Taxes in Portugal for US and EU citizens

📖 Taxes in Portugal: Essential Guide for Residents and Investors

If you plan to live or invest in Portugal, the first step is to register with the Tax Authority and obtain your Tax Identification Number (NIF). This number is essential to open a bank account, purchase a house or car, or even subscribe to basic services such as internet.

In Portugal, taxes are divided into direct and indirect taxes.

• Direct taxes are levied on income, with progressive rates: the higher the income, the higher the tax rate.

• Indirect taxes are charged on the purchase of goods and services, affecting families and businesses in everyday life.

Main Direct Taxes

• IRS (Personal Income Tax): applies to the income of individuals.

• IRC (Corporate Income Tax): applies to company profits.

• TSU (Single Social Tax): deducted directly from salaries, it funds Social Security and ensures future access to retirement benefits.

Property Taxes

• IMI (Municipal Property Tax): set by each municipality, paid annually, and based on the value of the property.

Indirect Taxes

• VAT (Value Added Tax): applied to most goods and services.

  • Mainland Portugal: 6% (reduced), 13% (intermediate), 23% (standard).

  • Azores: 4%, 9%, 18%.

  • Madeira: 5%, 12%, 22%.

Vehicle Taxes

• ISV (Vehicle Tax): paid upon the first registration of a car.

• IUC (Single Circulation Tax): replaces the former “car stamp” and is paid annually.

✨ In Summary

The Portuguese tax system combines taxes on income, consumption, and property, ensuring the financing of the State and Social Security. For newcomers, the NIF is the gateway to any economic or property-related activity. For investors, understanding these obligations is crucial to plan effectively and avoid unexpected costs.