News & Insights

Portugal’s tax system balances competitive corporate rates with progressive personal taxation. With a 21% corporate income tax and personal rates reaching up to 48%, it offers structure and clarity. Gift and inheritance taxes are modest at 10%, and the absence of wealth tax further simplifies the framework. Portugal aligns with EU anti-avoidance directives and international compliance standards, supported by a wide network of Double Tax Treaties (DTTs). These policies make Portugal’s tax system both efficient and globally aligned.

Portugal’s Tax System overview

Personal Income Taxation

Resident individuals are subject to tax on worldwide income at progressive rates up to a maximum of 48%. There is also a Solidarity tax of up to 5%. Portugal applies gift and inheritance tax at 10%, except for spouses and lineal descendants. Portugal does not impose wealth tax.

Anti-Avoidance Rules

Portugal has adopted the EU’s Anti-Tax Avoidance Directive (ATAD), and has Transfer Pricing rules, Thin Capitalization rules, and Controlled Foreign Corporation (CFC) rules, as well as General Anti Avoidance Rules (GAARs).

Controlled Foreign Corporations (CFCs)

Controlled Foreign Corporation (CFC) rules apply where a Portuguese resident owns at least 25% of the share capital, voting rights, or “rights over income or assets” of the CFC, the CFC is subject to tax at an effective rate of less than 50% of the Portuguese corporate rate (21%) or is resident in a low tax jurisdiction (LTJ). CFC rules do not apply to legal entities resident in the EU or EEA with effective exchange of information, provided that CFC has a valid economic purpose and substance. If CFC rules apply, the undistributed profits of the CFC are imputed to Portuguese residents.

Trusts 

Portugal has not ratified the Hague Convention on the recognition of trusts, and does not recognize trusts other than those created in the Madeira IBC. However, foreign trusts are recognized under general principles of Portuguese law, but are not recognized where they contravene Portuguese forced heirship rules.

Under a 2014 amendment to the Portuguese Tax Code (Law 82-E/2014) , foreign trusts are taxed as “fiduciary structures.” However, where the settlor is not also a beneficiary or the beneficiaries do not control distributions, trusts should not be treated as “fiduciary structures.” Transfers by the settlor to a trust are not subject to tax, except 10% stamp tax where the assets are local situs. Distributions to beneficiaries are taxed at 28%, except where the trust is resident in an LTJ, then taxed at 35%. However, if the trust is not treated as a “fiduciary structure,” distributions may be taxed as gratuitous transfers subject to stamp tax. On dissolution of the trust, distributions to the settlor are taxed at 28% on the gain, or 35% where from an LTJ, and 10% on transfers to beneficiaries where local situs assets.

Double Tax Treaties (DTTs) 

OECD Multilateral Convention 

Common Reporting Standard (CRS)

FATCA