Taxes in Lisbon: what taxes are charged in Lisbon?
As well as being the capital of Portugal, Lisbon is the city most sought after by tourists and by immigrants and nomads who seek Portugal as their habitual residence.
The reason for this is that it is the economic center of Portugal, as well as having a milder climate compared to other European capitals, among other reasons.
However, those who live or intend to live in the city of Lisbon will need to be aware of tax issues and be familiar with national taxes, as well as municipal taxes in Lisbon.
Unfortunately, the demand for legal assistance in the tax area is low, and this practice can lead to serious consequences, such as the payment of fines and penalties, or even criminal prosecution for tax evasion.
Before going into the subject of the article, it is worth explaining what tax residency is.
What is Tax Residency?
Tax residence is nothing more than the place where an individual carries out their vital economic activities. This place can be their fixed residence or their habitual residence.
Digital nomads do not have a fixed residence, but they do have a habitual residence. Therefore, the assertion that, because they have no fixed abode, they don't have to declare their taxes anywhere is false.
It doesn't matter if the digital nomad travels every 3 months, every month or every week. Everyone in the world will have a tax residence somewhere.
If you declare taxes for two countries at the same time, you will have double tax residence, i.e. you will be subject to declaring and paying taxes for two countries at the same time.
Taxes in Lisbon
Portugal has national taxes and municipal taxes.
The main tax levied on those who live in Lisbon, as well as in Portugal in general, is the Personal Income Tax (IRS).
IRS is the Portuguese income tax levied on everyone who has a tax residence in Portugal.
For this purpose, they take into account all the income earned during the period of one year and apply the following rates, depending on the progressivity of the income (table updated for the year 2024):
Taxable income | Rates |
Up to 7.703€ | 13,25% |
From 7.703€ to 11.623€ | 18% |
From 11.623€ to 16.472€ | 23% |
From 16.472€ to 21.321€ | 26% |
From 21.321€ to 27.146€ | 32,75% |
From 27.146€ to 39.791€ | 37% |
From 39.791€ to 51.997€ | 43,5% |
From 51.997€ to 81.199€ | 46% |
More than 81.199€ | 48% |
Portugal adopts the principle of universality of income. In other words, taxpayers are obliged to declare all their income, regardless of where it comes from. It is therefore extremely important to plan your move to Portugal in advance.
In addition to IRS, there are other national taxes that apply in Lisbon, such as VAT and Stamp Tax.
I'll talk about VAT in this article and Stamp Tax in this article.
For some, there is the possibility of benefiting from the more beneficial tax regime of the Fiscal Incentive for Scientific Research and Innovation. This scheme has been replaced by the former NHR (Non-Habitual Resident).
I'll talk more about the Tax Incentive for Scientific Research and Innovation in this article.
Considering this scenario, it is essential to carry out tax planning before immigrating to Lisbon.
If you are interested in hiring professional legal services related to tax planning for Portugal, we are a law firm specializing in the subject. To do so, contact us via Whatsapp or e-mail: thyanipuppio@gmail.com
In addition to national taxes, there are municipal taxes that Lisbon residents need to be aware of.
Municipal taxes in Lisbon
Lisbon has 2 municipal taxes: the Municipal Surtax and the Municipal Property Tax.
The Municipal Surtax is a tax levied on the taxable profit of industrial, agricultural and commercial activities. In Lisbon, a fixed rate of 1.5% applies.
The Municipal Property Tax is levied on property owners in Lisbon. A fixed rate of 0.3% applies in Lisbon.
It is clear that, in addition to knowing the national taxes, such as the IRS, it is necessary to know the municipal taxes of the city to which you intend to immigrate, be it Lisbon or another city in Portugal, making it even more necessary to carry out tax planning.
If you are interested in hiring professional legal services related to tax planning for Portugal, we are a law firm specializing in the subject. To do so, please contact us via Whatsapp or e-mail: thyanipuppio@gmail.com
Alert for Double Tax Residency
Individuals who have dual tax residency need to declare their taxes for two countries at the same time.
However, what few people know is that when you are a tax resident in a particular country, the principle of universal income declaration prevails. In other words, taxpayers must declare all their income, regardless of its origin.
What most people do is declare income from Portugal only in Portugal, and income from other country only in this country. However, by failing to comply with the duty to declare assets universally, the taxpayer commits a crime called tax evasion.
In addition to the risk of being held criminally liable for tax evasion and thus having your passport invalidated, the amounts evaded can be collected from the taxpayer, which will be subject to a fine, interest and monetary correction.
Portugal exchange information on tax matters with many countries around the world. This exchange of information is carried out using artificial intelligence, which searches and cross-checks the data of its taxpayers in order to detect fraud.
Those whose passports are invalidated will not be able to leave the country and will have their visas automatically invalidated, since Portugal requires immigrants to have a valid passport in order to apply for and remain on visas. In other words: no passport, no visa.
Remember: tax evasion is not just a crime in Portugal.
If you are interested in hiring professional legal services to carry out tax planning, we are a firm specializing in the subject and we can help you, just get in touch via email: thyanipuppio@gmail.com, or via WhatsApp.
