Living in Portugal - Taxes & Charges

Income tax payment:
Income tax (Imposto Sobre o Rendimento das Pessoas Singulares IRS) is self-assessed annually.

Tax must be paid a month after the demand of tax due is sent out by the tax office.

A fiscal number is needed. A card is available on presentation of a valid passport at the local tax office. For the first few months, a temporary number is issued.

IRS is paid using the nine following income categories:

• Category A - Salary and fringe benefits
• Category B - Income of independent professionals
• Category E - Income from financial investments
• Category F - Income from lease or rent of real estate
• Category G - Capital gains
• Category H - Retirement pensions

Residents are liable to IRS on their world-wide income. You are deemed to be a resident of Portugal if:

1. You remain in Portugal for more than 183 days in any calendar year; or
2. You visit Portugal for a shorter period in any year and you have a residence available in Portugal on December 31st of that year, which it is your intention to keep and occupy as a permanent residence.
3. You are a member of a ship or airplane crew whose companies have their headquarters in Portugal.

All members of a family unit are considered to be resident in Portugal if the person who is responsible for the family is residing there.

Double taxation occurs when income arising in one country is received by someone resident in another country and is taxed in both. To avoid or alleviate this, Portugal has taxation agreements with all the EU Member States, under which each one agrees to give up, or reduce, its tax in certain circumstances.

To find out the details of these agreements consult a local tax office (see Useful addresses below).

Married taxpayers, who are not separated or living apart, and Factual Unions (Uniões de Facto) jointly file an annual tax return which includes all the income arising in Portugal or overseas as well as that of their dependents who are regarded as part of their family unit (agregado familiar). Single taxpayers file an individual tax return.

The following deductions are allowed:

• health expenses (own and dependents)
• education and rehabilitation expenses (if the subject or dependents disabled)
• house buying or house repairs/improvements
• Bank fund for habitation purposes "Poupança Habitação"
• Bank Fund for retirement "Plano Poupança Reforma"
• Financial applications "Plano Poupança Acções"
• Others (consult the tax office for further details)

Each month, the employer must retain a percentage of the employee income (retenção na fonte), depending on their marital state and number of dependents. The non residents retain 25 percent of income (consult the agreements for double taxation).

Useful references:

• Ministério das Finanças 
  Tel: 21 881 68 00
  Website
• DGCI – Direcção-Geral das Contribuições e Impostos
  Rua do Comércio, 49
  1100 - LISBOA
  Tel: 21 881 26 00
• Loja do Cidadão
  Tel: 808 241 107
• INFOCID – Sistema Interdepartamental de Informação ao Cidadão

Text last edited on: 01/07/2003

Source: European Union
© European Communities, 1995-2007
Reproduction is authorised.