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Anyone who is considered a tax resident in Portugal must comply with certain tax, social security, and reporting obligations.
\nThese include, for example, paying monthly Social Security contributions, paying taxes, and submitting an annual income tax return.<\/p>\n
In addition to your tax obligations with the United States, if you are a citizen of this country, you also have certain tax obligations in Portugal. If you have acquired the tax status of non-habitual residents (NHR), you should keep in mind that in some situations it is more beneficial than the double taxation treaty itself. Don’t hesitate to contact us<\/a><\/strong> to calculate your taxes in both countries.<\/p>\n Tax residency and tax obligations in Portugal<\/strong><\/p>\n Your tax residency status is very important because anyone who is considered a resident for tax purposes in Portugal must fulfill all relevant obligations \u2014 from declaring all income (including income earned abroad) to reporting any foreign bank accounts. Who is considered a tax resident in Portugal?<\/strong><\/p>\n According to Portugal\u2019s Personal Income Tax Code (IRS), by its acronym in Portuguese, you are considered a tax resident in Portugal if, during the year the income relates to:<\/p>\n Main tax obligations in Portugal<\/strong><\/p>\n If you are tax resident in Portugal, you must meet certain tax requirements. General tax obligations for all residents<\/strong><\/p>\n Personal Income Tax (IRS)<\/a> and the Single Social Tax (TSU) are two of the most important obligations. Filling your annual income tax return<\/strong><\/p>\n Another key obligation is filing your annual tax return. Specific obligations for self-employed workers<\/strong><\/p>\n If you\u2019re self-employed or a freelancer in Portugal, you must meet several deadlines for your business activities. How to register as self-employed in Portugal \u2014 Specific rules for remote workers<\/strong><\/p>\n For remote workers, the key factor is tax residency. If you\u2019re a remote worker with tax residency in Portugal (under the rules mentioned earlier), your tax obligations will be similar to those of any other self-employed person. Specific obligations for property owners<\/strong><\/p>\n If you own real estate in Portugal, you must pay Municipal Property Tax (IMI) on its taxable value (VPT). IMI is paid annually, either in full by May 31st or in up to three installments (May, August, and September). Specific obligations for vehicle owners<\/strong><\/p>\n If you own a vehicle in Portugal, you must pay the Single Road Tax (IUC). Key tax deadlines in Portugal<\/strong><\/p>\n Here\u2019s a quick overview of the main tax deadlines:<\/p>\n
\nFor example, a Portuguese tax resident who works as a freelancer in Portugal but also receives a pension from abroad must include that pension in their annual income tax return (IRS3).<\/p>\n\n
\nBesides paying taxes, you also have to make Social Security contributions and submit accurate tax declarations.
\nBelow is a general overview of the main tax obligations in Portugal \u2014 covering general duties for all residents, as well as specific rules for the self-employed, remote workers, property owners, and vehicle owners.<\/p>\n
\nYour income is taxed according to the IRS category<\/a> it falls under, and each category has its own tax rules and rates.
\nSocial Security contributions are paid every month through the TSU, which is a percentage of your gross salary.
\nThe TSU is split into two parts: your employer pays 23.74% and you pay 11%. If you\u2019re an employee, your employer withholds and pays both parts directly to the Portuguese government.<\/p>\n
\nMost tax residents must submit a personal income tax return every year (IRS Model 3), as there are very few exceptions under the IRS Code.
\nThe return includes sections for different income types, deductions, tax credits, and applicable rates, and it covers employment and self-employment income, capital gains, and rental income.
\nFiling it correctly is crucial because it determines whether you\u2019re due a refund or have additional tax to pay.
\nYou must file online between April 1st and June 30th for income earned the previous year.
\nEmployees only need to submit this annual return \u2014 their employer handles monthly tax withholdings and Social Security payments.<\/p>\n
\nFor example, you must issue an invoice after every service provided.
\nYou\u2019re also required to submit VAT returns either quarterly or monthly, and pay Social Security contributions every month.
\nSelf-employed workers pay 21.4% of their gross income to Social Security each month.
\nHowever, if more than 80% of your annual income comes from the same client, that client must pay an additional 10% TSU on your behalf.
\nDuring your first year of activity, you can qualify for an exemption from Social Security contributions.<\/p>\n
\nDouble taxation is a common concern for remote workers in Portugal, but this is usually resolved through Portugal\u2019s tax treaty with the United States.
\nYour Social Security obligations will depend on how you work:<\/p>\n\n
\nIf the total taxable value of your properties exceeds \u20ac600,000, you must also pay the Additional to IMI (AIMI), due by September 30th.<\/p>\n
\nThe IUC applies to all vehicles (cars, motorcycles, etc.) registered in Portugal and must be paid every year before the last day of the vehicle\u2019s registration month.
\nThe amount depends on the engine size, fuel type, year of registration, and CO\u2082 emissions.
\nVehicles over 30 years old that are of historical interest and used only occasionally are exempt from IUC.<\/p>\n