Living in Portugal
Your Complete Financial Guide
Essential guidance for UK expats navigating taxes, pensions, and financial planning in Portugal.
At SJB Global, we specialise in helping expats organise their financial lives and navigate the complexities of Portuguese and UK cross-border rules.
Defining a Portuguese Resident
In Portugal, an individual is generally considered a tax resident if they spend more than 183 days in the country, have a permanent home available, or if Portugal is the centre of their personal or economic interests. Employment or professional activity in Portugal can also establish residency, even if less than 183 days are spent in the country. Tax residents are liable for tax on worldwide income and assets, while non-residents are taxed only on Portuguese-source income. Residency status is important for tax obligations, so professional advice is recommended if there’s any uncertainty.
Reporting on Foreign Assets in Portugal
Reporting foreign assets in Portugal requires compliance with the country’s tax laws. Here’s what individuals or entities need to know:
Residency Status
Tax residents in Portugal must report their worldwide income and assets to the Portuguese tax authorities.
Foreign Assets Declaration
Tax Forms
Foreign assets are reported on the Portuguese tax return, Modelo 3, which includes sections specifically for foreign income and assets.
Tax Treaties and Agreements
Portugal has agreements with other countries to prevent double taxation and share information on foreign assets. Residents should understand how these affect their reporting obligations.
Penalties for Non-Compliance
Failure to report foreign assets or income can lead to fines and other penalties from Portuguese tax authorities.
Automatic Exchange of Information (AEoI)
Portugal participates in the Common Reporting Standard (CRS), allowing automatic sharing of financial information with tax authorities in other countries.
Overall, reporting foreign assets in Portugal requires attention to detail, adherence to regulations, and often professional guidance to avoid penalties.
Tax laws and reporting requirements can change, so it’s important to stay informed and ensure ongoing compliance.
Tax Position for Non-Residents in Portugal
For non-residents in Portugal, their tax position is different from that of residents. Here’s an overview of the key aspects of the tax position for non-residents in Portugal:
Portuguese Source Income
Non-residents are generally taxed only on income derived from Portuguese sources, such as employment or rental income from properties in Portugal.
Withholding Tax
Certain types of Portuguese-source income may be subject to withholding tax at the source, depending on the income type and applicable tax treaties.
Flat Tax on Specific Income
Some types of income earned by non-residents, like rental income, may be taxed under fixed rules rather than progressive rates.
Double Taxation Relief
Tax treaties between Portugal and other countries can help prevent double taxation and may provide relief or reduced withholding taxes for non-residents.
Annual Tax Returns
Non-residents may need to file an annual tax return with Portuguese authorities to report income and claim any eligible deductions or credits.
Non-Resident Stamp Duty
Certain property transactions by non-residents, such as acquisitions or sales, may be subject to Portuguese stamp duty.
Capital Gains Tax
Gains from the sale of Portuguese real estate or other assets may be taxed in Portugal, depending on circumstances and applicable exemptions.
Pensions and Annuities
Non-residents receiving pensions or annuities from Portuguese sources may be taxed in Portugal according to the terms of relevant tax treaties.
It’s important for non-residents with income or assets in Portugal to understand their tax obligations and seek professional advice to ensure compliance with Portuguese tax laws and to optimise their tax position within the framework of applicable regulations.
Non-Habitual Resident (NHR) Scheme
The Non-Habitual Resident (NHR) scheme in Portugal was a popular program for expatriates and investors, offering tax advantages on certain income and transactions for a period of time. The scheme officially ended in 2024, with transitional rules allowing some individuals who became tax residents in 2023 or early 2024 to benefit under specific criteria.
The NHR program has been replaced by the Tax Incentive for Scientific Research and Innovation (also called the Incentivised Tax Status Program), which provides tax benefits for individuals in eligible professions who become tax residents in Portugal. Unlike the NHR, pensions are not included in the new program, but qualifying professional income may benefit from favourable tax treatment.
In summary, the NHR offered significant incentives for new Portuguese residents, and the new program continues to provide targeted tax advantages for specific professional categories.
Golden Visa in Portugal
The Golden Visa program allows non-EU/EEA citizens and their families to obtain residency in Portugal through investment. Applicants can invest in real estate, capital transfer, job creation, scientific research, or cultural projects, with real estate being the most common route. Successful applicants and their families receive a temporary residency permit, enabling them to live, work, and study in Portugal, with a pathway to permanent residency and citizenship after several years. Benefits include visa-free travel within the Schengen Area and access to Portugal’s healthcare and education systems, making it an attractive option for investors seeking European opportunities.
Tax Overview in Portugal
Understanding taxation in Portugal is essential for residents, non-residents, and businesses alike. Below is a concise overview of key tax obligations and considerations to help you plan effectively.
Income Tax
Residents are taxed on worldwide income, while non-residents report only Portuguese-source income. Progressive taxation applies, and additional contributions may apply for higher earners. Accurate reporting ensures compliance with Portuguese tax rules.
Inheritance & Stamp Duty
Portugal does not have a specific inheritance tax but imposes stamp duty on inheritances, gifts, and property transactions. Certain transfers between family members may be exempt. Stamp duty also applies to real estate contracts and long-term leases.
Capital Gains Tax
Capital gains tax applies to profits from the sale or transfer of assets such as property, stocks, and other investments. Exemptions may be available for primary residences or reinvestments. Both residents and non-residents must report gains in their annual tax returns.
Corporate Tax
Businesses operating in Portugal are subject to corporate tax, alongside possible local and state surcharges. Understanding corporate tax obligations helps companies plan finances and remain compliant.
VAT
VAT applies to most goods and services in Portugal, with standard and reduced rates depending on the item or service. Awareness of VAT rates and exemptions is key for compliance and avoiding unexpected liabilities.
Social Security
Social security contributions are shared between employees and employers and fund benefits such as pensions, family support, and unemployment insurance. Understanding obligations ensures both compliance and access to benefits.
Tax rules in Portugal can be complex. Consulting a qualified advisor ensures you maximise available benefits, remain compliant, and make informed financial decisions.
UK Pension Planning in Portugal
UK pension holders have several options when living in Portugal, including retaining their current scheme, transferring to a QROPS, or moving to a SIPP.
- Retain Existing Pension – May be suitable for defined benefit or contribution schemes but can limit flexibility.
- Transfer to QROPS – Provides access to pension drawdown, multi-currency options, and inheritance planning but may involve overseas transfer rules.
- Transfer to SIPP – Offers greater investment flexibility, international management, and the ability to take lump sums or income as needed.
Professional advice is crucial to ensure transfers and pension management are tax-efficient and compliant with both UK and Portuguese law.
Taxation on UK Pensions in Portugal
UK pensions are subject to Portuguese taxation but may benefit from double taxation relief. Non-Habitual Residents may have favourable treatment on foreign-sourced pensions.
Understanding how UK pensions are taxed in Portugal helps retirees plan withdrawals, manage liabilities, and optimise retirement income.
An adviser can ensure you take advantage of any available tax treaties and exemptions.
Tax-Efficient Investment Opportunities
The Portuguese Investment Bond offers residents a tax-efficient investment option, providing potential growth, succession planning benefits, and exemptions from certain taxes.
Tax Deferral
Earnings grow without immediate tax liability until withdrawn.
Control of Withdrawals
Policyholders decide when to make withdrawals to optimise tax efficiency
Portability & Security
Bonds can be transferred abroad and provide protection for invested funds.
Succession Planning
Allows nomination of beneficiaries and minimises exposure to stamp duties.
Partnering with a trusted financial advisor can help you make the most of these tax-efficient investment opportunities.
Stay Up to Date on Portuguese Taxes
Navigating Portugal’s tax system can be complex, and legislation changes regularly. Staying informed about residency rules, reporting obligations, and tax rates is essential to remaining compliant and making the most of planning opportunities. Regularly reviewing your financial situation with a professional adviser can help prevent surprises and enable timely, informed decisions.
Key Steps for Expats:
- Confirm Portuguese tax residency status
- Declare foreign assets (including crypto, if applicable)
- Review income, capital gains, and wealth taxes
- Evaluate pension options (UK and local)
- Check double tax treaty implications
- Consider inheritance and estate planning
- Stay compliant with social security contributions
Resources for Expats in Portugal:
- Autoridade Tributária e Aduaneira – official guidance on income, wealth, and VAT obligations.
- UK Government – Living in Portugal – practical guidance for UK nationals on taxes, pensions, and residency.
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Navigating taxation, pensions, and investment options in Portugal can be complex. Speak to an expert advisor to ensure your financial planning is compliant, tax-efficient, and aligned with your long-term goals.
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An initial 15-minute introduction call explaining our services and how we can help.
We go through a fact-finding exercise so we can then provide a full financial planning report including a personalised retirement forecast with future projections and work out how on track you are.
Lastly, we will provide a recommendation on any areas where we feel you could improve.
Who is SJB Global and meet your adviser
Our regulations, Independence and Fees
Our process from start to finish
Area we help with including:
UK Pension Advice
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Investment Planning
Tax Planning
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Note: Minimum managed assets for SJB Global is £100,000 or currency equivalent.
Licensing & Regulations
Nexus Global specialises in providing a regulatory platform and compliance support to international financial advisers and intermediaries to enable them to meet regulatory requirements to provide their clients with a professional service. The financial advisers trading under SJB Global are members of Nexus Global. Nexus Global is a division of Blacktower Financial Management (International) Limited (BFMI). All approved members of Nexus Global are appointed representatives of BFMI. BFMI is licensed and regulated by the Gibraltar Financial Services Commission (FSC) and bound by the rules under licence number 3647: http://www.fsc.gi/regulated-entity/blacktower-financial-management-international-limited-3647.