Portugal

2019 and 2022 State Budget

In the 2019 State Budget, a new tax regime was introduced to encourage the return of emigrants to Portugal. The regime consists of a 50% relief from taxation of employment or self-employment income received after their return to Portugal.

Emigrants who returned to Portugal in 2019, 2020, 2021, or 2022, or those returning in 2023, who become Portuguese tax residents in those years, have access to this regime, provided that they:

• did not qualify as tax residents during the three years prior to their return
• qualified as tax residents in Portugal prior to 31 December 2015 for those who returned in 2019 and 2020, or prior to 2017, 2018, and 2019 for those returning in 2021, 2022, and 2023, respectively
• have their tax situation regularised, and
• did not apply for the register in the non-habitual residents special tax regime.

This tax relief is applicable to income earned in the first year of residency after the return to Portugal and in the following four years, expiring after this period.

While the regime applies, entities required to withhold tax on the income covered by this regime shall apply the withholding tax (WHT) rates determined based on half of the income paid or made available.

2020 State Budget 

Regarding the non-habitual tax resident regime, a flat rate of 10% applicable to the net pension income from a foreign source obtained by non-habitual residents is introduced. The former exemption is revoked.

Social security regime for the self-employed

As of 2019, the notional contribution basis (linked to IAS - Index of Social Support) ceased to exist.

The new regime established a new quarterly reporting obligation for the self-employed, where they should report their self-employment income until the last day of April, July, October, and January.

For those under the simplified tax regime, the monthly contribution basis will correspond to 1/3 of the relevant remuneration determined in each reporting period and produces effects in that month and in the following two months. The contribution basis will no longer be determined in October of each year.

For the determination of the relevant remuneration of the self-employed, it is considered the income received in the three months previous to the reporting month. The relevant remuneration corresponds to 70% of the amount of services rendered and to 20% of the income related to the production and sales of products. 

Self-employed individuals are subject to a contribution rate of 21.4%.