Property-Related Taxes in Portugal

Non-resident individuals are generally taxed in Portugal on Portuguese-source income, including income and taxable gains arising from Portuguese real estate.

Income Tax

Portugal applies progressive personal income-tax (IRS) rates to income subject to aggregation. For 2026, the principal rates are:

Additional solidarity tax can apply to high levels of taxable income.

Rental Income Tax

Portuguese-source rental income earned by a non-resident individual is generally taxable in Portugal.

For residential property, the standard autonomous tax rate is 25% of net taxable rental income. For non-residential property, the standard autonomous rate is generally 28%.

Taxable rental income is determined after qualifying property-related expenses. Deductible expenses can generally include maintenance and repair expenditure, condominium charges, municipal property tax (IMI), and certain other expenses directly connected with generating or maintaining the rental income.

For comparison purposes, annual gross rental income of €18,000, €72,000 and €144,000 is assumed to incur deductible expenses equal to 30% of gross rent, leaving net taxable rental income of €12,600, €50,400 and €100,800, respectively.

Applying Portugal's standard 25% tax rate for residential rental income results in estimated annual income tax of €3,150, €12,600 and €25,200, respectively. This represents an effective income-tax burden of 17.5% of gross rental income at each income level.

The 30% expense assumption is used solely to standardize the international comparison. Actual Portuguese taxable rental income depends on the qualifying expenses incurred by the property owner. Financing costs, including mortgage interest, are generally not deductible.

Capital Gains Tax

Capital gains from the disposal of Portuguese real estate by a non-resident individual are generally calculated as the difference between the disposal value and the property's adjusted acquisition cost, taking into account qualifying acquisition, improvement, and disposal expenses.

For non-residents, generally 50% of the positive real-estate capital gain is included in the taxable base.

The taxable portion is then subject to Portugal's progressive personal income-tax rates. For determining the applicable progressive rate, the taxpayer's other income, including relevant foreign-source income, may have to be taken into account even though Portugal does not necessarily tax that foreign income.

Relief or exemption can apply in specific circumstances, including certain qualifying reinvestments and other statutory real-estate reliefs.

Corporate Taxation

For tax periods beginning in 2026, the standard Portuguese corporate income-tax (IRC) rate is 19%.

Qualifying SMEs and Small Mid Caps can benefit from a reduced 15% rate on the first €50,000 of taxable profit, with the ordinary rate applying to the excess.

Rental income earned by a Portuguese company is generally included in its taxable business income, with qualifying business expenses deductible.

Taxable gains arising from the disposal of real estate are likewise generally included in the company's taxable corporate income.

Municipal surtax (derrama municipal) can additionally apply, generally up to 1.5% of taxable profit, depending on the municipality. Larger companies can also become subject to the state surtax (derrama estadual).

Property Buying Costs and Transaction Taxes in Portugal

Annual Property Tax

Municipal Property Tax (IMI)

Portugal levies an annual Municipal Property Tax (Imposto Municipal sobre Imóveis – IMI) on the property's officially assessed taxable value (Valor Patrimonial Tributário – VPT), rather than directly on its market value.

For urban property, municipalities generally set the annual IMI rate between 0.30% and 0.45% of the VPT.

Rural property is generally subject to IMI at 0.80% of the VPT.

The VPT is determined under statutory valuation rules that take into account factors such as construction value, property area, location, age and characteristics. Consequently, the VPT can differ substantially from the property's actual market value.

For an ordinary urban residential investment property with a VPT of €500,000, annual IMI would generally range from approximately €1,500 to €2,250.

At a VPT of €1 million, annual IMI would generally range from approximately €3,000 to €4,500.

Additional Property Tax (AIMI)

Portugal also imposes an Additional Municipal Property Tax (Adicional ao IMI – AIMI) on the aggregate VPT of qualifying Portuguese real estate held by an individual or company.

For an individual, a €600,000 deduction generally applies before AIMI is calculated. Married couples and civil partners who elect joint AIMI taxation can generally benefit from a combined deduction of €1.2 million.

For individuals, the principal AIMI rates are 0.7% on the taxable amount up to €1 million, 1.0% on the portion between €1 million and €2 million, and 1.5% on the portion exceeding €2 million.

These thresholds apply to the taxable amount after the €600,000 individual deduction. Where spouses or civil partners elect joint taxation, the corresponding thresholds are effectively doubled.

Companies are generally subject to AIMI at 0.4% on qualifying Portuguese real estate. Special rules and higher rates can apply in certain circumstances, including residential properties held by companies for the personal use of shareholders, board members or members of corporate bodies.

Certain categories of property are excluded from AIMI, including qualifying properties classified for commercial, industrial or service use.

A residential property investor can therefore be subject to both IMI and AIMI. IMI applies annually to the property's VPT, while AIMI becomes relevant once the investor's aggregate qualifying Portuguese property value exceeds the applicable deduction.

Property Transfer Tax (IMT)

For residential investment property, IMT is progressive at lower property values, with marginal rates ranging from 1% to 7.5%. For higher-value acquisitions, a flat rate applies to the entire taxable value.

For 2026, residential investment property valued between approximately €660,982 and €1,150,853 is generally subject to a 6% flat IMT rate, while property valued above €1,150,853 is subject to a 7.5% flat rate.

For example, a non-resident investor purchasing a residential property for €1.2 million would generally pay €90,000 in IMT, calculated as 7.5% of the purchase price, assuming the purchase price is not below the property's relevant taxable value.