Portugal Tax Planning for 2026: Key Considerations for Expats

As the year draws to a close, expatriates and prospective relocators should review their tax planning strategies for 2026.

Key Tax Considerations

IFICI Regime

The Scientific Research and Innovation Tax Incentive (IFICI) continues as the main tax incentive for qualifying professionals:

• 20% flat rate on Portuguese employment income
• Exemption for most foreign-sourced income
• Requires specific professional qualifications or employment in certified companies

Double Taxation Treaties

Portugal’s extensive treaty network provides relief for:

• Pension income (varies by treaty)
• Investment income and dividends
• Capital gains on foreign assets

Standard Tax Rates

For those not qualifying for special regimes:

• Progressive rates up to 48% on employment income
• 28% flat rate on investment income (or progressive if elected)
• Solidarity surcharges on higher incomes

Planning Strategies

• Timing of Relocation: Consider starting Portuguese residency at optimal point in calendar year
• Income Structuring: Review how employment and investment income is received
• Asset Location: Consider holding structures for investments and real estate
• Pension Planning: Understand treaty treatment of various pension types

Professional tax advice is essential given the complexity of international tax planning and the significant differences in treatment between various income sources.