An Expat Guide to Living in Portugal (Updated 2025)
If you’re a UK citizen living in or planning to move to Portugal, it’s essential to understand how your finances will be affected. Portugal’s tax system differs significantly from that of the UK, and there are serious consequences for non-compliance.
Alongside our expertise in Retirement and Investment planning and to help you navigate local tax situations and reporting, we’ve partnered with local experts based in Portugal who provide on-the-ground insight and support. Our combined knowledge ensures you get practical, compliant, and tax-efficient advice tailored to expat life.
This guide walks you through key areas: residency rules, taxation, pensions (including QROPS and SIPPs), social contributions, and — importantly — the Golden Visa and Portugal’s expat-friendly tax schemes.
Asset Reporting
Once you’re a Portuguese tax resident, you must declare all worldwide income and assets, including foreign property, trusts, bank accounts, and investments. Portugal is part of the Common Reporting Standard (CRS), so undisclosed assets are likely to be detected eventually. Non-compliance can result in significant penalties and interest charges.
Portuguese Tax Residency
- You spend more than 183 days per year in Portugal (consecutively or not).
- You maintain a habitual residence in Portugal on any day of the tax year.
- Your primary economic interest (income, business, investments) is based in Portugal.
Once resident, you are subject to worldwide taxation, unless you qualify for a beneficial expat regime such as the new NHR (Non-Habitual Residency replacement). Seek expert advice early.
Portuguese Taxation & Social Contributions
Income Tax (IRS)
Portugal’s income tax is progressive and assessed on an individual basis.
Tax bands for 2025:
- 14.5%: Up to €7,703
- 21%: €7,704 – €11,623
- 26.5%: €11,624 – €16,472
- 28.5%: €16,473 – €21,321
- 35%: €21,322 – €27,146
- 37%: €27,147 – €39,791
- 43.5%: €39,792 – €51,997
- 45%: €51,998 – €81,199
- 48%: Over €81,200
A solidarity surcharge applies above €80,000 (2.5%–5%). Tax returns are due by June 30th.
- Residents: 50% of gain added to taxable income.
- Non-residents: Full gain taxed at 28% flat.
- Property sales may benefit from exemptions or rollovers if reinvesting in a primary home.
UK tax-free wrappers like ISAs are not recognised in Portugal — all income, dividends, and gains are taxable unless covered by a Double Tax Treaty (DTT).
- Employees contribute 11%; employers pay 23.75%.
- Self-employed pay between 21.4% and 25.2%.
- Foreign pensions may avoid these contributions depending on status (e.g. S1 or NHR scheme).
Inheritance and Gift Tax in Portugal
Portugal does not have a formal inheritance or gift tax, but Stamp Duty (Imposto do Selo) may apply:
- 10% flat rate on Portuguese assets given or inherited by non-direct descendants.
- Spouses, children, and parents are exempt from Stamp Duty.
There’s no forced heirship, meaning you are generally free to distribute your estate as you wish — a major advantage over countries like France or Spain.
UK Pensions & Retirement in Portugal
Defined Contribution (DC) Pensions
- Access to flexible drawdown
- Currency control (GBP/EUR)
- Better succession options
- Potential tax efficiency
Defined Benefit (DB) Pensions
- You want lump-sum access
- Your health impacts longevity
- Your UK scheme is at risk
Pension Transfer Options
- Keep it in the UK: Still possible, but post-Brexit regulation and access may be more complex.
- QROPS: Tax-free in the UK; subject to Portuguese taxation. No 25% overseas transfer charge if based in EEA.
- SIPPs: Remain popular with expats. Regulated by the FCA, they offer flexible access and broad investment options.
Here’s more information on UK Pension Transfers.
Tax on UK Pensions in Portugal
- Under the new NHR scheme, foreign pension income is taxed at 10% flat rate.
- Outside the regime, pensions are taxed at progressive IRS rates (14.5%–48%).
- UK State Pension is taxable in Portugal, not in the UK (due to DTT).
Golden Visa & Expat Tax Regimes
Portugal Golden Visa (2025 Update)
Although real estate options ended in 2023, the Golden Visa still exists for:
- Private equity funds
- Research or cultural donations
- Job creation
- Business investment
Minimum investment for fund route: €500,000. Requires 7 days/year stay and leads to residency and EU citizenship eligibility after 5 years.
New NHR Replacement Scheme (2024–25)
Portugal’s original NHR regime ended in 2023 for new entrants, but was replaced by targeted tax incentives in 2024:
Eligible individuals (e.g., highly qualified professionals, researchers, and tech workers) may benefit from:
- 20% flat tax on Portuguese income
- 10% tax on foreign pensions
- Exemptions or reduced rates on foreign income under certain conditions
To qualify, registration must occur within the first year of becoming tax resident.
Why Expats Choose These Regimes
- Reduce overall income tax burden
- Simplify pension and investment planning
- Maintain flexibility over where funds are held and accessed
- Improve succession planning
Final Thoughts
Living in Portugal as a UK expat offers an enviable lifestyle — but without careful planning, financial mistakes can be costly. Portugal’s rules are complex, and post-Brexit changes mean previous assumptions no longer apply.
Our on-the-ground partners in Portugal help ensure your planning is fully compliant and optimised for local rules.
Top Tips:
- Declare foreign assets and income fully
- Review whether to move your pension to a SIPP or QROPS
- Consider applying for Portugal’s Golden Visa or new expat regime early
- Work with a cross-border financial adviser familiar with UK–Portugal tax
Contact Us
Whether you’re exploring the Golden Visa, need help navigating Portugal’s tax system, or want a full pension transfer analysis — we’re here to help.
- Speak with cross-border experts
- Work with local, bilingual partners based in Portugal
- Get a personalised plan for pensions, taxes, and residency
- Contact us today to book your free consultation.
