Income tax in Portugal for newcomers (IRS, tax residence and IFICI)

According to the tax authority, you are resident in Portugal for a year if you:

• stayed in Portugal more than 183 days, consecutive or not, in any 12-month period starting or ending in that year; or
• stayed for less time but had a home here on any day of that period in conditions suggesting you intend to keep and occupy it as your habitual residence.

Once either applies, you must update your tax address to Portugal within 60 days (e-balcão or a tax office appointment). See the guide on NIF and NISS.

If you are employed, your employer withholds IRS from your salary each month and also deducts your social security contribution of generally 11% of gross pay. The withholding is an advance payment: your final tax is settled in the yearly return.

The IRS return (declaração Modelo 3) for the previous year is filed electronically on the Portal das Finanças between 1 April and 30 June. After assessment you either receive a refund or pay the difference.

Some personal expenses reduce your tax, within limits. For example, tenants can deduct 15% of the rent paid for their home; DECO reports the cap as €900 for 2026 (rising to €1,000 for 2027). Check the deduction categories and amounts linked to your NIF on the Portal das Finanças before you submit.

If you will work as a freelancer or self-employed person, open your activity with the tax authority before you start, either online on the Portal das Finanças or in person at a tax office or some Citizen Shops. You choose your activity code (CAE) and tax regime. When you open activity, Social Security is notified automatically (gov.pt guide for self-employed workers, updated September 2026). If you will only carry out one isolated act, you may not need to open activity.

Non-EU nationals need a visa or residence permit that allows self-employed work. Non-residents with an address outside the EU who work self-employed in Portugal must appoint a VAT tax representative before starting.

The Tax Incentive for Scientific Research and Innovation (Incentivo Fiscal à Investigação Científica e Inovação, IFICI) applies to people who become tax resident from 1 January 2024. According to the tax authority's leaflet (March 2025):

• eligible employment and self-employment income earned in Portugal is taxed at a special rate of 20% for 10 consecutive years;
• most foreign-source income of beneficiaries is, as a rule, exempt, while income paid from listed tax havens is taxed at 35%;
• you must become tax resident in Portugal, not have been resident in any of the previous five years, and not have benefited from NHR, the "Regressar" programme or IFICI before;
• the activity must be eligible: for example teaching and research, highly qualified professions in eligible companies (with a doctorate, or a bachelor's or master's degree plus three years of experience), jobs in certified start-ups, or R&D roles;
• you apply on the Portal das Finanças (Benefícios Fiscais > Inscrição no IFICI) by 15 January of the year after you become resident. If you apply later, the regime applies only from the year you register, for the remaining years.

People who benefit from IFICI cannot also use the separate young people's regime (IRS Jovem).