IRS in Portugal for Foreigners: What You Need to Know

Recent posts

IRS in Portugal for Foreigners: What You Need to Know

Here’s what you need to know to stay compliant and avoid unnecessary issues with the Portuguese Tax Authority.

IRS Deductions in Portugal: What You Can Declare and How to Maximize Your Refund

In this article, we explain which expenses are deductible, their limits by category, and how to make sure they are properly included in your IRS return.

I’m a Foreigner Living in Portugal: Do I Have to File IRS?

In this article, we’ll explain clearly who needs to file the IRS, how tax residency is determined, and why it’s essential to stay compliant.

Tags:

IRS

If you're a foreigner living or planning to live in Portugal, understanding how the Portuguese Personal Income Tax (IRS) works is essential for staying compliant and avoiding surprises.

In this article, we cover the key points foreigners should know: who needs to file taxes, which types of income are taxable, how tax residency is determined, and important benefits such as Double Taxation Agreements and the Non-Habitual Resident (NHR) regime.

‍

Who needs to file IRS in Portugal?

Everyone who is considered a tax resident in Portugal must file an IRS return each year between April 1 and June 30. This applies to both Portuguese and foreign nationals who:

⁠Spent more than 183 days in Portugal during the previous year; or
⁠⁠Have a home in Portugal that suggests the intention of establishing permanent residence.

Even if these conditions are not met, individuals may choose to be treated as tax residents, which can be advantageous in some cases.
‍
In addition, non-residents who earn income from Portuguese sources — such as freelance work, rental income, capital income, or capital gains — are also required to file an IRS return in Portugal.

‍

What types of income are taxable?

‍
In Portugal, the IRS covers income earned in Portugal and, in many cases, income earned abroad (if you are a Portuguese tax resident). Income is classified into categories:

⁠Category A – Employment income
⁠⁠Category B – Self-employment income (freelancers, sole traders)
⁠⁠Category E – Capital income (interest, dividends)
⁠⁠Category F – Rental income
⁠⁠Category G – Capital gains
⁠⁠Category H – Pensions

‍

Avoiding double taxation: Portugal has treaties with many countries

Portugal has Double Taxation Agreements (DTAs) with many countries, including Brazil, the UK, France, Germany, the USA, Canada, Israel, and others. These agreements ensure that your income isn’t taxed twice — once in your home country and again in Portugal.

Proper documentation is required (such as a tax residency certificate from your home country) to apply these treaties correctly.

‍

The Non-Habitual Resident (NHR) regime

One of the most attractive tax benefits for foreigners moving to Portugal is the Non-Habitual Resident (NHR) regime, which offers:

⁠Reduced flat tax rates on certain Portuguese-sourced income;
⁠⁠Exemption from IRS on qualifying foreign income (such as rentals, dividends, and self-employment income), provided certain conditions are met.

The regime is valid for 10 years and must be applied for after obtaining tax residency in Portugal.

‍

Stay organized with the right documentation

To file your IRS correctly as a foreigner in Portugal, you will need:

⁠Proof of income (both from Portugal and abroad);
⁠⁠Tax residency certificates from your home country (if applying a DTA);
⁠⁠Invoices with your Portuguese NIF to claim deductions;
⁠⁠NHR registration proof (if applicable).

‍

Need help with your IRS in Portugal? E-Golden is here for you.

Filing taxes in a new country can be challenging — but it doesn’t have to be. At E-Golden, our team of tax experts provides full assistance for foreigners, making sure your IRS is done properly, securely, and with all the available benefits.