Finance: Expat finances news in Portugal

Recent analysis indicates that the total tax and social contribution burden on average wages in Portugal exceeds 42%. This high level of taxation significantly reduces the net income received by workers, fueling ongoing debates about the need for structural fiscal reform.

A statement regarding the protected status of retirement pensions within the Portuguese social security system.

The Tax and Customs Authority (Autoridade Tributária e Aduaneira or AT) is warning citizens about a rise in fraudulent phone calls, known as vishing, regarding IRS tax returns. Scammers are contacting individuals and asking them to press keys to correct alleged discrepancies in their tax filings. Authorities advise taxpayers to remain vigilant and use only official communication channels.

A government-appointed working group has proposed the introduction of automatic professional pension plans to address the long-term sustainability of Social Security. The plan suggests contributions of 8% to 10%, split between employees, employers, and the State, with companies receiving tax benefits. While the proposal aims to increase retirement income, labor unions have requested detailed simulations to understand the full impact on future pensioners.

Minister of the Presidency António Leitão Amaro has confirmed that the government will not pursue structural reforms to the Social Security system during the current legislative term. The government maintains that any such changes require prior electoral debate, effectively closing the door on proposals to lower the retirement age. This stance follows pressure from opposition parties, including the Socialist Party (Partido Socialista or PS) and Chega, regarding the sustainability of the public pension system.

The working group created by the government to study the sustainability of Social Security has concluded that the system is in deficit.

The government has ruled out major structural changes to the state pension system, known as Segurança Social, during the current legislative term. Despite a new report from an expert group led by Jorge Bravo proposing automatic workplace pension enrollment and youth savings accounts, officials described the findings as a contribution to public debate rather than a roadmap for immediate policy reform.

Purchasing power gains from wages in Portugal have fallen to 1.8% in the second quarter of 2026, the lowest level recorded in three years. According to the National Statistics Institute (INE), inflation is significantly eroding the real value of salaries compared to the 3.9% growth seen a year ago.

Prime Minister Luís Montenegro used the annual Pontal Festival in the Algarve to outline his government's goals, including further income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) cuts and raising the national minimum wage to 1,100 euros by the end of his term. While he avoided specific new announcements, he highlighted economic growth and pledged to continue supporting pensioners if budgetary conditions allow. Opposition parties, including Chega (Chega), criticized the event for lacking concrete answers to current government controversies.

The Tax and Customs Authority (Autoridade Tributária e Aduaneira or AT) has started distributing the 2026 salary bonus to young workers. This initial phase covers approximately 41,000 beneficiaries who registered in 2024 and continue to meet the eligibility requirements based on their 2025 income.

A study by Knight Frank reveals that house prices in Portugal rose by 16.5% in the first quarter of 2026 compared to the previous year. This growth is the fourth-highest among 55 markets analyzed, highlighting the ongoing pressure on the national housing market.

Housing costs are expected to increase next year, with rents projected to rise by 2.5%. Homeowners with mortgage loans tied to six-month rates will also face higher monthly payments, with an average increase of 42 euros.

Novo Banco reported a 15.6% decline in net profits to 367.2 million euros for the first half of 2026. The bank attributed the decrease to extraordinary costs associated with its sale to the French group BPCE and a higher effective tax rate.

The Tax and Customs Authority (Autoridade Tributária e Aduaneira or AT) has issued a binding ruling stating that taxpayers who use their primary residence as a workplace may lose eligibility for capital gains tax exemptions. This applies even if the proceeds from a home sale are reinvested into the purchase of another primary and permanent residence.

Secretary of State for Tax Affairs Cláudia Reis Duarte stated that while the government remains committed to reducing income tax by two billion euros by the end of the legislative term, a new cut for 2027 is not yet guaranteed. The government confirmed that the youth income tax scheme (IRS Jovem) will continue next year, noting a fivefold increase in declarations compared to 2024.

The European Central Bank (ECB) is meeting in Frankfurt to decide on monetary policy, with investors anticipating a potential pause in interest rate hikes. Officials are closely monitoring the recent rise in oil prices, which remains a primary concern for inflation forecasts and future economic stability.

The fintech company Trade Republic has opened a branch in Portugal, now offering a local bank account number (International Bank Account Number or IBAN) and a simplified tax reporting process. The platform, which has surpassed 200,000 users in the country, also introduced a 3% interest rate on balances up to 50,000 euros.

The Competition Authority (Autoridade da Concorrência or AdC) has recommended that the Bank of Portugal create a comparison tool for bank deposit interest rates. The AdC believes this measure would encourage customer mobility between financial institutions and improve market competition.

The German digital bank Trade Republic has officially launched a branch in Portugal, authorized by the Bank of Portugal (Banco de Portugal or BdP). Customers can now obtain a Portuguese IBAN (PT50) and earn 3% interest on balances up to 50,000 euros, with the bank aiming to double its current base of 200,000 customers within a year.

The Tax and Customs Authority (Autoridade Tributária e Aduaneira or AT) received over 6.4 million income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) declarations for 2025. As of mid-July, the government has paid 2.3 million refunds, totaling approximately 2.2 billion euros to taxpayers.

Millions of pensioners in Portugal will receive a double payment this month, combining their regular July pension with their annual holiday allowance. The specific payment dates vary depending on the individual's enrollment in the social security system.

The Treasury and Public Debt Management Agency (Agência de Gestão da Tesouraria e da Dívida Pública or IGCP) has launched the new Series 5 Treasury Certificates while suspending subscriptions for the previous Treasury Savings Value Certificates. While these new products offer competitive rates, consumer protection groups note that some bank deposits currently provide better returns for larger savings amounts.

The Tax and Customs Authority (Autoridade Tributária e Aduaneira or AT) garnished 75,620 salaries and 13,221 pensions in 2025 to recover unpaid tax debts. This coercive collection process saw a 10% increase compared to previous periods, as the government intensifies efforts to ensure compliance with fiscal obligations.

The government is launching a new series of Treasury Certificates (Certificados do Tesouro) to attract family savings with a fixed interest rate. The new 10-year product, known as Series 5, offers an initial interest rate of 2.35% and requires a minimum subscription of 1,000 euros. This initiative aims to provide a secure investment option for savers while the state manages public debt in a volatile financial market.

The Treasury and Public Debt Management Agency (Agência de Gestão da Tesouraria e da Dívida Pública or IGCP) is launching a new series of Treasury Certificates (Certificados de Aforro) starting next Monday. The product offers an average annual interest rate of 2.71% with a ten-year term, though investors may redeem their funds after one year. The minimum investment for the new series is set at 1,000 euros.

Starting August 1, the Bank of Portugal (Banco de Portugal or BdP) will implement new macroprudential rules for mortgage and consumer credit. The central bank is lowering the maximum debt-to-income ratio from 50% to 45% to mitigate financial risks for households. Additionally, the new regulations simplify loan duration requirements based on borrower age and prohibit credit intermediaries from accepting funds directly from consumers.

Today marks the final deadline for taxpayers to submit their personal (Imposto sobre o Rendimento das Pessoas Singulares or IRS) and corporate (Imposto sobre o Rendimento das Pessoas Coletivas or IRC) income tax returns. Failure to submit the declaration for the previous year by the end of the day will result in fines starting at 25 euros.

Despite signs that Euribor rates have peaked and are stabilizing, mortgage holders in Portugal will face higher monthly repayments for contracts reviewed in July. While the pace of rate increases slowed in June, the impact remains a financial concern for many families.

The National Association of Payment and Electronic Money Institutions (Associação Nacional de Instituições de Pagamento e Moeda Eletrónica or ANIPE) has warned that the Portuguese crypto-asset market risks paralysis following the end of the transition period for the European Markets in Crypto-Assets (MiCA) regulation on July 1st. The association has requested urgent clarification from the Bank of Portugal (Banco de Portugal) and the Securities Market Commission (Comissão do Mercado de Valores Mobiliários or CMVM) regarding the status of pending authorization processes.

New regulations for online shopping from non-EU platforms come into effect this Wednesday, impacting customs and import procedures.

The Tax Authority (Autoridade Tributária e Aduaneira or AT) has clarified that homeowners who rent out their primary residence before selling it may lose their exemption from personal income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) on capital gains. Even if the property remains the owner's registered tax address, the act of placing it on the rental market can disqualify the tax benefit.

The government has confirmed to the International Monetary Fund that there will be no extraordinary reduction in personal income tax (Imposto sobre o Rendimento das Pessoas Singulares or IRS) for 2026. This decision marks a departure from the previous two years, when taxpayers benefited from lower tax withholding rates toward the end of the year.

The government is defending its proposal for a Single Social Benefit (Prestação Social Única or PSU), which aims to consolidate social support management into one system. During a parliamentary hearing, officials stated the measure will not reduce support for the vulnerable and could save the state approximately 3.2 million euros annually. However, critics, including the Association of Retired Pensioners and Pensioners (Associação de Aposentados Pensionistas e Reformados or APRe!), warn the system could foster social exclusion.

Investments by Portuguese families in savings certificates (Certificados de Aforro) reached 42.4 billion euros in May, marking the 20th consecutive month of growth. Data from the Bank of Portugal (Banco de Portugal or BdP) shows a 13.2% year-on-year increase, driven by rising Euribor rates. Additionally, the state-owned Caixa Geral de Depósitos (CGD) announced it will pay 1.25 billion euros in dividends to the state on June 26.

The European Central Bank (Banco Central Europeu or BCE) is widely expected to increase its benchmark interest rate by 0.25 percentage points to 2.25% during its meeting this Thursday. Economists and investors anticipate the move as a measure to curb inflation, which the central bank aims to stabilize at 2%.

Update: Finance Minister disagrees with ECB interest rate hike

The ECB confirmed the 0.25 percentage point increase to 2.25% on Thursday, citing inflationary pressures from the ongoing conflict in the Middle East. Portuguese Finance Minister Joaquim Miranda Sarmento stated he respects the decision but disagrees with the move, arguing that the current economic crisis differs from 2022 and that the hike was not necessary.

A new analysis from the Banco de Portugal reveals that credit intermediaries now process 51% of consumer credit and 56% of housing loans in Portugal. The report notes that using these intermediaries is often associated with higher annual percentage rates (APR) compared to contracting directly with a bank.

International investors are increasingly looking toward Portugal as a stable destination for luxury real estate amid ongoing conflicts in the Middle East. Agencies report a rise in inquiries for move-in-ready properties and medium-term rentals as families re-evaluate their relocation plans.

A tax dispute has emerged between Portugal and Spain regarding foreign retirees who previously benefited from the non-habitual resident regime. Spanish authorities are reportedly refusing to recognize certain residency certificates issued by Portugal, potentially allowing Spain to tax pensions that were previously exempt or subject to lower rates.