Property Taxes in Portugal: The Ultimate Guide (2024)

FAQs

How much tax do you pay on property in Portugal? ›

The tax rate is determined annually and varies between 0.3% and 0.8%. This tax is due by anyone who owns the property on the last day of December of the previous year. For example, if you own a property on 31 December 2021, you will have to pay the Portuguese IMI tax in 2022.

All US citizens and permanent residents — even those living abroad — are subject to taxation on their worldwide income, as long as they meet the minimum income thresholds.

The tax regime NHR in Portugal is granted for a period of 10 years non-renewable, as long as the individual continues to be considered as tax resident in Portugal during each of these 10 years. If for a year the person is not recognized as a tax resident in Portugal, then his status is not lost.

Once you are a tax resident in Portugal, your State Pension is taxable only in Portugal at the scale rates of income tax. For 2023, this income starts at 14.5% for income up to €7,479 and rises to 48% for income over €78,834. You benefit from a deduction of up to €4,104.

For non-residents, you'll pay a flat tax rate of 25%, while residents are taxed on a progressive scale from 14.5% to 48%. Like the US, the Portugal tax year is the calendar year. Returns must be filed by March 31st, and you are required to pay any additional tax owed by that date.

Home Ownership Rate in Portugal averaged 75.00 percent from 2004 until 2021, reaching an all time high of 78.30 percent in 2021 and a record low of 73.90 percent in 2019.

If you have social security credits in both the United States and Portugal, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country.

The treaty provides that you won't be taxed in either country on your wages, salaries, tips, and other compensation from a Portuguese source if you're an employee of a U.S. company that has a permanent establishment in Portugal or if you live in Portugal for 183 days or more during a consecutive period of 12 months.

If you are thinking of living or working in Portugal you must fulfil one of the following conditions to obtain a tax address in Portuguese territory: remain for over 183 days, whether consecutive or not, within a 12-month period, beginning or ending in the year in which you request a tax address.

What triggers tax residency in Portugal? ›

Spends more than 183 days, consecutive or not, in Portugal in any 12-month period starting or ending in the fiscal year concerned. Regardless of spending less than 183 days in Portugal, maintains a residence (i.e. a habitual residence) in Portugal during any day of the period referred above.

The Portuguese Non-Habitual Residency status enables those who become tax resident in Portugal and are accepted as a non-habitual resident, the opportunity to receive qualifying income tax-free both in Portugal and in the country of the source of the income.

Portugal's living costs for retirees

You can live comfortably with an estimated €1,300-€1,500 (US$1,500-1,700) per month in small towns or €1,700 ($2,200) in larger urban areas such as Lisbon or Porto. Groceries, eating out, rent, utilities, and health care are especially affordable in Portugal.

According to the Annual Global Retirement Index 2022, Portugal is the fourth best country to retire to after Panama, Costa Rica, and Mexico.

For the best places to retire in Portugal consider Lisbon and Porto if you are looking for a good life in the city. Cascais is an excellent location a short 30-minute drive from Lisbon. Consider the Algarve for a relaxed retirement with plenty of beaches and golf courses.

When it comes to your US ex-pat tax in Portugal, most US expatriates worry about “double taxation.” Paying taxes to two different countries – the U.S. and Portugal. A U.S. taxpayer working overseas in Portugal may reduce U.S. taxable income and “double taxation” by claiming the Foreign Tax Credit on Form 1116.

If you're moving to (or are already in) Portugal and earning an income, you may have to pay taxes. If you reside in Portugal for 183 days or more a year, you must pay income tax on your worldwide income.

Existing residents

With the correct planning and structuring, you can legitimately create a tax-favourable position and in some cases, single-digit rates of tax, which means that Portugal can still be more favourable than most individual's home countries.

The country has no restrictions on foreigners looking to buy a house in Portugal. You won't have to fill in any extra paperwork or meet any criteria to buy a home per say. All you need is a VAT identification number, known as a número de identificação fiscal (NIF) or número de contribuinte in Portugal.

The national average price of a 2,000-square-foot home in Portugal is $278,000. Buying a house in Portugal as an American is about 40% cheaper than the U.S. median home price, which is roughly $455,000.

Are house prices falling in Portugal? ›

According to Moody's, Portugal will not escape a correction in house prices in the near future, meaning that house prices in Portugal in 2023 could be about to drop.

To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.

If you leave the U.S., we will stop your benefits the month after the sixth calendar month in a row that you are outside the country. You can make visits to the United States for specific periods of time, depending on how long you've been outside, to continue receiving your benefits.

If you earned Social Security benefits, you can visit or live in most foreign countries and still receive payments. Look up the country on the SSA Payments Abroad Screening Tool to be sure you can receive your payments.

Overall, Portugal's combination of warm weather, affordable cost of living, high quality of life, welcoming culture, and attractive visa and residency programs make it an ideal destination for Americans looking to live and work abroad.

The Algarve is the most popular choice for expats and tourists alike. It too, has some stunning beaches and coastlines, with some beautiful rock formations to marvel at. The weather is always a few degrees warmer than Lisbon which makes it a popular place for retirees.

Current early retirement ages (2020*)

In fact, 62 is the early retirement age in almost half of the countries, including Sweden, Portugal, Norway, Italy, Greece, and Austria.

Foreign Tax Credit

Well, if you qualify for the Foreign Tax Credit, the IRS will give you a tax credit equal to at least part of the taxes you paid to a foreign government. In many cases, they will credit you the entire amount you paid in foreign income taxes, removing any possibility of US double taxation.

Capital gains tax for non-Portuguese residents

Put simply, capital gains tax in Portugal is charged on the sale of property or other assets at a rate of 28% for individuals and 25% for companies and non-residents. Residents will need to pay taxes on just 50% of their capital gains.

Can You Buy Property in Portugal as a Foreigner? The short answer is YES! One of the most encouraging qualities of Portugal is that there are no restrictions for foreigners who want to buy a home in the country.

How long can I live in Portugal as a US citizen? ›

As an American, you need to get a Portuguese residence permit if you're planning to stay there for longer than three months. If you reside in Portugal with a proper residence permit for five years, you can then apply for permanent residency or Portuguese citizenship.

Does Portugal Allow Dual Citizenship? Portugal allows dual citizenship. Only if the applicant's home country does not allow it, the applicant may have to renounce their citizenship of their own country.

Acquiring the Portugal Golden Visa

Buying property in Portugal allows you to acquire a Portugal residence permit, as long as you stay in the country for a minimum of 14 days each two years.

You basically multiply the value of the tax asset (TPV) with the applicable rate. Property tax rates range from 0.3% to 0.45%. While properties in rural areas are taxed at 0.8%, properties in more urban areas are taxed within the mentioned range.

Since nowadays the IRS declaration can only be submitted electronically, you need to log in to the Tax Office Portal ("Portal das Finanças"). The access to the portal can be done using your tax number (NIF) and password, mobile digital key or with your citizen card.

Property is taxed annually by the municipality in which it is located. Each municipality assigns a patrimonial value and assesses a rate that generally ranges from 0.5% to 1.0%. Rural properties frequently have a higher percentage of assessment but a lower value than urban properties.

If you reside in Portugal for 183 days or more in a calendar year, you'll be considered a resident and will need to pay income tax on your worldwide income. If you live in Portugal for fewer than 183 days, you'll only need to pay on income earned within Portugal.

Firstly, the Global Peace Index 2021 ranks Portugal as the fourth-safest country to live in, while Italy is ranked at thirty-two. Of course, this doesn't mean Italy is completely unsafe, but an environment where you don't have to worry about your safety is an added benefit for older people.

How much is medical insurance in Portugal? ›

Health Insurance in Portugal is affordable and averages somewhere between €40 and €100 per month, depending on multiple factors like age and pre-existing conditions. To visit a private Doctor in Portugal, you would typically pay around €50 to €100 per appointment. With insurance you can pay only a fraction of that.

Home to approximately 87 different nationalities, Lisbon is the most popular place for expats to live in Portugal. The diversity of the city makes it a very dynamic and exciting place to live.

If you have social security credits in both the United States and Portugal, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country.

If you've lived in Portugal for 183 days or less, you're likely considered a non-resident and will only owe taxes on Portugal-sourced income. Non-residents are taxed with a flat rate rather than a sliding scale.

Mainly yes, Portugal has a free healthcare system. It's free for all Portuguese citizens and residents. Citizens and residents of the country who contribute to the Social Security Fund can receive free medical care through the National Health Service, SNS.

Most Americans in Portugal live in Lisbon, Porto, or the Algarve. Portugal offers an array of stunning locations, whether you are looking for a buzzing city, peaceful village, or waterfront beach house.

The short answer is yes! Buying property in Portugal is a great way to invest your money, whether you're looking for a holiday home, a retirement property, or an investment to rent out. We've seen that the returns from short-stay property lets are particularly profitable in Portugals tourist and student-heavy cities.

If you're a non-EU citizen and you invest in property worth a certain value, you can qualify for a Golden Visa residence permit in Portugal. This permit allows you to live, work, and study in Portugal, and travel freely across the Schengen area.

Residents in Portugal for tax purposes are taxed on their worldwide income at progressive rates varying from 14.5% to 48% for 2023.

What is the tax rate in Portugal for foreigners? ›

Acquiring the Portugal Golden Visa

Buying property in Portugal allows you to acquire a Portugal residence permit, as long as you stay in the country for a minimum of 14 days each two years.

To buy property in Portugal, you should obtain a Portuguese tax identification number (NIF) at your local tax office, and we recommend opening a bank account in Portugal to avoid transaction fees. You should also make sure that you are aware of the taxes involved, such as Property Transfer Tax (IMT).

No, you can't buy Portuguese citizenship. However, you can obtain residency through investing in Portugal, and then apply for citizenship in five years. Investors can choose to make a property investment, a subscription in an investment fund, or a capital transfer to a Portuguese bank account.

Mainly yes, Portugal has a free healthcare system. It's free for all Portuguese citizens and residents. Citizens and residents of the country who contribute to the Social Security Fund can receive free medical care through the National Health Service, SNS.

The rate applied ranges from 0.3% to 0.8%, and is dependent on whether the property type is classified as urban or rural (classified by the Portuguese tax authorities based on the location of the property).