Latest news and stories about tax law in Portugal for expats and residents.
Parliament approved a measure doubling personal income tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) deductions for families from the third child onwards. Lawmakers also voted to increase support under the Child Guarantee (Garantia para a Infância) to match the larger tax allowances for dependents. The change aims to provide targeted financial relief for larger households facing increased living costs.
Pending cases in Portuguese tax courts fell by 54 percent, according to a new report on the country's tax justice system, though systemic delays persist. Legal disputes in traditional administrative courts can still drag on for more than a decade, with backlogs in the Southern Central Administrative Court taking up to five years to clear. In contrast, tax arbitration tribunals resolve matters in less than five months, now handling more than a third of all tax disputes filed in the country.
The Tax and Customs Authority (AT) has clarified that couples can maintain their young person's Municipal Property Transfer Tax (IMT) exemption if they move to a new home due to the birth of a child. The ruling specifies that the exemption remains valid as long as the original property continues to be used for housing purposes.
The property transfer tax (Imposto Municipal sobre Transmissões Onerosas de Imóveis), commonly called IMT, is a one‑off tax paid when you buy real estate in Portugal and its rate depends on the property’s price and type. The exemption referenced by the finance minister lowers upfront costs for eligible young buyers, making it an important affordability measure for people trying to enter the housing market.
The Order of Accountants (Ordem dos Contabilistas Certificados) has clarified that the reduced 6% value-added tax (Imposto sobre o Valor Acrescentado or IVA) for urban renovation works does not apply retroactively to periods before January 2022. This ruling settles the timeline for taxpayers seeking to benefit from the reduced rate on property improvements.
VAT is Value Added Tax (Imposto sobre o Valor Acrescentado), a consumption tax charged at each stage of production and sale; the standard mainland rate in Portugal is 23%. Parliamentary proposals to cut VAT on bottled gas from 23% to 6% would directly reduce consumer prices if approved.
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 IRS withholding tables (tabelas de retenção na fonte) are government-published schedules that determine how much personal income tax (Imposto sobre o Rendimento das Pessoas Singulares — IRS) employers must deduct from each paycheck. They take into account gross pay, marital status, number of dependents, and disability status.
The tables are updated annually (and sometimes mid-year when budgets change), directly affecting monthly take-home pay. When tables are revised downward, workers see more in their pay packet; when raised, less. Any difference between amounts withheld and the actual tax owed is settled when the annual IRS return (Modelo 3) is filed, typically between April and June.
Employees and pensioners should check the current tables — published by the Autoridade Tributária e Aduaneira (AT) — whenever they change, as the impact on net income can be significant.
The Supreme Administrative Court has standardized jurisprudence regarding the Single Circulation Tax (Imposto Único de Circulação or IUC). The ruling dictates that the Tax Authority (Autoridade Tributária or AT) can no longer collect this tax from previous vehicle owners, shifting the responsibility entirely to the new owner.
The IUC is the Imposto Único de Circulação (IUC), Portugal's annual vehicle circulation tax charged on cars, motorcycles and other vehicles. If you own or import a vehicle as an expat you must pay the IUC each year to the tax office (rates depend on age, engine size and emissions), and recent news says the payment date will be fixed on the calendar.
The Central Administrative Court South has ruled that the sale of inherited properties before the estate is divided is subject to capital gains tax. This decision contradicts a previous stance by the Supreme Administrative Court, which generally exempted undivided inheritances from such taxation.
The Tax Authority (Autoridade Tributária e Aduaneira or AT) has ruled that delays in municipal licensing do not justify extending the 36-month deadline for reinvesting capital gains from a primary residence. This means taxpayers who fail to complete a new home purchase within the legal timeframe due to bureaucratic delays will still face Personal Income Tax (Imposto sobre o Rendimento de Pessoas Singulares or IRS) on those gains. Tax-paying residents should note that the AT maintains a strict interpretation of the law regardless of external delays.
The IRS withholding tables (tabelas de retenção na fonte) are government-published schedules that determine how much personal income tax (Imposto sobre o Rendimento das Pessoas Singulares — IRS) employers must deduct from each paycheck. They take into account gross pay, marital status, number of dependents, and disability status.
The tables are updated annually (and sometimes mid-year when budgets change), directly affecting monthly take-home pay. When tables are revised downward, workers see more in their pay packet; when raised, less. Any difference between amounts withheld and the actual tax owed is settled when the annual IRS return (Modelo 3) is filed, typically between April and June.
Employees and pensioners should check the current tables — published by the Autoridade Tributária e Aduaneira (AT) — whenever they change, as the impact on net income can be significant.
Capital gains (mais-valias) are the profits earned from selling an asset, such as a home, for a higher price than it was bought. In Portugal, residents can often avoid paying tax on these gains if they reinvest the full sale proceeds into a new primary residence within 36 months. The Tax Authority (Autoridade Tributária) recently confirmed this deadline is absolute and does not account for external delays like slow building permits.
