such as maintenance costs and property management fees, may be deductible.

Capital Gains Tax: Residents who sell property in Portugal are subject to capital gains tax on the profit made from the sale. The capital gains tax rate varies depending on factors such as the type of property and the length of ownership.

Non-Resident Tax Declaration Obligation

IRS (Income Tax): Non-residents in Portugal are generally subject to a flat rate of withholding tax on income earned in the country. For rental income from property located in Portugal, the withholding tax rate is 25%, which is deducted by the tenant and remitted to the tax authorities.

Rental Income: Non-residents renting out property in Portugal must declare their rental income to the Portuguese tax authorities. This declaration is made through the Modelo 30 form, which is submitted annually.

Capital Gains Tax: Non-residents selling property in Portugal are subject to capital gains tax on the profit made from the sale. The capital gains tax rate for non-residents is typically 28%, although it may vary depending on the type of property and other factors.

Property Taxes

In addition to national taxes like IRS and capital gains tax, property owners in Portugal may also be subject to local taxes such as IMI (Property Tax) and IMT (Property Transfer Tax). IMI is an annual tax levied on the rateable value of the property, while IMT is a one-time tax paid upon the acquisition of property. You can find explanations in our Buyer's Guide section.

Double Taxation Treaties

Portugal has signed double taxation treaties with many countries to avoid double taxation on income earned in both Portugal and the taxpayer's country of residence. These treaties often provide relief mechanisms such as tax credits or exemptions to prevent the same income from being taxed twice.

Wealth Tax

While Portugal does not currently have a wealth tax, it's essential to stay informed about any changes in tax legislation that may affect your tax obligations, including the introduction of new taxes or amendments to existing ones.

Non-Habitual Resident (NHR) Regime

Non-Habitual Residents may benefit from favorable tax treatment in Portugal, including exemptions or reduced rates on certain types of income, such as foreign pension income, dividends, and royalties. However, specific criteria must be met to qualify for the NHR regime. Explore the latest updates regarding the NHR regime on our blog.

IRS Tax Rates in Portugal (2023)

In this table, you'll discover a comprehensive overview of Portugal's progressive annual income tax (IRS) rates.

Income

€ 0 to € 7,479

€ 7,480 to € 11,284

€ 11,285 to € 15,992

€ 15,993 to € 20,700

€ 20,701 to € 26,355

€ 26,356 to € 38,632

€ 38,633 to € 50,483

€ 50,484 to € 78,834

€ 78.835 and higher

Tax Rate

14,5 %

21 %

26,5 %

28,5 %

35 %

37 %

43,5 %

45 %

48 %

Progressive Tax System: Portugal's IRS operates on a progressive tax system, where tax rates increase as income levels rise. This means higher-income individuals are taxed at a higher rate than lower-income individuals.
Taxable Income: Taxable income includes various sources such as employment income, self-employment income, rental income, investment income, pensions, and capital gains.
Tax Credits and Deductions: Portugal offers various tax credits and deductions to reduce taxable income, including deductions for health expenses, education expenses, mortgage interest, and charitable donations.
Tax Return Filing: Taxpayers in Portugal are required to file an annual tax return declaring their income, deductions, and any tax credits they are eligible for. The tax return filing deadline is typically in April or May of the following year.
Payment Methods: Taxes in Portugal are typically withheld at the source, such as through employer payroll withholding. However, individuals with additional sources of income may need to make quarterly tax payments or settle any outstanding tax liabilities when filing their annual tax return.