Portugal Salary Calculator

An introduction to Portugal

Portugal is located in the south western part of Europe and is bordered by the North Atlantic Ocean and Spain. The territory of Portugal includes not only the mainland on the Iberian Peninsula, but also the autonomous regions of the Azores and Madeira, two archipelagos located in the Atlantic Ocean. The nation spans a total area of over 35,600 square miles (92,200 square kilometers). Portugal has an extensive coastline with the Atlantic Ocean which includes over 585 miles (943 kilometers) on the mainline and over 569 miles (917 kilometers) on its islands. Lisbon is the capital city of Portugal.

Portugal has a rich history of seafaring and discovery. After handing over its last overseas territory, Macau, to the Chinese administration in 1999, it ended a long and sometimes turbulent era as a colonial power. The roots of that era can be traced back to the 15th century when Portuguese explorers such as Vasco da Gama were looking for a way to India. By the 16th century these sailors helped build a huge empire that included Brazil as well as prominent sections of Africa and Asia. Today, there are over 200 million Portuguese speakers around the world.

For almost half of the 20th century Portugal was ruled by Antonio de Oliveira Salazar as a dictatorship. However, this all ended in 1974 when a bloodless and peaceful coup known as the Revolution of the Carnations ushered in a new democracy.

Traditionally, Portugal's economy was reliant on the manufacturing industry. Ever since the country joined the European Union in 1986, Portugal's economy has diversified and become increasingly service based. In 1999, Portugal was one of eleven EU Member States to launch the euro currency. The currency then first started circulating in 2002.

The Portuguese economy was negatively impacted by the global financial and economic crisis that started in 2008 and the European debt crisis in 2009. In partnership with the European Union and the International Monetary Fund, Portugal adopted an economic adjustment program in 2011. Portugal was put on a path to stabilizing the economy, correct domestic economic imbalances and restore growth thanks to the program. The three year program was subsequently ended in May 2014 when Portugal was able to make a clean exit through the efforts made by the PSD-CDS coalition government. Both the work done and achieved outcome were applauded internationally. The economy has posted consecutive quarters of growth since then.

The majority of Portugal's international trade is with the rest of the European Union, which accounts for 75 per cent of Portugal's export market and 78 per cent of its imports. The United States, China, and Brazil are some of the largest trading partners outside of the EU. Machinery and tools are Portugal's main exports, followed by vehicles, other transport material, textile articles, plastics and rubber, base metals and agricultural products.

Today, the tourism sector, as well as the services and technology sectors, play huge roles in the economy. Additionally, Portugal continues to further increase its sources of investment and broaden its export markets.

Frequently Asked Questions

What is the income tax rate in Portugal?

The individual income tax rate in Portugal is progressive and ranges from 14.5% to 48% depending on your income for residents while non-residents are taxed at a flat rate of around 25%. This income tax calculator can help estimate your average income tax rate and your take home pay.

How many income tax brackets are there in Portugal?

The income tax system in Portugal has nine different tax brackets for residents. For more details, check out our detail section.

Portugal Income Tax Brackets and Other Information

The income tax system in Portugal is a progressive tax system. This means that your income is split into multiple brackets where lower brackets are taxed at lower rates and higher brackets are taxed at higher rates. Tax rates for residents range from 14.5% to 48%.

For married couples, the above progressive rates are separately applied on each half of the total income.

A standard deduction exists and is valued at the higher of 4,104 € or the total amount of social security contributions. As with many other regions, Portugal also provides a wide range of other tax deductions and tax credits for things like employment expenses, dependents, disabilities, household expenses, health expenses, VAT on various things, donations, education expenses, retirement contributions, and many others. However, these other ones will vary wildly from person to person, they are beyond the scope of our calculator and are not included.

One interesting and somewhat rare tax relief that is worth mentioning is a 50% relief from taxation of employment income or self employment income for applicable returning residents for their first year of new tax residency and for a period of 4 years afterwards. This is meant to encourage the return of emigrants to Portugal. This tax relief was created in 2019 and, as of 2022, has been extended to 2023. Emigrants who return to Portugal and become tax residents while this tax relief policy is in place may be eligible. In order to even be considered eligible, emigrants must not have been tax residents in the previous 3 years, but must have been tax residents before this 3 year period. Additionally, they must have their tax situation regularized and not have previously applied for the special tax regime for non-habitual tax residents. As always, please consult with a tax professional for more details regarding your personal situation.

Non-residents, on the other hand, are not allowed any tax deductions and are subject to a flat income tax rate of 25%.

In addition to the standard income tax system, there also exists a solidarity tax which varies between 2.5% to 5% for individuals earning over a certain amount.

Social Security in Portugal

Social security in Portugal includes family, pension, and unemployment benefits. Contributions are made by both employees and employers. For employees, the contribution rate is 11%.

Resident status and income tax in Portugal

Residents taxpayers are taxed on worldwide income while non-residents are subject to income tax only on Portuguese-sourced income. Note that Portguese-sourced income includes both income from activity carried out within Portugal and foreign income derived from Portuguese companies and permanent establishments.

Individuals are considered residents of Portugal for tax purposes if they either stay a total of at least 183 days within any 12 month period or they maintain a often used residence in Portugal.