# algarve.tax: Full Reference > Portuguese Tax in Plain English: detailed tax guidance for expats, property buyers, and investors in the Algarve. --- ## Property Taxes ### IMT: Imposto Municipal sobre Transmissoes Onerosas de Imoveis (Transfer Tax) IMT is the Portuguese property transfer tax paid by the buyer on completion. Rates depend on the property value, type, and intended use. **Permanent Residence (Continental Portugal) 2024/2025 Bands:** | Property Value (EUR) | Marginal Rate | Deduction (EUR) | |-----------------------------|---------------|-----------------| | Up to 101,917 | 0% | 0 | | 101,917 to 139,412 | 2% | 2,038.34 | | 139,412 to 190,086 | 5% | 6,220.70 | | 190,086 to 316,772 | 7% | 10,022.42 | | 316,772 to 633,453 | 8% | 13,190.14 | | 633,453 to 1,050,400 | 6% | 0 (flat) | | Above 1,050,400 | 7.5% | 0 (flat) | **Non-Habitual/Secondary Residence Rates:** Higher rates apply. No exempt band. Rates from 1% to 7.5%. **Other property types:** - Rural property: flat 5% - Legal persons (companies): flat 6.5% - Properties in listed tax havens: flat 10% ### IMI: Imposto Municipal sobre Imoveis (Annual Property Tax) Annual tax set by each municipality on the Valor Patrimonial Tributario (VPT), not the market value. **Rates:** - Urban properties: 0.3% to 0.45% (set by each council) - Rural properties: 0.8% - Properties owned by entities in tax havens: 7.5% **Algarve Council IMI Rates (typical):** Most Algarve councils apply rates between 0.3% and 0.4%. Faro, Loule, Albufeira, Portimao, Lagos, Tavira, Silves, Olhao, Vila Real de Santo Antonio, Lagoa, Aljezur, Castro Marim, Monchique, Sao Bras de Alportel, Vila do Bispo, and Alcoutim each set their own rate annually. **Payment schedule:** - Under EUR 100: single payment in April - EUR 100 to EUR 500: two instalments (April and November) - Over EUR 500: three instalments (April, July, November) **Exemptions:** - New builds or first purchase for permanent residence: up to 3 years exemption if VPT does not exceed EUR 125,000 - Low-income households (below certain thresholds) ### Stamp Duty: Imposto do Selo **On property purchases:** 0.8% of the purchase price or VPT (whichever is higher). **On mortgages:** - Loans up to 1 year: 0.04% per month of duration - Loans 1 to 5 years: 0.5% - Loans over 5 years: 0.6% Payable at completion. Collected by the notary and remitted to the tax authority. ### AIMI: Adicional ao Imposto Municipal sobre Imoveis An additional wealth tax on total Portuguese property holdings. **Thresholds and rates:** - First EUR 600,000 of VPT: exempt (EUR 1.2M for jointly assessed couples) - EUR 600,000 to EUR 1,000,000: 0.7% - Above EUR 1,000,000: 1.0% - Corporate-owned property: 0.4% on total VPT (no exempt threshold) AIMI can be offset against IMI paid. Assessed annually based on property holdings as of 1 January. ### Capital Gains Tax on Property **Residents:** - 50% of the gain is added to taxable income and taxed at progressive IRS rates - Effective maximum rate approximately 24% - Reinvestment relief: if the gain from selling a primary residence is reinvested in another EU/EEA primary residence within 36 months (before or after), the gain is excluded from taxation - Allowable deductions: acquisition costs, notary/registration fees, documented improvement costs (last 12 years), estate agent commission **Non-residents:** - Flat 28% on the full gain - EU/EEA residents can elect to be taxed as residents (50% inclusion at progressive rates) if this produces a lower liability **Calculation:** Acquisition cost is adjusted for inflation (monetary correction coefficients published annually by Portaria). ### Rental Income (Category F) **Residents:** - Default: 28% autonomous flat rate - Option: aggregate with other income at progressive IRS rates - Reduced rates for long-term leases: 25% (2-5 years), 20% (5-10 years), 11% (10-20 years), 10% (20+ years) **Non-residents:** 28% flat rate (no aggregation option). **Deductible expenses:** IMI, condominium fees, insurance premiums, maintenance/repair costs, energy efficiency certificates, management fees. **Short-term rental (Alojamento Local):** - Requires municipal licence - Category B income (business) with 35% deemed expense coefficient under simplified regime - Subject to tourism tax in some municipalities --- ## Personal Income Tax: IRS ### IRS Brackets 2024/2025 | Taxable Income (EUR) | Rate | |---------------------------|--------| | Up to 7,703 | 14.5% | | 7,703 to 11,623 | 21% | | 11,623 to 16,472 | 26.5% | | 16,472 to 21,321 | 28.5% | | 21,321 to 27,146 | 35% | | 27,146 to 39,791 | 37% | | 39,791 to 51,997 | 43.5% | | 51,997 to 81,199 | 45% | | Above 81,199 | 48% | **Solidarity surcharge:** 2.5% on income EUR 80,000 to EUR 250,000; 5% above EUR 250,000. **Six income categories:** - Category A: Employment income - Category B: Business and professional income - Category E: Capital income (dividends, interest) - Category F: Rental income - Category G: Capital gains - Category H: Pensions **Filing:** Annual return via Portal das Financas, 1 April to 30 June. Automatic IRS (IRS automatico) available for simple cases (single income source, no deductions beyond standard). ### NHR: Non-Habitual Resident Regime **Status:** Closed to new applicants from 1 January 2024 (Lei do Orcamento do Estado 2024). **Existing holders (until their 10-year period expires):** - 20% flat rate on qualifying Portuguese-source income from "high value added" professions - Foreign pension income: 10% flat rate (from 2020 onwards registrations) - Foreign employment, self-employment, rental, interest, dividends, capital gains: exempt from Portuguese tax if taxed in the source country (or taxable under the applicable DTA) - Duration: 10 consecutive years from registration ### IFICI: Incentivo Fiscal a Investigacao Cientifica e Inovacao **Replacement regime from 2024:** - 20% flat rate on qualifying employment and self-employment income from eligible activities (scientific research, innovation, qualified professionals) - 10% flat rate on certain passive income categories - Eligibility: not a Portuguese tax resident in the previous 5 tax years - Duration: 10 years - Application through Portal das Financas with supporting documentation ### Tax Residency **You are Portuguese tax resident if:** 1. You spend more than 183 days in Portugal in any 12-month period (starting or ending in the relevant tax year), OR 2. On 31 December you have a habitual abode in Portugal suggesting intention to use it as permanent residence **Consequences of residency:** - Taxed on worldwide income - Must file annual IRS return - Eligible for Portuguese tax benefits and deductions - Subject to reporting obligations (foreign bank accounts, assets) **Split-year residence:** Not available in Portugal. Residency applies to the full tax year. ### Double Taxation Treaties Portugal has signed DTAs with over 80 countries. **UK-Portugal DTA (key provisions):** - Private pensions: taxable only in the country of residence - Government/state pensions: taxable only in the paying country - Employment income: taxable where work is performed (with a 183-day exception) - Capital gains on immovable property: taxable in the country where the property is situated - Interest: may be taxed in both countries (withholding limited to 10%) - Dividends: may be taxed in both countries (withholding limited to 10-15%) - Relief method: tax credit in the country of residence for tax paid in the source country --- ## Business and Other Taxes ### IRC: Corporate Tax - Standard rate: 21% - Reduced rate for SMEs: 17% on first EUR 50,000 of taxable profit - Derrama Municipal: up to 1.5% surcharge (varies by municipality) - Derrama Estadual (State Surcharge): 3% on EUR 1.5M-7.5M profit, 5% on EUR 7.5M-35M, 9% above EUR 35M - Filing: annual IRC return due by the last working day of May (following the tax year) - Advance payments: 3 instalments (July, September, December) based on prior year tax ### IVA: Imposto sobre o Valor Acrescentado (VAT) **Mainland Portugal rates:** - 23% standard rate (most goods and services) - 13% intermediate rate (food service, some processed foods, agricultural inputs) - 6% reduced rate (basic foodstuffs, water, pharmaceuticals, books, newspapers, public transport) **Registration threshold:** EUR 15,000 annual turnover (2025). Below this, small traders can opt for the exemption regime (Article 53). **Filing:** Monthly if turnover exceeds EUR 650,000; quarterly otherwise. ### Social Security **Employed workers:** - Employer: 23.75% - Employee: 11% - Base: gross monthly salary **Self-employed (trabalhadores independentes):** - Rate: 21.4% on relevant income (calculated as 70% of gross income for services, subject to quarterly declarations) - First 12 months of activity: exempt - Minimum contribution based on IAS (Indexante dos Apoios Sociais, EUR 509.26 in 2024) **Board members/directors:** 23.75% employer + 11% employee (same as employed). ### Self-Employment: Simplified vs Organised Accounting **Simplified regime (regime simplificado):** - Automatic if annual turnover below EUR 200,000 - Deemed expense coefficients applied to gross income: - Sales of goods: 85% deemed expenses (15% taxable) - Services (general): 75% deemed expenses (25% taxable) - Services (specific professional list, Table Article 151): 75% - Hotel/restaurant: 85% - Short-term rental (AL): 65% deemed expenses (35% taxable) - No requirement for certified accountant - Must issue green receipts (recibos verdes) via Portal das Financas **Organised accounting (contabilidade organizada):** - Mandatory above EUR 200,000 turnover or by election - Actual income and expenses recorded - Requires certified accountant (Contabilista Certificado) - Full audit trail and SAF-T reporting ### Vehicle Tax **ISV (Imposto sobre Veiculos):** - One-off tax on first registration in Portugal - Based on engine cubic capacity and CO2 emissions - Applies when importing a vehicle from another country - Reductions for used vehicles based on age (depreciation table) - Electric vehicles: exempt - Plug-in hybrids: reduced rates **IUC (Imposto Unico de Circulacao):** - Annual road tax - Due in the month of first registration anniversary - Based on engine capacity, CO2 emissions, fuel type, and registration year - Ranges from approximately EUR 30 to over EUR 600 depending on vehicle ### Inheritance and Gift Tax Portugal replaced inheritance/gift tax with stamp duty in 2004. **Stamp duty on gratuitous transfers (Imposto do Selo):** - 10% on the value of assets transferred - **Exempt:** transfers between spouses, civil partners, descendants (children, grandchildren), and ascendants (parents, grandparents) - Applies to: all other beneficiaries (siblings, unrelated parties, etc.) - Property within the estate also attracts 0.8% stamp duty on the VPT - Portuguese-situs property always subject to Portuguese stamp duty regardless of the deceased's/donor's residence or nationality --- ## Key Tax Dates | Month | Obligation | Details | |-----------|-------------------------------|------------------------------------------------------------| | January | IUC vehicle tax | Annual road tax due in month of first registration | | February | IRS pre-fill | Portal das Financas pre-populates return data | | March | Validate invoices | Deadline to validate e-fatura invoices for IRS deductions | | April | IRS filing opens / IMI 1st | IRS submission period begins; first IMI instalment due | | May | IRC filing deadline | Corporate tax return due (last working day) | | June | IRS filing closes | Last day to submit annual IRS return | | July | IMI 2nd instalment | Second property tax instalment (if >EUR 500) | | August | IRS refunds | Typical period for IRS refund payments | | September | AIMI notice | Assessment notice for additional property tax issued | | November | IMI 3rd instalment | Third and final property tax instalment (if >EUR 500) | | December | AIMI payment | Additional IMI payment due | --- ## Practical Information ### Getting a NIF (Numero de Identificacao Fiscal) Required for all tax and property transactions in Portugal. Non-residents need a fiscal representative (representante fiscal) if from outside the EU/EEA. EU/EEA citizens can apply directly at any Financas office or via online registration. ### Portal das Financas The Portuguese tax authority's online portal (portaldasfinancas.gov.pt) handles: IRS filing, IMI and AIMI information, NIF registration, invoice validation (e-fatura), tax payment, certificates and statements. ### Fiscal Representative Non-EU/EEA residents must appoint a fiscal representative in Portugal: a Portuguese resident individual or entity who acts as the contact point with the tax authority. Required for NIF registration and ongoing tax compliance. Post-Brexit, UK nationals must appoint a representative. --- ## Legal Disclaimer Not tax advice. The information provided by algarve.tax is for general guidance only and does not constitute professional tax, legal, or financial advice. Tax law is subject to change. Always consult a qualified Portuguese tax advisor (contabilista certificado) before making financial decisions. Rates and thresholds are based on 2024/2025 published data. ## Source algarve.tax: https://www.algarve.tax/