Portugal's 2027 State Budget (OE2027): what changes for expats

Nothing in this guide marked as 'in the proposal' is law yet. Parliament debates the budget in general terms on 27 and 28 October 2026, with the general vote on 28 October; amendments are then negotiated in committee until the final global vote on 24 November 2026. The law says it enters into force on 1 January 2027.3 sources

Approval looks very likely. The minority PSD/CDS government needs another party to vote for it or abstain, and the Socialist Party (PS) leader José Luís Carneiro has said the PS will abstain after the prime minister gave guarantees on its four conditions, although PS party bodies had not formally ratified that by 11 October. PCP has said it will vote against; Chega called it 'a bad budget' without yet committing its vote.4 sources

Expect details to move. Committee amendments in past years have added or changed tax measures, so treat the figures here as the government's starting position. If a budget is ever rejected, the previous year's budget is rolled over and spending runs on 'duodécimos' (monthly twelfths), and new tax measures do not take effect.2 sources

If you only read one part, read this table. It lists every 2027 change likely to affect a foreign resident, investor or would-be mover, with its legal status and the section that explains it.3 sources

Notice what is missing: no change to IRS Jovem, IFICI (the 'NHR 2.0' regime), the 28% rate on investment income, IMI or AIMI property taxes, VAT, Alojamento Local or the golden visa. If you were planning around those, the budget does not move the ground under you.3 sources

The government expects the economy to grow 2.1% in 2027 after 2.3% in 2026, with inflation easing from 2.9% to 2.3% and unemployment edging down to 5.7%. It plans a small surplus of 0.1% of GDP (about €275 million) and expects public debt to fall from 87.5% to 84.5% of GDP.2 sources

The headline totals actually shrink: general government revenue falls to €143.4 billion and spending to €143.1 billion, about 42% of GDP each. That is because EU Recovery and Resilience Plan (PRR) money, which added €9.1 billion of revenue and €11.1 billion of spending in 2026, stops in 2027. Excluding the PRR, revenue grows 4.3% and spending 5.7%.1 source

Interest on the debt is the fastest-growing cost: up 23.2% to €8.2 billion, as cheap old bonds are refinanced at higher rates. The government also counts €5.4 billion of pressure from commitments made in earlier years, led by pensions, interest and public pay.1 source

VAT is the State's biggest tax by far. Of €70.7 billion in State tax revenue budgeted for 2027, VAT brings in €30.3 billion (43%), IRS €20.4 billion (29%) and IRC €9.6 billion (14%). Corporate tax is the only major tax expected to raise less than in 2026, because of the rate cut. Local taxes such as IMI and IMT go to municipalities and are not in this total.1 source

On the spending side, pensions and other cash benefits take 37% of general government spending and public-sector pay 25%. Health is the largest ministry programme after social security, at €17.9 billion, of which €15.5 billion is the State transfer to the SNS, the national health service (up 4%).1 source

Many programmes show a headline cut that is really the PRR ending. Higher education and science falls 7.6% overall but rises 9.8% excluding PRR money; culture falls 17.9% but rises 23.4%. The table shows both figures so you can tell real cuts from accounting effects.1 source

IRS, Portuguese personal income tax, goes down for everyone who pays it, in two steps. First, a separate law approved by Parliament on 9 October 2026 cuts the rates of brackets 1 to 6 by 0.3 to 0.5 points for the whole of 2026 (it still needs promulgation and an authorised decree-law). Second, the budget keeps those lower rates for 2027 and raises every bracket threshold by 3.88%.5 sources

Because 3.88% is above the 2.3% inflation the government forecasts, the threshold update is a real cut, not just inflation-proofing. The Relatório calls it the sixth general IRS cut since 2024 and puts the cost of updating the brackets and specific deduction at €431 million in 2027.2 sources

Low earners gain most in relative terms. The mínimo de existência, the income below which you pay no IRS, rises from €12,880 to €13,580 a year, which is 14 payments of the €970 minimum wage planned for 2027. Someone earning up to €970 a month should pay no IRS.3 sources

High earners get a smaller break on the solidarity surcharge (taxa adicional de solidariedade). The 2.5% band will start at €89,995 of taxable income instead of €80,000, so it lines up with the 48% top bracket; the 5% rate above €250,000 is unchanged.3 sources

The specific deduction for salaries and pensions stays at 8.54 times the IAS (the social benefits index), so it rises automatically when the 2027 IAS is set by portaria in December. Dependant, health, education and general family-expense deductions are unchanged, and the €250 general expenses credit has not moved since 2015.3 sources

The headline for newcomers is stability. The budget does not amend IRS Jovem (Article 12-B of the IRS code), IFICI, the 20% flat-rate regime often called NHR 2.0 (Article 58-A of the tax benefits statute), or the transitional rules for people still on the old NHR. EY's analysis of the proposal explicitly notes that IRS Jovem is maintained.4 sources

The government expects the cost of these regimes to shift rather than shrink: IRS tax expenditure falls 0.7% to €4.09 billion as old NHR beneficiaries reach the end of their ten years, partly offset by more young people using IRS Jovem, which the Relatório says has already benefited almost a million people. It also plans to fold IRS Jovem into IRS Automático, the pre-filled return.2 sources

Programa Regressar, for people who lived in Portugal before, is extended by a year. If you become resident by the end of 2027, having been non-resident for the previous five years, half of your salary or freelance income is excluded from IRS for five years, capped at €250,000 a year. It was due to close to anyone becoming resident after 2026.3 sources

Tenants get a larger IRS deduction for rent paid on their permanent home: up to €1,000 for rent paid in 2027 (claimed in the return filed in 2028), from €900 for rent paid in 2026. This was legislated in May 2026 by Decreto-Lei 97/2026, the housing tax package, so it does not depend on the budget vote. The deduction is 15% of rent declared through e-Fatura, so you need rent of about €6,667 a year (€556 a month) to reach the cap.4 sources

Landlords keep the 10% IRS rate on residential rents of up to €2,300 a month, instead of the standard 25%, for 2026 to 2029, existing leases included. That is also Decreto-Lei 97/2026; the budget only records its cost, €209 million in 2027. The €2,300 cap equals 2.5 times the 2026 minimum wage, and the proposal does not say whether it will rise with the 2027 minimum wage.4 sources

The maximum annual rent increase for 2027 is 2.56%, the coefficient INE published in the Diário da República on 1 October 2026. A landlord who wants to apply it must give at least 30 days' written notice, and the lease must be at least a year old.2 sources

Rent support is a mixed picture. The budget says Porta 65, the young people's rent subsidy, will be 'reinforced' but gives no amount, while the transfer for the apoio extraordinário à renda, the extraordinary rent support paid through social security, is capped at €210 million against €331 million in the 2026 proposal.4 sources

Employer-provided housing stays tax-free for one more year. If your employer gives you a permanent home rent-free in 2027, its value is exempt from IRS and social security up to the official rent caps, and the employer can double the depreciation. People holding 10% or more of the company are excluded.2 sources

IMT, the property transfer tax paid on purchases, gets an inflation update and nothing else. Article 65 of the proposal raises every bracket threshold by 2.3% and keeps the rates, so most buyers pay slightly less in 2027 for the same price. The 0% band for an own permanent home rises from €106,346 to €108,792.4 sources

Young buyers gain most. Under IMT Jovem, a buyer aged 35 or under purchasing their first own permanent home pays no IMT and no stamp duty up to €338,141 in 2027 (from €330,539), and 8% IMT only on the part above that up to €676,185. Above €676,185 there is no relief. You must not be a tax dependant or have owned a home in the previous three years.4 sources

The State guarantee that lets under-35s borrow 100% of the price is promised but not yet legislated for 2027. The Relatório says it 'will be maintained', but no article of the proposal extends it, the current scheme covers loans signed by 31 December 2026, and the finance minister said the formal decision had not been taken. If you are relying on it, sign in 2026 or wait for the extension to be published.4 sources

New-build homes may be cheaper thanks to 6% VAT on construction, which has applied since 1 July 2026 under Decreto-Lei 97/2026 to homes sold as a permanent residence or let at moderate rents. Its sale-price cap follows the IMT table, so it rises to €676,185 in 2027.3 sources

If you buy a Portuguese home while not tax resident here, you pay a flat 7.5% IMT on the whole price, with no own-home table and no IMT Jovem. This came from Decreto-Lei 97/2026, in force since 25 May 2026, not from the budget. Some reports said OE2027 'aggravates' non-resident IMT; the proposal does not touch the rule, and the Relatório lists it among measures already approved in 2026.4 sources

The extra tax can be cancelled. You can ask the tax authority to refund the difference from the normal rates if you had been tax resident in Portugal before, if you become resident within two years of buying, or if you let the property as a home within six months at a rent no higher than €2,300 a month and keep it let for at least 36 of the first 60 months. The request must be made within six months.4 sources

The gap with resident buyers is largest in the middle of the market. Because the 2027 brackets rise, residents pay the same 7.5% flat rate only above €1,177,323, so for the most expensive homes non-residents pay nothing extra.2 sources

The proposal does not amend the IMI code, so the annual municipal property tax (IMI, 0.3% to 0.45% of the taxable value for urban property, set by each council) and the additional tax on high-value holdings (AIMI) stay as they are. The Relatório forecasts IMI revenue down 5.6% and IMT down 2.3% in 2027.5 sources

Capital-gains rules on property are also untouched by the budget. Decreto-Lei 97/2026 added a new exclusion in 2026: gains on the sale of residential property reinvested in Portuguese homes let at moderate rents, for sales from 2026 to 2029, alongside the existing own-home reinvestment relief.3 sources

Urban-rehabilitation tax benefits, which give IMI and IMT relief for restoring older buildings in rehabilitation areas, are extended to the end of 2031.2 sources

The 2027 proposal does not mention Alojamento Local (AL), Portugal's short-term rental licence, once. There is no new tax, no change to the IRS coefficient, no IMI change and no new restriction. If you run or are buying an AL, your 2027 rules are the ones already in force.3 sources

Those rules are municipal. Decreto-Lei 76/2024 scrapped the 2023 'Mais Habitação' national freeze on new licences and gave councils the power to regulate AL, including containment areas where new registrations are limited. Lisbon and Porto both run such areas, so check your parish before buying.3 sources

The extraordinary AL contribution (CEAL) created in 2023 was abolished in 2024 with effect from the end of 2023. Under the simplified IRS regime, 35% of AL income from a flat or house is taxable.2 sources

AIMA, the immigration and asylum agency, gets a much bigger budget: €145.7 million for 2027 against €97.4 million in the 2026 budget. It is almost entirely paid for by the fees AIMA itself collects for permits, renewals and residence cards. The Relatório ties the extra money to more staff and outside contractors to issue residence cards and clear pending cases.3 sources

You may see a different figure, €135 million, in the press. That is the government's whole immigration programme, split into regulating immigration (€108 million), attracting talent (€5 million) and reception and integration (€22 million), not AIMA's own budget. EU asylum and integration funds rise 45% to €15.8 million.3 sources

The budget changes no immigration or visa fees (they are set by portaria) and nothing in the golden visa, the residence permit for investment (ARI). The 2025 and 2026 changes to the foreigners law and the nationality law, which raised the residence needed for citizenship to 7 years for CPLP nationals and 10 for most others, were made by separate laws and are not affected.4 sources

For 2027 the government promises a new National Integration Plan and more Portuguese-language courses for newcomers, without a specific amount.1 source

Corporate tax (IRC) falls from 19% to 18% for 2027 profits, and the rate for small and medium-sized companies on their first €50,000 of profit stays at 15%. Both were set by Lei 64/2025, which also takes the general rate to 17% from 2028, so they do not depend on the budget.3 sources

Freelancers on the simplified regime (category B) see no change to the share of income treated as taxable, to the €15,000 VAT exemption threshold or to social security rates. They benefit from the same wider IRS brackets and higher tax-free floor as employees.3 sources

Employers get some targeted help. Productivity bonuses stay IRS- and social-security-free up to 6% of an employee's annual base pay if the company gives qualifying pay rises; the pay-rise threshold for the IRC cost uplift drops from 4.6% to 4.5%; and loss-making companies with a clean filing record are spared the 10-point autonomous-tax surcharge in 2027.3 sources

Red tape is deferred. The SAF-T accounting file is pushed back to periods from 2028, and plain PDF invoices remain acceptable as electronic invoices until 31 December 2027. The SIFIDE R&D tax credit is extended to 2027.3 sources

The minimum wage is planned to rise from €920 to €970 a month (paid 14 times a year) in January 2027, as agreed with employers and the UGT union in 2024. The budget assumes it, but the rise is set by a separate decree-law, as €920 was for 2026; unions are pushing for €1,000 or more.4 sources

Public-sector pay rises 2.3% in 2027, with a minimum of €60.52 a month, under the multi-year pay agreement. The budget sets aside €948 million for pay measures.3 sources

Pensions rise in January under the automatic formula (inflation plus a growth bonus for lower pensions), with the exact percentage fixed by portaria in December. The budget includes no extraordinary pension supplement for 2027; the one-off supplement of €100 to €200 for pensions up to €1,611.39 is paid in December 2026, and the finance minister said a 2027 repeat depends on the public finances.3 sources

The complemento solidário para idosos (CSI), the top-up for low-income pensioners, rises by €50 to €720 a month. The statutory retirement age is 66 years and 11 months in 2027; Chega wants it lowered to 65 or after 40 years of contributions, which the prime minister has called unacceptable.4 sources

The budget does not raise or cut VAT, fuel tax (ISP), the annual car tax (IUC), the car registration tax (ISV), tobacco or alcohol duties. The government says excise duties will not be updated for inflation, which in real terms is a small cut. Fuel-tax relief introduced in 2026 continues through a separate mechanism.3 sources

Two smaller changes: the extra IUC on diesel cars (Lei 82-B/2014) is kept, and the environmental fees set in 2020 rise 4%. Fuel-tax exemptions for power stations burning fuel oil and some natural gas are phased out, with the revenue going to reduce the electricity tariff deficit and to the Environmental Fund.2 sources

One new tax is on the way, but not in the budget: a separate bill would charge oil companies a one-off 33% 'solidarity contribution' on 2026 profits more than 20% above their 2024-2025 average.2 sources

The State transfer to the SNS rises 4% to €15.5 billion, and health staff spending 5.2%. The government's stated priority is more people with an assigned family doctor (médico de família), but the Relatório sets no numeric target.1 source

School spending rises 1.5% (4.9% excluding the PRR), mainly teacher pay as the recovery of teachers' frozen service time ends. University tuition is unfrozen: the maximum bachelor's fee for 2027-2028 may rise with inflation.2 sources

Public transport fare support (Incentiva+TP, which funds discounted passes such as Navegante) gets €439.2 million, and free passes for under-23s continue. In Lisbon, the budget funds the Metro's circular line (€60 million in 2027), the red line to Alcântara (€90 million) and the Odivelas-Loures light rail (€338 million); the Lisbon-Porto high-speed line gets €431 million.1 source

Defence spending reaches about 2.15% of GDP on the NATO definition, the government says, including over €800 million of investment financed by the EU's SAFE defence loans; the defence ministry's own programme is €3.8 billion. Internal security (PSP, GNR and the new border unit) rises 9.3% to €3.16 billion.2 sources

The government's growth forecast is the most optimistic of the main forecasters. The Conselho das Finanças Públicas (CFP, the independent fiscal council) endorsed the macroeconomic scenario but warned that the risks are to the downside, and doubted the assumed 10.4% jump in private investment that is meant to replace falling public investment.2 sources

On the deficit, the CFP's own policy-unchanged projection, made before the latest tax cut, is a 0.2% of GDP deficit in 2027, and the European Commission's spring forecast a 0.4% deficit, against the government's 0.1% surplus. A small miss would not threaten debt reduction, which all forecasters expect to continue.3 sources

Ratings agencies are relaxed: Fitch raised Portugal to A+ in September 2026 and DBRS rates it A+ with a positive outlook, which helps keep the State's borrowing costs down.1 source

Plenty of rumours circulate in October. Checked against the proposal itself, these areas are untouched: IRS Jovem and IFICI, the 28% flat rate on dividends, interest and capital gains, crypto taxation, the tax on pensions, IMI and AIMI, VAT rates, Alojamento Local, the golden visa, and immigration fees.3 sources

Equally, several 2026 changes that people associate with the budget were made by other laws and apply regardless of the vote: the 6% VAT on new homes, the 10% landlord rate, the €1,000 rent deduction, the 7.5% non-resident IMT rate and the 18% corporate tax rate.3 sources

Watch three dates: the general vote on 28 October, the deadline for party amendments in early November, and the final vote on 24 November. We will update this guide after each, and mark any measure that changes in committee.2 sources

Some 2027 numbers arrive after the budget: the IAS and the pension update by portaria in December, the 2027 minimum wage by decree-law, and the January 2027 withholding tables. They set the final specific deduction, IRS Jovem cap and pension increases.3 sources