Portugal

The following tax credits are available for 2025 against the amount of tax due by tax residents:

• A fixed amount of EUR 600 and EUR 525, respectively, per dependant and ascendant living in the same household and who does not receive income higher than the minimum pension payable under the general regime. These amounts are increased by EUR 126 and EUR 110, respectively, for each dependant under three years of age by 31 December or if there is only one ascendant. If there is more than one dependant in the household, the deduction of EUR 600 is increased by EUR 300, applicable to the second and following dependants aged up to six years old (inclusive), regardless of the age of the oldest dependant.

Regarding the dependants who are included in more than one annual tax return, the amount of tax credit corresponds to 50% of that amount.

• General household expenses, corresponding to 35% of the amount of expenses incurred by any member of the household, limited to EUR 250 per taxpayer, whose taxpayer number is included in invoices for services or goods acquired in any sector of activity, provided these expenses are communicated to the Portuguese tax authorities, except for the sectors referenced below. Therefore, in case of joint tax returns, the limit referenced above is EUR 500. In the case of a single parent household, the credit is increased to 45% of the amount of expenses incurred by any member of the household, with a global limit of EUR 335.

• 15% of non-reimbursed health expenses exempt from VAT, or subject to VAT at a rate of 6%, communicated to the Portuguese tax authorities, up to a limit of EUR 1,000.

• 15% of the VAT incurred by any household member, included on invoices communicated to the Portuguese tax authorities, with a global limit of EUR 250, for services acquired in any of the following activity sectors:
  • Maintenance and repair of motor vehicles, motorcycles, and related parts and accessories.
  • Accommodation, restaurants, and similar food service activities.
  • Hairdressers and beauty salons.
  • Veterinary expenses (increased to 35% instead of 15% of the VAT when it regards the acquisition of medicines for veterinary use).
• 30% of the VAT incurred by any household member with sports and recreational activities, sports club, and gyms/fitness club expenses, if included on invoices communicated to the tax authorities, being comprised within the global household limit above.

• 100% of the VAT incurred by any household member on monthly passes or tickets regarding the use of public transportation if included on invoices communicated to the tax authorities and also on invoices relating to the acquisition of subscriptions of periodical publications (newspapers and magazines), including digital ones (taxed at the reduced VAT rate), being comprised within the global household limit above.

• 20% of the amount of alimony paid, without limit (which will be subject to taxation at the same tax rate).

• 25% of the amount of donations made to central, regional, or local administration entities and foundations, without any limit, and limited to 15% in the case of donations made to other entities.

• 30% of the amount of expenses incurred in the education of any member of the household with a global limit of EUR 800 and with rented property, per member of the household aged 25 or under and who attends a recognised educational establishment located more than 50 km from the permanent residence of the household, with limit of EUR 400. If there are simultaneously these expenses, the limit is EUR 1,100 instead of EUR 800.

• 15% of the amount of expenses incurred with real-estate, namely, interest from loans taken up until 31 December 2011 and rents from leases of urban buildings and autonomous fractions for permanent habitation, with limits, respectively, of EUR 296 and EUR 700 (for 2025). These limits can be increased depending on the level of income.

• 25% of the amount of expenses incurred with retiring homes, with a global limit of EUR 403.75.

• 20% of contributions to individual retirement saving plans (Plano Poupança Reforma [PPR]), with the following limits:
  • For taxpayers younger than 35 years old: EUR 400.
  • For taxpayers between 35 and 50 years old: EUR 350.
  • For taxpayers older than 50 years old: EUR 300.

• EUR 2,090 for individuals with disabilities (a tax deduction ranging from 2 to 0.5 times the amount of the social support index [IAS] shall apply during the four years following the review or reassessment of a disability for those who benefited from the disability deduction for, at least, five years and keep a disability equal or higher to 20%).

• 20% of contributions made to individual accounts managed under a public capitalisation regime, with the following limits:
  • For taxpayers younger than 35 years old: EUR 400.
  • For taxpayers older than 35 years old: EUR 350.
• 5% of the annual expenses borne with the remuneration of domestic workers, with a maximum cap of EUR 200, provided certain conditions are met.  

Limit to the sum of credits to tax liability

Note

1. For households with three or more dependants, this limit is increased by 5% for each dependant not subject to PIT.

Non-habitual residents (NHR) regime

The NHR regime was revoked with effect from 1 January 2024 onward. However, the regime is still applicable to those who (i) are already registered as NHR on 1 January 2024 or (ii) by 31 December 2023 meet the conditions for registration as NHR.  

The regime is also applicable to individuals who became tax residents until 31 December 2024, provided certain conditions were met. 

Conditions, taxation, and other specificities  

A taxpayer who became tax resident in Portugal for a certain year and has not been taxed as resident in Portugal for any of the previous five years are eligible for the special tax regime for non-habitual tax residents (additional conditions imposed by law apply for those who became tax residents in 2024 in order for them to be entitled to the special regime).

An application for the non-habitual residents tax regime has to be submitted electronically by 31 March, inclusive, of the year following the year in which the taxpayer became tax resident in Portugal (those who became tax residents in 2024 and are eligible for the regime under the special conditions imposed by law have until 31 March 2025 to submit the application).

In general terms, non-habitual residents are taxed at a flat rate of 20% in respect of employment income (Category A) and self-employment income (Category B) arising from high-value activities of a scientific, artistic, or technical nature.

A tax exemption (with progression, depending on the category of income) applies on foreign-source income (e.g. property income, interest, and dividends), provided certain conditions are met. In most cases, capital gains on the sale of securities are taxable at a flat rate of 28%. In addition, a flat tax rate of 10% is applicable on pensions from a foreign source, as well as to other payments from pension funds and similar retirement schemes.

A non-habitual resident acquires the right to be taxed as such during a ten-year period.

Tax Incentive Scheme for Scientific Research and Innovation (IFICI) 

With the 2024 State Budget, a tax incentive for research and innovation is created. 

The regime applies to individuals who (i) become Portuguese tax residents, under Portuguese domestic law, in a specific year, (ii) have not qualified as tax residents in Portugal in any of the previous five years, (iii) do not benefit or have benefited from the NHR regime or the former resident regime, and (iv) who carry out activities provided for in the applicable legislation. 

Different procedures should be enacted in order to apply for the regime, depending on the activity performed / on the criteria of eligibility. 

In general terms, the regime shall provide for:  

• A special 20% rate on net employment income (category A) and business and professional income (category B) from the activities identified in the applicable legislation.  

• An exemption on foreign-sourced employment income, business and professional income, investment income, rental income and capital gains (as a rule, foreign-sourced income is exempt with the exception of pension income and income sourced in “blacklisted” countries).

Youth Personal Income Tax ("IRS Jovem")

With the 2025 State Budget, the Youth Personal Income Tax (PIT) tax regime is extended, making it applicable to income from employment and self-employed work earned by taxpayers (not dependents) who are up to 35 years old, while also eliminating the condition related to the completion of a cycle of studies.

In summary and in accordance with the current regime, income from Category A (employment income) and Category B (self-employment/business income) earned by taxpayers who are up to 35 years old who are not dependents is partially exempt from PIT in the first ten years earning employment or self-employment income.

The exemption applicable corresponds to 100% of the income earned in the first year, 75% in the second, third and fourth years, 50% in the fifth, sixth and seventh years and 25% in the eighth, ninth and tenth years, capped at 55x Social Support Index (IAS).

A transitional regime has been created which establishes that, for purposes of exemption, taxpayers are included in the percentage corresponding to the year following the number of years of income generation from categories A and B already elapsed, not considering, for this purpose, the years in which they were considered dependents.

The exemption does not apply in the years in which income from categories A and B is not earned, resuming its application for the remaining years income is obtained by the taxpayer, until a total of ten years of exemption or the age limit of 35 years is reached.